The Texas attorney general and the foundation arm of a Dallas hospital once owned by Ascension Health, St. Louis, have sued the Catholic system in state court, accusing it of plundering $60 million from the hospital.
The St. Paul Foundation filed the suit Tuesday on behalf of 288-bed St. Paul Medical Center, now part of two-hospital University Hospitals Health System, Dallas. State Attorney General John Cornyn intervened to defend charitable trust assets on behalf of the public.
The foundation accuses Ascension predecessor the Daughters of Charity National Health System-West Central of illegally transferring $60 million from St. Paul to Tri Provincial Depository, St. Louis, which the Daughters controlled. The transfer occurred when Harris Methodist Health System agreed to take over the majority sponsorship and operating interest of the hospital in 1996. Harris Methodist merged with Presbyterian Healthcare System of Dallas in 1997, and St. Paul's was sold to University of Texas Southwestern Medical School in 2000.
The 17-page suit was filed in Dallas County District Court.
In a written statement, Ascension Health denied the allegations. "We are reviewing the information regarding this issue. We strongly disagree with the assertions made by the plaintiff and will be responding to the court at a later date," the system said.
St. Paul Foundation President Mary Love Henderson said the $60 million comprised the hospital's funded depreciation account, which according to audited financial statements was designated for St. Paul's capital needs. The fund contained both donations and operating income. "It represented the savings account of this hospital for about 100 years," Henderson said.
"The question is, how did the board let this happen? I think it's pretty clear the board was misled and the impact on the future of this hospital wasn't fully felt until years after it happened," she said.
Earl Hale, who serves on the boards of both the foundation and the hospital, said the transfer of the $60 million was not disclosed publicly for some years. The decision to transfer the fund was made by a Daughters-controlled board, Hale said. "There were some objections, but they were told the money would still be available to St. Paul," he said.
Hale estimated the hospital has lost $50 million in the six years since the transfer. "The impact has been devastating," he said. "Every year the hospital has lost the interest on that $60 million -- between $4 million and $6 million annually -- and lost access to that $60 million for its much needed capital."