Work started on Palomar Pomerado Medical Center West in Escondido in December 2007, with Redwood City-based Rudolph & Sletten on board as construction manager. CO Architects of Los Angeles is architect of record for the project, with Anshen + Allen of San Francisco providing interior design and furnishing services.

But months later, owner Palomar Pomerado Health (PPH) fired Rudolph & Sletton in an effort to shave $50 million off the project�s cost, which had risen from an initial estimate of $531 million to its current $917 million. DPR Construction, San Diego office, was brought in to complete the development.

Then, in December, PPH filed a lawsuit against Rudolph & Sletten, alleging breach of contract, fraud and negligent representation.

Asked by phone about the allegations, Martin Sisemore, Rudolph and Sletten president and CEO, says he couldn�t comment on any of the specifics of the lawsuit.

North San Diego County voters in 2004 approved a $496 million bond measure � the largest local healthcare bond issue in state history � to help pay for the project. The balance of the cost will be paid for by the issuance of revenue bonds and money raised through philanthropic campaigns.

Despite the dispute, hospital officials say construction is proceeding smoothly, with more than 50% of the work finished and a completion date set for early to mid-2012.

That�s good news, given that the existing Escondido facility, the 50-plus-year-old Palomar Medical Center, doesn�t meet California�s strict seismic safety codes.

According to PPH spokesman Andy Hoang, hospital officials saw the need to retrofit Palomar Medical as an opportunity to gain a state-of-the-art hospital that would last at least another half-century.

�When we started down this path, we asked ourselves: Do we simply retrofit the existing facility or do we use public dollars to start from scratch?� says Hoang.

What followed were plans for an 11-story, 360-bed facility, with the capacity to expand to 600 beds to accommodate future demand.

The facility will embrace the latest principles gleaned from the Center for Health Design, a Concord-based organization that researches and advocates improvements in how healthcare facilities are designed and run.