Harris Suit Dropped

A federal judge in California has dismissed a lawsuit in which a hospital chain claimed U.S. Sen. Kamala Harris catered to union demands and imposed unreasonable conditions during a proposed purchase while the Indian American was the state's attorney general. (Chip Somodevilla/Getty Images)

A lawsuit filed by a California hospital chain against U.S. Sen. Kamala Harris during her tenure as the state’s attorney general has been dismissed by a federal judge.

U.S. District Judge Gonzalo Curiel of San Diego Aug. 16 dismissed Prime Healthcare Services’ claim that the Indian American attorney general catered to union demands and imposed unreasonable conditions on a proposed $843 million purchase of a group of nonprofit health facilities, the San Francisco Chronicle reported.

The judge said that the hospital was unable to show it was the victim of discrimination or that Harris knowingly violated any laws, the report said.

Curiel added that the hospital company was trying to make a constitutional issue out of “discretionary state decision-making,” it added.

In October 2014, Prime Healthcare reached an agreement with Daughters of Charity Health System to purchase five California hospitals and a nursing home.

As attorney general, Harris held veto power over the sale and said she would only approve it should Prime Healthcare agree to keep the facilities open for a decade, which the company refused, according to the report.

Facing possible closure of its hospitals, Daughters of Charity reached an agreement in December 2015 with New York hedge fund BlueMountain Capital Management for a $260 million investment that would keep them open for three years, the report said.

BlueMountain would then have an option to buy the hospital group, now called Verity Health System, and agreed that, as the new owner, it would keep them operating for 10 years. Harris approved the transaction, the publication noted.

Prime Healthcare accused Harris of conspiring with the Service Employees International Union and its United Healthcare Workers West affiliate to block the sale.

Prime Healthcare noted that the union had contributed to Harris’ campaigns for attorney general, and alleged that union leaders had promised large contributions to her Senate campaign if she prevented Prime Healthcare from acquiring the Daughters of Charity hospitals, according to the suit, the Chronicle reported.

However, Curiel said in his ruling that state law gave the attorney general “broad discretion to impose such conditions, where the transaction — the largest of its kind — affected multiple communities, and ... the conditions were otherwise supported by plausible reasons,” such as “access to continuing health services,” according to the report.

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