Alameda Health System Sues Alameda County Over Misuse of Pension Fund Money

The Alameda Health System (AHS), which operates Highland Hospital and other safety net hospitals and clinics, is suing Alameda County’s Employee Retirement Association (ACERA) to recover tens of millions of dollars in improper payments toward under-funded employee pensions, Oakland News Now has learned from a legal filing by AHS in San Francisco Superior Court.

AHS is essentially suing the Alameda County Board of Supervisors because it contros ACERA–which AHS’s lawsuit says is siphoning off pension funds and illegally using the money to plug the County’s own deficits. This battle is sure to be a big one as this year’s Grand Jury report blasted the Alameda County Board of Supervisors for its mismanagement and failures in supporting AHS.

More than 4,500 people and 1,000 physicians work at the Alameda Health System, which includes Alameda Hospital, San Leandro Hospital and John George Psychiatric Hospital.

UPDATE: Delvecchio Finley Left Alameda Health System To Become CEO Of Atrium Health Navicent In Atlanta

We found AHS’s lawsuit was quietly filed earlier this year in S.F. Superior Court. The AHS lawsuit says ACERA is using a formula that is inherently unfair and improper in how it accesses pension fund payments and thus is a major factor in the nearly $100 million operating deficit AHS faces this year alone.

This legal battle is an important one: unless AHS wins this fight the already financially struggling health system may have to reduce the services it provides to Alameda’s neediest residents. And, if you have been following the health system, which is unlikely as it gets little media attention, you will know that the County Board of Supervisors is doing everything in its power to prevent an AHS victory in court.

If you read the lawsuit, you can see that Alameda County Board of Supervisors has been directing the overcharging for years to make the County’s own budget look better. AHS requested the ACERA address and fix the overcharging, but it has refused to do so, and thus the lawsuit to protect AHS finances from the Board of Supervisors.

Right now, the lawsuit says, Alameda County is using a pension formula that far exceeds what AHS really owes and therefore is impacting the health system’s financial stability and its budget deficit.

This “taking of AHS funds” has been done with the direct and improper interference of County officials, as emails between the Alameda County Executive and ACERA’s Board of Trustees show, according to the lawsuit.

A big part of the problem is the Alameda County Board of Supervisors themselves, as a separate 2020 Grand Jury report reports. The Alameda County Grand Jury found that while AHS has tried to solve its issues with the Board of Supervisors the“…meetings have not resulted in a viable plan to return AHS to financial health.” The Grand Jury also determined that “Political pressure by some Alameda county supervisors has interfered with AHS operations and efforts to control costs.”

No kidding.

The CEO of Alameda Health System, Delvecchio Finley, resigned right before Thanksgiving amid recent labor turbulence and turmoil on the public health organization’s board that has seen its trustees forcibly replaced by the Alameda County Board of Supervisors.

Finley’s resignation was submitted and accepted by the board of supervisors in closed session. They did not indicate whether the resignation was requested or expected, whether it is linked to the forced AHS board departures, the AHS lawsuit against the County Board of Supervisors, or what Finley’s future plans might be. 

The Alameda County Board of Supervisors had fired AHS board of trustee members who oversee the health system. The two Supervisors leading the firing were Supervisor Richard Valle and Supervisor Wilma Chan.

Stay tuned because this is going to be a battle royal with AHS fighting to protect public health and the County Board of Supervisors fighting for political, physical and monetary control of the health system.

Stay tuned.

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