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Tim Ward, Tulare County District Attorney, delivers a presentation to the board of the Tulare Local Healthcare District last week regarding the investigation into Tulare Regional Medical Center’s former management company.

published on May 11, 2018 - 9:35 AM
Written by Donald A. Promnitz

As Tulare Local Healthcare District fights an uphill battle to reopen Tulare Regional Medical Center this summer, the community is seeking answers to why Healthcare Conglomerate Associates ran the hospital the way it did and why the old Board of Directors would agree to a one-sided contract that took control out of their hands.

“We refer to that contract as the worst contract in the history of public hospitals — nobody has argued that that has read it,” said Kevin Northcraft, president of the current TLHCD Board of Directors.

The Management Services agreement, signed in 2014, barred TLHCD Board members from entering the premises of the hospital without prior approval and forbade any speech that criticized HCCA. It also included a $3 million per year management fee that would increase every year.

Under HCCA’s management, vendors stopped being paid and the hospital’s credit plummeted. This led to problems with the quality of care. Eventually the staff’s paychecks began to bounce shortly before TRMC went into bankruptcy.

 

Inside job

The reason for this style of management has now come under speculation by the people of Tulare, but one possible reason set forth by critics is that the crashing of the hospital was deliberate.

“There’s kind of two theories: either gross incompetence or a plan to fiscally destroy the hospital and pick it up under the contract provisions for a few pennies for the dollar to pay off the debt to HCCA,” Northcraft said. “I tend to lean on the side that there was a plan.”

“If you don’t pay the bills, then you can have an inflated sense of how well you’re doing and keep everyone at bay until you one day take it down as they did and say it’s crashed and burned,” said Tulare dentist Patricia Drilling, a member of the Citizens for Hospital Accountability group. “And that’s basically what they were trying to do.”

Drilling is the daughter of former Tulare mayor Tom Drilling, who passed away in 2017.

Citizens member Deanne Martin-Soares, a registered nurse and a director on the board from 2000 to 2008, is also convinced that their failed management was not an act of incompetence.

“I think it was deliberate,” she said. “When you look back on all these things, on appearance, they were making it seem like they had just worked miracles in this place and they had this big financial turnaround and did all these things all this time, but it was false,”

The positive financial returns, Martin-Soares elaborated, came from government monies and the cessation of payments to vendors.

 

Measure I

Placed on the ballot in 2016, Measure I was a proposed general obligation bond for $55 million to finish the stalled Tower One project. Citizens for Hospital Accountability and other opponents of the measure, however, said the proposal drew suspicion.

In 2005, an $85 million general obligation bond was approved to help in constructing the tower.

“They never revealed where the money was going,” Northcraft said.

In 2014, Harris Construction, the company contracted to build Tower One, settled a lawsuit $7.9 million for unpaid work. The old Board of Directors and HCCA’s leadership also allegedly failed to explain what had happened to the previous bond, on which State Sen. Jean Fuller (R-Bakersfield) requested an audit in January.

Another factor that raised eyebrows about the measure was that the $55 million asked for greatly exceeded what was believed necessary to finish the project, but that its proponents lacked a concrete answer for the need for this amount.

“The estimates were $25 million to $35 million to complete the tower. We’re talking about an additional $20 million and what was that going to be used for?” Drilling said. “The assumption was it was going to be used to pay the revenue bonds, that is, the roadblock for eventually owning the hospital.”

Measure I was defeated 66.77 percent opposed to 33.23 percent in favor.

 

Missing money

Beginning last summer, Tulare County District Attorney Tim Ward has been investigating HCCA. Since then, it has become the largest undertaking of its kind in the history of Tulare County.

“What started out as a team of one or two investigators has multiplied,” Ward said. “We actually now have two separate investigative teams working on this.”

The office has made trips to Inyo County, Los Angeles, Fresno San Diego, Orange County and Michigan. Numerous search warrants have also been served, primarily on financial institutions. Most recently, a search warrant was executed at Benzeevi’s home in Los Angeles in conjunction with the FBI.

Ward’s revelations at last Wednesday’s district board meeting, however, served to raise further questions. In his briefing, Ward said that the taxpayers of Tulare County had been overpaying for hospital bonds.

“There was a program that was specifically pertinent to this board and really to every single taxpayer in the district during this time,” Ward said. “This program, as it was designed and approved and instituted, was that the district qualified to receive federal funds to offset taxpayers and their burden of having to pay what is otherwise the interest on that bond note.”

Ward elaborated that beginning in February 2010, the district received biannual payments of approximately $800,000. The money was meant to flow through the district to the tax collector’s office to offset interest on the bond. From February 2015 through all of 2017, however, these funds did not reach their intended recipients. This amount added up to almost $4 million.

“We estimate that the taxpayers — the residents and businesses of the city — during those times, paid hundreds of thousands of dollars that they were not otherwise obligated to pay,” said Ward.

“I think I was somewhat aware of the federal money that was to go to pay the interest of the bonds, there was a question about that,” Northcraft said. I did not know the amount, so that was new information.”

 

Motivations

While there seems to be a consensus on the motivations of Dr. Benzeevi and HCCA’s leadership, the reason for the old board of directors’ compliance in the contract and management remain up for debate, along with why prominent members of the Tulare community supported the corporation.

“That’s the million-dollar question. That has been something that a lot of us have wrapped our brains up to,” Martin-Soares said. “Who really knows?”

Of all the members of the TLHCD Board of Directors, the one who appeared to benefit the most from HCCA’s management was Dr. Parmod Kumar. An outspoken supporter of HCCA, Dr. Kumar served on the board of directors for more than 20 years before he was recalled in 2017.

During HCCA’s tenure as the managing company for TRMC, Dr. Kumar was on the receiving end of a number of appointments, including his work as medical director for the Southern Inyo hospital. This job alone made Dr. Kumar $7,500 per two-hour visit, which he reportedly made two to three of each month. All the while, he made $600 a day, 30 days a month at TRMC.

Dr. Kumar has declined to comment.

“As far as we can tell, the motivation is greed by Dr. Kumar and Dr. Benzeevi — how they got some people with respect to go along with it is anyone’s guess,” Northcraft said. “I think that people scratch heads over that.”

 

The road back

With Dr. Benzeevi and HCCA no longer in charge, the new board of directors is working to get the hospital up and running again. Northcraft said it is their hope that TRMC will be operational again by June.

“There are a lot of obstacles to make that possible, but that is our goal,” he said. “We’ve got some obstacles that keep occurring, but we’ve got some good news and we also have some challenging news.”

Northcraft, however, remains optimistic, as his team has received heavy support from the Tulare community. Currently, the district is in talks with Community Medical Centers, one of the original contenders for the management contract before it was rewarded to HCCA.

For the Citizens for Hospital Accountability members, this represents a potential fresh start for TRMC and the district. It could also mean that the tower may finally be built.

“They have plans to modernize medical facilities, including ours,” Northcraft said. “And I think they have particular interest in a new emergency room and a new operating room, so the first two floors of the tower, so yeah, I think that’s in our timetable in the next several years.”

Martin-Soares is also hopeful about working with Community Medical Centers and believes that the public hospital can be restored for the people of Tulare.

“I think that if there’s going to be anyone that’s going to be able to do it, it’s going to be them,” she said. “I think there’s a lot of things that keep coming up that are just tough hurdles to overcome, but I have faith that we’re going to get this open.”


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