River communities exit Palm Drive Health Care District

It was mostly a formality but it nevertheless drew protests last week when county officials formally removed the lower Russian River area from the Palm Drive Health Care District’s designated “sphere of influence.“

“We didn’t really expect to be in this position,” of having the river area detached and then cut from the sphere of influence (SOI), said Palm Drive Health Care District Director Gail Thomas before the final vote by members of the Local Agency Formation Commission (LAFCO). “I’m asking you to really reconsider” the reduction, Thomas told LAFCO, the county panel that regulates government district services and boundaries.

Thomas along with Palm Drive Health Care District Executive Director Alanna Brogan and Palm Drive Health Care District Board President  

Dennis Colthurst asked LAFCO members to back off on the reduced SOI designation, despite the successful petition drive last year by lower Russian River residents wanting to get out of the district.

Sebastopol resident Joan Marler, whose husband Dan Smith has been instrumental in providing financial support to keep the former Palm Drive Hospital going as Sebastopol’s Sonoma West Medical Center (SWMC), said she was concerned that reducing the SOI “would open the door” for a more radical “zero sphere of influence” designation that could precede a dissolution of the entire health care district.

Russian River residents “may want to rejoin” the district sometime in the future, said Marler.

But LAFCO Chairwoman Teresa Barrett, who also serves on the Petaluma city council, agreed with Fifth District Sonoma County Supervisor Lynda Hopkins and fellow LAFCO panelists last week in pointing out that amending the SOI “doesn’t change anything” as far as SWMC’s ongoing medical services and financial challenges.

Detached Russian River area taxpayers can always petition to be annexed back into the health care district “if there’s a groundswell of support,” said Hopkins.

However, “I think it’s incredibly unlikely in the next 10 years the river will suddenly want to rejoin given the tremendous grassroots support for detachment,” said Hopkins when LAFCO took an initial straw vote last month to remove river communities from the health care district’s sphere of influence.

“I think it’s time to move on,” said Hopkins. If river residents ever want to rejoin the district they always have the option, said Hopkins, adding “let’s leave that to the river.”

LAFCO’s unanimous vote culminated a nearly three-year effort by lower Russian River property owners to free themselves from the health care district’s taxing power that extracts $155 in annual parcel taxes paid by west county property owners within the district’s boundaries.

The loss of future Russian River area parcel tax revenues will ultimately cut the Palm Drive Health Care district’s annual parcel tax income by 40 percent, according to LAFCO.

Health care district property owners pay an annual parcel tax of $155, which prior to detachment added up to approximately $3.5 million to pay district bond debt and help support SWMC operations.

The river’s parcel tax bills are expected to gradually decrease as the district pays off approximately $27 million in bond debt and settles a pending bankruptcy case.

The original 200-square-mile hospital district comprised nine school districts encompassing the communities of Sebastopol, Graton, Forestville, Occidental, Freestone, the coast from Bodega Bay to Jenner, Duncans Mills, Villa Grande, Monte Rio, Guerneville and Summerhome Park.

Last week’s vote means “LAFCO doesn’t think the district is going to grow in next five or 10 years,” said LAFCO Executive Officer Mark Bramfitt.

River taxpayers are still obligated to continue paying their share of health care debts incurred before the detachment last year.

But it remained unclear last week whether health care district taxpayers including the river may be responsible for repaying approximately $13 million in alleged overcharges that health insurer Anthem Blue Cross says the hospital owes for a discontinued toxicology testing program. Anthem’s lawyers say the toxicology program was basically part of a billing scam that gamed health insurance reimbursement rules.

Anthem’s claim says SWMC and the health care district were both involved in the effort to exploit medical billing rates that allow smaller rural hospitals like SWMC to charge higher rates for toxicology tests, a partnership that SWMC entered into last year with Florida-based Durall Capital Holdings.

Anthem’s claim, precursor to a potential lawsuit, demands that SWMC return $13 million in billings for drug testing services funneled to SWMC from Durall.

If Anthem is able to claw back the $13 million it could bankrupt SWMC and close the hospital, some county sources warned last week.