The majority owner of West Suburban Medical Center can continue to run the hospital, a Cook County judge ruled Monday.
Resilience Healthcare CEO Manoj Prasad and the hospital’s landlord, Rathnakar Reddy Patlola, sued each other last month after Prasad abruptly closed the struggling hospital. Patlola’s suit asked a Cook County judge to appoint a receiver to help wrestle management of the hospital away from Prasad.
Judge Patrick Stanton ruled against Patlola’s request Monday, saying his lawyers did not meet the burden of proof for a receivership.
The ruling comes amid a bitter legal fight between the two business partners who together own the safety-net hospital on the eastern edge of Oak Park.
Patlola is the minority owner of Resilience Healthcare, which owns and operates West Suburban Medical Center and Weiss Memorial Hospital in Chicago’s Uptown neighborhood. Prasad is Resilience’s majority owner and is in charge of the day-to-day hospital operations.
But Patlola’s company Ramco is the sole owner of all of the land the hospitals sit on, which includes the main Oak Park campus, the River Forest campus, Weiss and all associated medical office buildings.
Prasad closed the hospital in late March and furloughed the vast majority of employees. He blamed the hospital’s electronic medical record system that “never functioned correctly” for the payroll issues. He also shuttered Weiss last summer after the hospital lost Medicare and Medicaid funding.
After Prasad closed West Suburban, Patlola attempted to oust Prasad and evict Resilience from both hospitals and the associated medical office buildings. Prasad then filed his own suit against Patlola to stop the eviction.
In response, Patlola sued and asked a judge to appoint a receiver to take control of West Suburban’s operations, allowing it to reopen.
Lawyers for Patlola and Prasad declined to comment on Stanton’s ruling. Prasad could not immediately be reached for comment.
The legal teams for Prasad and Patlola have been arguing in court before Stanton about the financials for Resilience Healthcare.
In the lawsuit, Patlola accuses Prasad of “financial mismanagement and malfeasance.” The complaint also seeks financial damages for back rent Prasad allegedly owes Patlola.
Patlola also alleges Prasad misused $35 million intended for hospital operations. The suit claims Prasad moved the funds to a separate bank account and “misappropriated” the funds for his “direct or indirect benefit.” Prasad disputes that claim and says Patlola had access to those funds, too.
Prasad has said the suit is “without merit,” and claims the hospitals’ leases prohibit Patlola from terminating the lease or removing the hospital operator. He also says the two agreed to set rent for the hospital at just $1 a year until a profit was turned, which he says hasn’t happened since they purchased West Suburban and Weiss.
He also maintains that the disputed millions went toward hospital payroll and operating expenses, and that the funds were transferred to a bank account tied to Westlaw Management Group. Prasad says both men can access the account, but Patlola claims he can’t get into it.
The two sides agreed to have recently-retired Judge Patrick Sherlock review years of bank records for several accounts tied to Resilience Healthcare and the hospitals.
Patlola had been in talks with Insight Hospital & Medical Center to see if the company could take over West Suburban. Insight’s CEO said the company was interested in helping get West Suburban back open.
Prasad previously said he hopes to fully reopen the hospital by late June or early July. He has resumed some clinical services at the Oak Park campus.
The two men teamed up in 2022 to buy Weiss Memorial, West Suburban Medical Center and West Suburban’s River Forest medical campus from Pipeline Health, which had declared bankruptcy that year.