Pacific Health Corp., the Tustin-based hospital chain that owns troubled Anaheim General Hospital, is seeking to expand its regional footprint -- but not without controversy.
Last spring the hospital company agreed to purchase the nonprofit, 223-bed Anaheim Memorial Medical Center for $57.1 million. But the sale of a nonprofit hospital to a for-profit company must be approved by the state attorney general, and the purchase has run into opposition.
At a contentious six-hour public hearing this summer, the company promoted the deal while some community activists, labor groups and some doctors staunchly opposed it.
Pacific Health's problems grew Wednesday. The Tustin company was named in a civil lawsuit filed by Los Angeles City Atty. Rocky Delgadillo. He contended that the company -- but not Anaheim General -- was part of a scheme "to defraud the Medi-Cal and Medicare programs."
Pacific Medical said it was cooperating with the city attorney and expected to be cleared of any illegal actions.
At the public hearing, opponents of Pacific Health's purchase of Memorial contended that Pacific Health should not be expanding at a time when its current hospitals have been hit with so much criticism from regulators over the last year.
Pacific Health has a "poor patient-care track record," Jorge Rodriguez, executive vice president of SEIU United Health Care Workers West, said at the hearing. "Given this poor performance, we fear that the quality of patient care may suffer at Anaheim Memorial under PHC's ownership."
"We think that Anaheim Memorial should stay a nonprofit hospital and serve the community," Dr. Raveen R. Arora, a cardiologist and past chief of staff at Anaheim Memorial, said in an interview. "We are concerned the level of care will deteriorate if the hospital is bought."
Jim Young, Pacific Health's president, rejected the criticism and was bullish on the company's plans.
"We plan to continue the legacy of outstanding medical care that Anaheim Memorial Medical Center is so well known for," he said.
Sources in Delgadillo's office said the city attorney had notified the office of California Atty. Gen. Jerry Brown about the civil suit filed Wednesday in recognition that the attorney general's approval would be necessary for the deal to go forward.
Gareth Lacy, a spokesman for Brown, said in an interview that the attorney general was aware of the safety issues raised at Anaheim General.
Lacy said Brown was closely considering "all issues" in his decision.
"We are aware Anaheim General is correcting several safety issues and the attorney general is taking them into serious deliberation," he said.
It's the third time that Anaheim Memorial, currently owned by Memorial Health Services of Fountain Valley, has been up for sale. Last summer, the attorney general declined a bid by Prime Healthcare Services Inc. of Victorville after concluding that the sale wasn't in the community's best interest. Another deal fell through early this year because of financing problems.
The attorney general is expected to make a decision this month.
Times staff writer Cara Mia DiMassa contributed to this report.