A lawsuit from two nonprofit groups alleges that Community Health took funding intended for its downtown Fresno hospital, which serves many of the region’s poorest residents, and diverted those resources to the system’s hospital in suburban Clovis.

The lawsuit from Cultiva La Salud and Fresno Building Healthy Communities claims that Community Health funneled $1 billion to the Clovis facility instead of providing better staffing and facility upgrades at Community Regional Medical Center.

“As they poured resources into their Clovis campus, respondents were aware their safety net hospital, Fresno CRMC, required critical upgrades due to antiquated facilities, outdated and malfunctioning equipment, insufficient operating rooms, an overwhelmed Emergency Department, and chronic understaffing,” the lawsuit states.

The lawsuit further claims that current and former board members involved in land development invested in Clovis to advance property values around the hospital and the nearby California Health Sciences University, a private medical school founded by the Assemi family of Fresno.

A representative from Cultiva La Salud said leaders were too busy to answer questions from GV Wire. Attorney Patience Milrod, who represents the plaintiffs, declined to comment on the record.

The lawsuit drew a sharp rebuke from Community Health.

“Community Health System is deeply committed to serving Central Valley patients, particularly those insured by Medi-Cal, so it’s safe to say we are extremely disappointed in this baseless lawsuit,” said Community Health senior vice president Michelle Von Tersch in a statement to GV Wire. “Addressing inaccurate claims only serves to take time and resources away from our nonprofit healthcare mission.”

Related Story: A Look Inside Clovis Community’s New High-Tech Hospital Lobby

The lawsuit does not cite damages, but instead seeks, “to correct (Community’s) discriminatory allocation of resources to the Clovis CMC campus and to redirect them, as the law requires, to Fresno CRMC.”

Attorneys also want an injunction to spend supplemental Medi-Cal funding at CRMC as the lawsuit makes its way through the courts.

Clovis Has a ‘Wealthier, Whiter, Healthier’ Population: Lawsuit

Community Health gets three-quarters of its funding from government programs, according to the lawsuit. Part of its nonprofit status requires it to serve Medi-Cal patients.

Hospitals get Medi-Cal reimbursement largely from two different programs, the Hospital Quality Assurance Fee Program, and the Disproportionate Share Hospital Program.

Milrod — who recently won a housing lawsuit case against the city of Clovis — said those programs obligate the hospital system to reinvest in Community Regional.

The lawsuit alleged that Community instead invested that funding in Clovis Community Hospital, “which serves a much wealthier, whiter, and healthier population, and far fewer Medi-Cal beneficiaries.”

Related Story: Fresno vs. Clovis Rivalry Over Hospital Care? The Critics Couldn’t Be ...

CRMC vs. Clovis Community

Since 2009, board members approved $815 million for capital projects at Clovis, compared to $224 million at CRMC. Among the Clovis renovations: a remodel of the hospital, including the expansion of the labor and delivery services.

Two five-story bed towers added 288 all-private beds. The lawsuit quoted an architect for the Cancer Institute on the Clovis campus saying, “the client wanted a sense of luxury but not opulence.”

The lawsuit also cites a lobby chandelier that the plaintiffs claim cost $1 million.

In 2009, Clovis had 109 beds. Community Health has said that its Clovis expansion came in response to 67% population growth in the city increase since 2000.

“On information and belief, a significant portion of the investment in the Clovis campus was funded by operating income generated at Fresno CRMC, including supplemental Medi-Cal funding,” the lawsuit states.

Community Health’s Trustees

Before and after the Clovis hospital expansion, the plaintiffs claim that Community Health’s board of trustees was influenced by members who were either land developers or bankers. The lawsuit states several trustees had close ties to Granville Homes, which owns land near Clovis Community.

“Granville Homes has been building in the city of Clovis since the ’90s, at least a decade before the events described in the Complaint that the Complaint’s author alleges to have taken place,” said Granville Homes president and CEO Darius Assemi in a statement to GV Wire.

“There are many reasons for building and living in the Clovis community including strong schools, low crime and close proximity to (Highway) 168.  A nearby medical school and hospital are great additions to the area, which each compliment what is, and was already, a fantastic community to build and grow.”

Disclosure: Assemi is the publisher of GV Wire and a board trustee of California Health Sciences University.

Assemi’s brother Farid Assemi sat on the Community Health board for more than a decade before leaving in 2023. The lawsuit claims that the board used Community Regional funding to expand Clovis Community’s footprint in a bid to elevate the value of undeveloped land near the hospital.

The lawsuit also claims without documentation that funding intended for CRMC went instead to California Health Sciences University.

CHSU President Flo Dunn did not return a request for comment from GV Wire.