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Updated 08/16/2010 02:57 PM

Lawsuit: St. Vincent's Hospital Squandered Millions, Exaggerated Debts

By: Samuel King

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Officials at the now-closed St. Vincent's Hospital in Manhattan grossly exaggerated their debt as their executives and consultants spent millions of dollars, according to papers filed today in Manhattan Supreme Court by a group of former employees.

The documents say the hospital paid $278,000 for a golf outing, paid its top 10 executives a combined $10 million a year, spent $17 million for management consultants and spent nearly $4 million on professional fundraising.

The petition also says the former Greenwich Village hospital's federal tax returns claim the facility spent $104 million on unspecified costs listed as "other."

The lawyers filing the claim said they hope the suit will force the state Health Department to release documents that will explain what went wrong.

"We estimate the amount of public money that we can track at this point that was going to this hospital was approximately $700 million," said attorney Thomas D. Shanahan. "The public deserves better than to hear a hospital was 'bankrupt' under a crushing $1 billion debt, when it seems they had substantial public monies coming in and that the hospital was mismanaged."

"We're trying to compel the Department of Health to do the right thing, not only in disclosing the records that they already have receipt of, but also they should be holding public hearings," said attorney Yetta Kurland. "There is a greater imperative and a greater responsibility that the DOH has to ensure the health and safety of Lower Manhattan."

About 3,000 employees lost their jobs when St. Vincent's closed in April, citing a billion dollars in debt.

"We gave back a lot of money to the hospital, we worked under conditions that weren't the best all the time, and to think that people might have been getting these extravagant salaries, it makes me mad," said Eileen Dunn, the former president of the St. Vincent's Nurses Association and a 24-year veteran of the hospital. "But it also saddens me, because we trusted the people that we worked for."

The lawsuit will also push for a new medical center to be opened on or near the site of the former hospital. For some patients and residents of Greenwich Village, losing St. Vincent's Hospital was like losing a member of the family.

"We're losing a lot of hospitals and there's not a lot of places that people can go that need help with [psychiatric] treatment, drugs, alcohol, whatever have you," said former patient Ebony Boyd. "And they closed all these hospitals down and I think St. Vincent's could have been saved."

The lawyers also claim the billion-dollar debt was exaggerated in part by hundreds of millions of dollars in loans dumped on St. Vincent's by other medical entities run by the Sisters of Charity, which is affiliated with the Diocese of Brooklyn.

A spokesman for the Diocese of Brooklyn disputed that claim, saying the debt should have been settled during a 2007 restructuring plan, after the hospital filed for bankruptcy five years ago.

The next date for the lawsuit has been set for September 8 at Manhattan State Supreme Court.

The state Health Department would not comment on pending litigation.

Former St. Vincent's officials have not yet commented to NY1 on the case.