Adventist Health reaps millions in Camp Fire compensation but closes Paradise’s only hospital

That settlement was on top of at least $128 million the company received from its insurance company, according to public tax audits.

The company’s decision not to rebuild is just one example of the role its aggressive pursuit of compensation has played in the trust saga. The company’s lawyers won rights that weren’t afforded to average victims, and its claim tied up a significant chunk of the $13.5 billion awarded to businesses and individual victims.

The fund’s administrators and victims’ attorneys say its tactics pushed other victims to the end of the line for compensation.

Adventist told town leaders in mid-January they would be investing $2 million — a fraction of the settlement money they’ve received — into their Paradise clinic. Some there said the company should be reinvesting far more.

“I don't know what settlement Adventist Health got with the Fire Victims Trust and their own insurance,” Steve Crowder, a Paradise City Council member, told The Press Democrat during a February visit to the town about 165 miles from Santa Rosa.

“But all of that money was generated in Paradise. And even though there's no legal obligation, it’s my feeling there's a moral obligation to reinvest that here.”

If Manson could see the hospital’s future as the Camp Fire reduced much of the town to ashes, firefighters might have chosen differently that vicious November day, he said.

“If I had any indication or knowledge it wasn’t going to be open, we would’ve moved on,” he said.

A vital resource for rural communities

The fire burned almost 19,000 structures and killed 85 people. It caused an estimated $8.47 billion in insured losses. It devastated Paradise and burned whole sections of neighboring communities.

Today, Paradise remains a town on the mend.

Though far from the 27,000 who used to live there, its current population of 9,500 has more than doubled since the fire’s immediate aftermath in 2019.

Construction equipment is everywhere, and driving around town requires patient waits for road0work on many streets. While charred stumps and blackened earth abound, and business signs still stand in front of empty lots, green growth and homes are filling in.

The fire opened up broad vistas of the valley floor.

“The beauty is different today,” former Mayor Jody Jones said from the living room of her rebuilt home. “There were huge trees everywhere before. Not now, but you can see the sunset.”

Before the fires, Adventist accounted for 68% of the town’s workforce, according to company President Chris Champlin.

Adventist laid off more than 1,300 employees after the fire, with executives stating early on it was unlikely the facility could reopen before 2020 at the earliest.

The hospital was critical, too, for a town drawing retirees from California’s coastal and flatland cities attracted to the tight-knit foothill community where land and homes were still cheaper.

Today, Adventist operates a clinic with walk-in urgent care services in town, which it plans to expand with the $2 million infusion over the next 18 to 24 months.

But, the maternity ward, a cancer center, and, most pressingly, the emergency room, are no longer available to residents of “the ridge,” as locals term the once-forested area that includes Paradise and such nearby unincorporated communities as Magalia, which is home to roughly 9,000 people and growing.

“People say they won’t move back because there is no health care,” Jones said.

Numbers don’t add up

But for Adventist Health, the numbers don’t add up, Champlin said.

“We cannot rebuild that hospital,” he told The Press Democrat. “There's just not enough residents out there to support that facility.”

Across the country, providers are drawing back from rural health care, a crisis that has only intensified.

Even before the Camp Fire, amid declining inpatient admissions, the company was weighing downsizing the hospital, Champlin said. Still, the facility was profitable. Adventist’s claim with the trust projected a lost profit of $16 million between 2018 and 2019.

In March 2020, Adventist publicly announced it would conduct a feasibility study about whether the town could still support a hospital, but never released the results. Crowder said town officials were told the report found Paradise could support such a facility, if a smaller one.

Adventist is not abandoning the community, Champlin said. Since the fire, the company has donated hundreds of thousands of dollars to local organizations and agencies.

"What the community needs is urgent and emergent care,” something Champlin said the company is committed to restoring in Paradise in keeping with the demand.

But, Adventist’s hot and cold response so far to the town’s efforts to at least bring back an emergency department have left local leaders unsure if they can rely on that promise.

In the months after the fire, rebuilding the emergency room became a chief concern for Jones and other town leaders.

Construction crews, cleanup teams and other workers were arriving in the ruined town by the thousands and engaging in dangerous labor. Schools came back into session.

All of a sudden, “my grandson is playing on the football team, and there’s no place to take somebody who gets hurt up here,” Jones said.

The lack of emergency care has ripple effects, too, regularly taking firefighters out of the area for as long as an hour when they’re required to ride along with ambulances down to Chico.

The town’s socioeconomic status only heightened concerns. Pre-fire, nearly half of Paradise residents were 65 or older, and one-fifth had disabilities.

The median household income was $49,270, more than $20,000 below the statewide average at the time, and according to Adventist, more than 80% of patients seen at Feather River hospital before it burned had Medi-Cal or Medicare coverage.

These factors combine to complicate many residents' ability to travel farther distances and spend more money for health care.

In addition, a 2019 study found that rural hospital closures in California led to increased mortality rates.

State lawmakers who represent the area jumped on such concerns. They were joined, Jones — Crowder and other local leaders thought — by Adventist executives themselves.

“Health care and the well-being physically of the citizens was absolutely paramount,” said then-Sen. Jim Nielsen, a Red Bluff Republican whose district includes Paradise.

“We could not be hauling people down to Chico. We needed a facility period. That’s what we needed.”

In January 2019, less than three months after the fire, Nielsen introduced a Senate bill to spur rapid restoration of an emergency room in Paradise.

Existing state laws required an emergency room be paired with a broader hospital facility. Nielsen’s bill created a carve out for Paradise, allowing Adventist to build a free-standing emergency room where patients could be stabilized before transport to hospitals in the valley.

To exercise the exemption, the company would have to submit plans to the state for construction of a complete new hospital within six years.

Adventist backed the measure.

In a legislative analysis, Capitol staff wrote the health care operator estimated they could open a free-standing ER within “a few months.” Nielsen, now retired, and Assemblymember James Gallagher, R-Yuba City, both told The Press Democrat that company executives were involved in drafting the legislation.

“They were very engaged with it,” said Gallagher, now the minority party leader in the state assembly, in an interview with The Press Democrat.

“I feel like they made a commitment to come back, that they were committed to the community that they were going to do everything they could to rebuild the hospital,” he said.

By October 2019, Gov. Gavin Newsom had signed the bill into law after it passed through the Legislature without a single no vote in either chamber.

“All these different elements (came) together with such a singular resolve and commitment,” Nielsen said. “And you do not often have that in government even in emergency situations.”

When the bill passed, Nielsen and Gallagher attended an event in Paradise. Adventist executives were present when Nielsen told the town the emergency room would be rebuilt within a year, recalled Crowder, the city councilman.

None of them contradicted the senator.

Months and then years passed without action from Adventist. Crowder said he could never get a straight answer from company officials on what was happening.

The lawmakers “worked really hard to get that through, and then Adventist did nothing with it,” Jones said.

Champlin, who joined the company in 2021, said that while the legislation was a step in the right direction, it was not sufficient to overcome all the bureaucratic and regulatory hurdles to a free-standing emergency room in California.

Though the entire Legislature and governor backed the idea three years ago, Champlin said that today the company would need “a tremendous amount of coordination with multiple government agencies,” to bring the project to bear.

But there’s little indication the company has tried. Asked if Adventist had pursued agency approvals for the emergency room project after the bill passed, Champlin said the company was focused on the immediate aftermath of the fire.

“It wasn't until recently,” he said, that “we started really looking at what we're going to do and that we've started to have these conversations.”

While Adventist remains interested in a free-standing emergency room, there was no clear timeline yet to pursue it, he said.

Crowder said he feels Adventist has strung him, and the community he serves, along.

“Personally, I made commitments to people, based on what I thought was going to happen,” he said. “Especially the older people … you come back to Paradise, we're going to at least have an emergency room for you.”

Among those Crowder made that promise to were his neighbors, Charles, 81, and Janie Dee, 78. The Dees moved to Paradise in 1999, when, making the climb up from the valley floor for the first time they saw a Welcome to Paradise sign.

“May it be all the name implies,” the slogan read.

“I knew this was the place,” Charles Dee recalled. The hospital played a role in their decision, as they sought a good community to grow old in.

“We felt pretty safe at that time,” he said, “not so much today.”

The day of the Camp Fire, the Dees fled back down the hill after watching the flames race toward their ranch style home. They left without time to save anything but their vehicles, unsure if they would ever return.

In the years that followed, the Dees purchased a condominium outside Palm Springs and planned to stay there permanently. But the desert was too hot, and they missed the sense of community in Paradise.

When their son bought a lot across the street, the Dees decided it was time to move back to the ridge, comforted by the thought that Adventist would grow its presence again.

Now, they worry about what they’ll do in a medical emergency.

“There’s a certain amount of unease there,” he said.

Aggressive in court, if not in Paradise

As people like the Dees weighed the choice to move home, Adventist’s lawyers were at work in a federal bankruptcy court in San Francisco, acting in ways victims’ representatives say set the company’s interests at odds with those of individual fire victims.

The same month Nielsen introduced his hospital bill, PG&E declared bankruptcy, setting off an intense struggle among shareholders, bondholders, insurers and other creditors vying for compensation.

It was a struggle that left fire victims with the short end of the stick — a $13.5 billion trust, half in cash and half in ailing PG&E stock, that was unlikely to make the 70,000 claimants whole.

Adventist and a handful of businesses, like Comcast and AT&T, and agencies, including the Paradise Unified School District and the Paradise Irrigation District, were lumped into the trust with people seeking reparations for homes, small businesses and lives lost.

But Adventist stood out from the pack both in the size of its claim and its doggedness in court, drawing sharp critiques from the Fire Victim Trust and lawyers representing individual fire victims.

“The sense that a lot of us got from how Adventist conducted themselves is they were looking to maximize their revenue,” said Gerald Singleton, a San Diego lawyer who represents hundreds of fire victims.

“They were not thinking about the fact that this is a bankruptcy, so it’s a limited fund.”

Victims’ lawyers called the hospital’s initial roughly $1 billion claim, half in punitive damages, “grossly overinflated” in court filings and said, if successful, it “would take an enormous amount of money from the wildfire victims.”

Unlike Adventist, most fire survivors lacked adequate insurance. A 2019 survey found that 60% of Camp Fire victims did not have enough to cover the cost of repairing or rebuilding their homes.

Almost a third had no insurance at all. In 2018, Santa Rosa’s then-Vice Mayor Chris Rogers testified at a state legislative committee hearing that two-thirds of city residents who lost their homes were underinsured by more than $300,000.

In bankruptcy court, Adventist argued it made every attempt to pursue remedies through its insurance. But the trust stated in court filings that the company “stonewalled” its attempts to verify these efforts.

The protracted legal battle slowed down the Fire Victim Trust’s ability to pay out, according to the fund’s trustee.

Though the trust finally settled Adventist’s claim, the money will go into the broader health system’s general fund, to be invested where the company thinks it will be most effective.

“The funds … would not be specific to Paradise,” Champlin said.

Crowder has asked Adventist to announce the news that the hospital won’t reopen to the community themselves.

“We wanted them to tell our citizens what was going on because every time we tell them something it doesn’t happen,“ he said.

The company will soon host town hall meetings in Paradise, Champlin said.

A choice to return and rebuild

Adventist’s aggressive legal tactics stand in sharp contrast to many fire victims' experience navigating what is a burdensome and Byzantine judicial process for most.

For Magalia resident Joan Coffin, the task of inventorying all she lost the day her home burned was too traumatizing. Without a lawyer she put in only a claim for “pain and suffering” to the Fire Victim Trust.

She lived pretty frugally and knew she’d be able to manage.

“I didn’t want to take more from the trust than I needed,” Coffin said. “Any money they can give me won’t make me whole.”

When Coffin was looking for an affordable place to retire, the nearby hospital was one of the reasons she chose Magalia, just north of Paradise.

Just 20 months after she arrived, the fire swept across the ridge. After watching the cul-de-sac below her home burn, she made a slow and treacherous escape in a caravan along a road that was burning on all sides.

It was a long road back, one that included bouncing between motels and a local church parking lot and almost two years living in a 17-foot travel trailer with her son and daughter-in-law. Finally, though, they were able to rebuild — a blue 1,800-square-foot manufactured home, one of the only ones erected on her still mostly empty block.

The hospital’s noncommittal stance on rebuilding in Paradise is a source of frustration to Coffin, who along with others in the community has been vocal about the need for restored health services on the ridge.

The issue took on a personal urgency in October 2021 when Coffin suffered a mild stroke. She was treated in Chico and recovered, but “it would have been a lot better to have had at least an ER to go to,” she said.

Adventist’s presence and answers at recent community meetings feel more like “lip service” at this point, she said.

“I think they never intended to rebuild,” Coffin told The Press Democrat.

As for the settlement Adventist gained from the trust, “I think they’re going to use the money in other markets, and it’s a shame … I don’t think they’re being honest. They’re stringing people along.”

The fire left its mark on Coffin.

In the aftermath, a trip to Michaels, the arts and crafts chain store, in Chico, ended in a panic attack. The decorations on display reminded her of the Christmas decorations and other trinkets she’d collected since her son was little now gone forever. Even now, she’ll be reminded from time to time of all she lost when she reaches instinctively for something she no longer has.

But Coffin is committed to staying.

“We chose this area for a reason … We were just starting to learn the community,” she said. “It’s a perfect opportunity to be there and help rebuild.”

Update: This story has been updated to remove a sentence stating a ‘Welcome to Paradise’ sign had not been replaced. Last year, the town erected a new version of the sign.

You can reach Staff Writer Andrew Graham at 707-526-8667 or andrew.graham@pressdemocrat.com. On Twitter @AndrewGraham8

You can reach “In Your Corner” Columnist Marisa Endicott at 707-521-5470 or marisa.endicott@pressdemocrat.com. On Twitter @InYourCornerTPD and Facebook @InYourCornerTPD.