The California attorney general filed a lawsuit against AHMC Healthcare on Oct. 2, claiming the Alhambra-based health system’s service reductions at one Bay Area hospital and closure of another facility violate conditions set by the state when it acquired the facilities in 2020.

The lawsuit alleges that the closure of Seton Medical Center Coastside in Moss Beach and failure to maintain stroke center certification at Seton Medical Center in Daly City breach the terms of the purchase agreement.

In the lawsuit, filed in San Mateo County, the Attorney General alleges that AHMC Seton Medical Center, LLC  violated the Attorney General’s July 27, 2020 conditions by closing Seton Coastside in its entirety. The Attorney General is seeking specific performance and civil penalties. Additionally, the injunctive relief the Attorney General is seeking is crucial to the reopening of the Seton Coastside facilities and the restoration of services at Seton.

“The conditions that were set forth with AHMC were specifically implemented to protect patients, ensure continued access to critical healthcare services, and safeguard the community’s health and well-being,” said the Attorney General. “Unfortunately, AHMC clearly has not upheld its obligations. This failure to meet the required standards is completely unacceptable, and I’m holding them fully accountable for placing patient care and public health at risk.”

Under California law, any transaction involving the sale or transfer of control of a healthcare facility owned by a nonprofit corporation must secure the approval of, or waiver of notice and consent of, the Attorney General.

The Attorney General’s July 27, 2020, conditions required the continuation of services, including emergency departments (ED) at both hospitals, a stroke center certification, STEMI receiving center designation, general acute care hospital (GACH) and the skilled nursing facilities (SNF), among others.

AHMC has permitted the stroke certification and STEMI designation to lapse at Seton Medical Center and has closed the SNF, GACH, and ED at Seton Coastside since April 2024, without notifying nor seeking an amendment of the conditions from the Attorney General.

These reductions in services have negative consequences for the community including requiring people to travel farther for care, increasing volumes of patients at neighboring hospitals that offer those services, and escalating rates for services at those competing hospitals.

In a statement to Becker’s Hospital Review, the health system said it was “surprised” by the lawsuit, calling the attorney general’s claims “misleading” and emphasizing its intention to reopen the facility once structural repairs are complete. It also said the temporary closure was required by regulators and that the state’s health department approved the closure.

“The AG is under the false impression that Seton Coastside could open its doors once the roof replacement was completed earlier this fall,” AHMC said. “Not so. Even after the roof was replaced, the building was still unsafe for human occupancy, and there was no safe option to occupy the building when the other emergency repairs were still required. We believe the claims made by the AG’s office that Seton was merely engaged in cosmetic upgrades and deferred maintenance are false and misleading.

“We have been diligently addressing these matters and undertaking the repairs necessary to reopen the Seton Coastside Emergency Department and SNF and to otherwise comply with the AG’s conditions. We have also been cooperating with the AG office’s investigation into these issues as they relate to the AG’s 2020 conditional approval of the sale of this distressed hospital, which was facing closure if AHMC had not purchased it.”

In taking legal action, the attorney general is seeking to resume operations at Seton Coastside and restore primary stroke services at Seton Medical Center. The move marks his second lawsuit against a hospital this week.

On Sept. 30, his office filed suit against Providence St. Joseph Hospital in Eureka for refusing to provide an emergency abortion to a woman experiencing an obstetric emergency. In doing so, Providence violated multiple state laws, the lawsuit claims.