The business partners who together bought West Suburban Medical Center in Oak Park have now become legal foes, battling for control of the hospital in Cook County court.
Resilience Healthcare chief executive officer Manoj Prasad and the hospital’s landlord, Rathnakar Reddy Patlola, sued each other last month. Patlola wants a judge to appoint a receiver — a neutral third party — to help wrestle management of the hospital away from Prasad.
That request is before Cook County Circuit Judge Patrick Stanton, who said in court Wednesday that he hopes to rule by the end of the month.
Prasad abruptly closed the Oak Park institution in late March and furloughed most of its employees. He blamed the hospital’s electronic medical record system, which he said “never functioned correctly” for the payroll issues.
Prasad also shut down Weiss Memorial Hospital last summer after the hospital in Uptown was stripped of Medicare and Medicaid funding.
That’s led to the court fight between Prasad and Patlola, with people on the West Side and in the near west suburbs having lost one of the few safety-net hospitals in that area. The remaining hospitals nearby — including Rush Oak Park Hospital, Loretto Hospital in Austin and Community First Medical Center in Portage Park — have been left to plug the gap.
Who owns the hospitals?
Patlola is a minority owner of Resilience Healthcare, which owns and operates West Suburban and Weiss Memorial.
Prasad is Resilience’s majority owner, in charge of day-to-day hospital operations.
But Patlola’s company Ramco is the sole owner of the land on which the hospitals sit. That includes West Suburban’s Oak Park campus, its River Forest campus, Weiss and associated medical office buildings.
In 2022, the men together bought Weiss Memorial, West Suburban and West Suburban’s River Forest medical campus from Pipeline Health, which had declared bankruptcy that year.
What do the lawsuits say?
Before suing for control of the hospitals, Patlola tried to oust Prasad and evict Resilience from both hospitals and the associated medical office buildings. Prasad then filed suit against Patlola to stop the eviction.
In response, Patlola countersued, asking a judge to appoint a receiver to take control of West Suburban’s operations, allowing it to reopen.
In the lawsuit, Patlola accuses Prasad of “financial mismanagement and malfeasance.” The suit also seeks financial damages for back rent it says Prasad owes Patlola.
Patlola also accuses Prasad of having misused $35 million intended for hospital operations. The suit says Prasad moved the money to a separate bank account and “misappropriated” the funds for his “direct or indirect benefit.”
The lawsuit also accuses Prasad of breaching the hospitals’ leases and demands back rent of more than $24 million.
Prasad says that suit is “without merit” and that the hospitals’ leases bar Patlola from terminating the agreements or removing the hospital operator. He says the two men agreed to set rent for the hospital at just $1 a year until the operation shows a profit, which he says hasn’t happened since they bought West Suburban and Weiss.
Prasad says the disputed millions went toward hospital payroll and operating expenses and that the money was transferred to a bank account tied to Westlaw Management Group that he says both men can access, though Patlola disputes that.
What has happened in court?
Lawyers for Prasad and Patlola have been arguing before Stanton about the financial details of Resilience Healthcare.
Both sides have agreed to have recently retired Judge Patrick Sherlock review years of bank records for several accounts tied to Resilience Healthcare and the hospitals.
Once Sherlock has turned over what he finds to Stanton, closing arguments are expected May 29.
Stanton will then decide whether to appoint a receiver to take temporary control of the business.
If Patlola wins, he’s in talks with Insight Hospital & Medical Center to see whether that company could take over West Suburban. Insight’s CEO says the company is interested in helping reopen West Suburban.
Insight bought Mercy Hospital and Medical Center in Bronzeville after it nearly closed in 2020.
If Prasad keeps control, he has said he hopes to fully reopen the hospital by late June or early July. In the meantime, he has resumed some clinical services at the Oak Park campus.