ARTICLES
March 2004 ARTICLES
Contents © 2004
by Jim Holman.
All rights reserved.
There is No Remedy for This
Aftermath of Santa Teresita's Closure
BY MARIA KENNEDY
After the abrupt January closure of Santa Teresita Hospital in Duarte, seventeen nurses filed a lawsuit in Los Angeles superior court on February 11, alleging that the hospital' s chief executive officer, Michael Costello, violated the California Labor Code by laying off more than 50 employees. The attorney for the nurses, Charles Zetterberg, said in a February 10 interview with this reporter that he sued on behalf of the nurses as well "as others similarly situated." Zetterberg said that his clients are entitled to "back pay and benefits for [the] period of up to 60 days." Additionally, the nurses contend in their lawsuit that the hospital is also liable for a civil penalty of $500 per day for being in violation of the statute against massive lay offs as well as attorney fees.
In a January 6 letter to Eric Stone, supervisor of the licensing and certification division of the California Department of Health Services, Carmelite sister Michelle Clines, the chairman of the hospital's board of directors, requested that the state suspend the hospital's license for their surgical beds, intensive care beds, and maternity ward. According to the letter, the reason for the hospital's closure was its inability to adhere to the new state mandate that hospitals increase their nursing staff to ensure that a registered nurse is always available to oversee patients. The new law, which took effect on January 1, was supported by the California Nurses Association. Sister Michelle's letter pointed out that Santa Teresita's skilled nursing facility, known as the Manor, would remain open.
The closure of Santa Teresita prompted an outcry by state and local government officials. On January 13, Los Angeles County supervisor Michael Antonovich issued a press release stating he had directed the Los Angeles County department of health services to launch an investigation into why Santa Teresita had only provided three-days notice before it closed its emergency unit as well as its acute care hospital, including its maternity ward. There are also allegations by the maternity ward nursing staff that during the months of November and December, the unit was not staffed adequately.
When asked about the outcome of Supervisor Antonovich's call for an investigation, an employee within the Los Angeles County department of health services said that an investigation was being conducted, but the preliminary findings were not encouraging. This employee, who asked not to be named for this story, said that in spite of the fact that the law clearly states that ample notice must be given before a hospital and an emergency facility can be shut down, "there are no penalties if they go ahead and shut down the facility." This employee noted that California state senator Gloria Romero and Assemblyman Dario Frommer had met with health department officials, as did Attorney General Lockyer. As to the outcome, this employee pointed out that everyone agreed that there were no recourses when a hospital decides to shut down. "Costello's at fault here," said the employee. "The sisters had complete loyalty to him. In their eyes, he could say and do no wrong."
Romero's health consultant Rosie Escobar agreed that Costello had summarily decided to close down the hospital; but, she said, he would not suffer any consequences. "The sisters don't have any money," said Escobar. "The hospital is going to be fined [for closing down], but Costello is not going to pay the fine. The sisters are the ones who are going to be paying the fine. He was the one running the hospital, he ran it down, and the sisters are going to pay for it. He's gone."
The employee at the California department of health services pointed out that by retaining the license for the skilled nursing facility, the Carmelite sisters will be able to "retain the integrity of their license." When asked what this meant, the employee replied, "the license is worth a lot of money, at least it used to be. If they gave up their license and then decided later to reapply, they would have to make sure the buildings at the facility are up to code." This employee also noted that he does not fault the Carmelite sisters for the hasty manner in which the hospital was closed, but he does fault the hospital's CEO, Michael Costello. "As I said before, in their eyes, he can say or do no wrong."
When asked if a hospital CEO can be faulted when a hospital abruptly closes, Jan Emerson of the California Health Care Association replied, "CEOs are never to blame." Saying what happened at Santa Teresita was "a tragedy," Emerson noted that hospitals are under tremendous economic pressure. "This is the impact of seven million people in the state we are required to provide health care for; these are people who don't have insurance. We have provided over 3.7 billion in uncompensated health care in the year 2002." Emerson said that a small, independent hospital such as Santa Teresita would be particularly vulnerable. Emerson quickly added that she was not trying to shield any particular CEO. "I don't know who their CEO is, so we don't have a personal interest in this. As a matter of fact, they dropped membership in our organization a year ago."
A search of the California Health Care Association's web site shows that in 1998 Michael J. Costello, Jr. of Santa Teresita hospital was nominated for a life membership by the California Health Care Association. This award is given for "those who have made a significant service contribution to the association upon their retirement from active participation in health care administration."
The California department of health services employee laughed when I asked him about Emerson's reply that the CEO is never at fault. "These guys [the CEO's] know about every single closure well before it happens," said the employee. "They are supposed to give us notice; but, if they don't, there's not a whole lot we can do. There is no remedy for this."
Attorney Zetterberg noted that Costello has owned a company called Apollo Health Care Corporation; and Zetterberg is anxious to see if there is a relationship between this company and Santa Teresita hospital. Costello has maintained that there is no connection.
A public records search for Apollo Health Care Corporation reveals a complex arrangement that often is unable to meet its financial obligations. Costello incorporated Apollo Health Care Corporation in 1986. The address of the company is listed as being on Garden Grove Boulevard in Garden Grove. In the five years of the company's existence, Costello managed to open several fictitious businesses using the Apollo Health Care name. Apollo Health Care was suspended on February 2, 2001.
One of Apollo Health Care's fictitious business names (filed in April 1998) is Alexis Home for Seniors, located at the same address Apollo Health Care Corporation used when it was incorporated. A call to directory assistance in Garden Grove revealed there is no listing for Alexis Home for Seniors. There is no public record that the company was formally shut down. Public records also show that the Pacific Educational Institute is also owned by Apollo Health Care. The Pacific Educational Institute, issued a fictitious business name in August 1991, had an apartment address on Lewis Street in Garden Grove. In September of 1993, Apollo Health Care created a fictitious business name for Pacific Coast Maid to Order, using the same address on Lewis Street. Neither business has a directory listing. Three months later, in December 1993, Apollo Health Care Corporation created a fictitious business name for Pacific Coast Medical Staffing, also using the same apartment house address on Lewis Street.
Apollo Health Care Corporation has incurred tax liens by state and county governments. On August 31, 1995, the state of California issued a tax lien against Apollo Health Care Corporation for the sum of $1, 062. Subsequently, in December of 1995, the lease was released by the state. On October 31, 1996, the state put another lien on Apollo Health Care Corporation for the sum of $1,446. This lien was released on July 30, 1998. On November 13, 2002, Orange County put a lien on Apollo Health Care Corporation for the sum of $215. There is no record of this lien being satisfied.
When asked about allegations of Costello's role in the closure of the hospital, Carmelite sister Michelle Clines said that the hospital had not closed; the license for the acute care unit had been suspended. When the county learned of this, it closed the hospital's emergency bays. "They [the county] closed the emergency room," she said. Sister Michelle pointed out that Los Angeles County owed the hospital $200,000 for health care given to county employees. Sister Michelle added that if the county would pay its bill, the hospital could pay its bills outstanding. "We have creditors and vendors who are calling us," Sister Michelle said.
Sister Michelle stressed that Costello was not the decision-maker at the hospital, but that the Alhambra Carmelites' Mother General, Sister Timothy Marie, and her counsel made the decisions. Sister Michelle said the situation at the hospital was a trial that they will survive. "The trial will continue and we'll continue as a health care facility," she said.
MORE ON COSTELLO
Santa Teresita Hospital's CEO, Michael Costello, besides his work in the medical industry, has been active in the local community. He was a co-chair of the 2003-2004 Inner-City Scholarship Fund. Costello was also active on Monrovia's economic development board.
Additionally, Costello is the spiritual director and senior minister of the Angelus Unity Fellowship in Long Beach. The church's web site states that Costello was ordained in 1973 and "has served as minister, pastor and bishop of churches since his ordination." Although the web site states that Costello is the author of a book, In the Garden of Life, attempts to buy the book through bookstores and Amazon.com were to no avail. Costello is listed as the president of a health care management firm, but there is no mention of his affiliation with Santa Teresita Hospital.
Costello's associate senior minister at Angelus Unity Fellowship, Iris Freelander, was "ordained by a Christian mystic," according to her bio on the Unity Fellowship web site. The group holds its services at the Scottish Rite Cathedral in Long Beach. A public records search for the church shows that it has a book store called the Angelus Interfaith Unity Center on Broadway in Long Beach.
"Sure, I know about all of that," Sister Michelle Clines said about Costello's involvement in Unity Fellowship, the liens, and the various fictitious business names. "He's been here for 17 years. He's never done anything scandalous here," she said. "We don't judge what other people do outside of Santa Teresita." Sister Michelle said that as long as an employee was performing satisfactorily at the hospital, what he did on his own time was of no concern. Sister Michelle pointed out that Costello was highly regarded by religious who were involved in health care.