Already locked in a scandalous and expensive legal battle regarding the sudden and unannounced replacement of the medical staff at Tulare Regional Medical Center, directors of the Tulare Local Health Care District (TLHCD) last week found themselves the target of a damning report by the Tulare County Grand Jury.
Entitled Tower of Shame, the report accuses the District of serious and perhaps willful misconduct and incompetence in construction of the vastly over-budget, years-late Phase I Tower Project. Primarily, the report finds that the TLHCD Board of Directors withheld critical information from its Bond Oversight Committee about how they spent $85 million in taxpayer-approved bonds beginning in 2007. The Board, the report said, appears to have “routinely circumvented” laws requiring disclosure to the public as well, failing to inform constituents where their money was being spent.
Also among the findings listed in the report, which the Grand Jury took the unusual step of releasing months ahead its annual report, was the accusation the TLHCD Board “intentionally or unintentionally” misrepresented the District’s ability to cover the gap between the $85 million in bonds it requested from the public and “the total project cost estimated to be well in excess of $100 million.” The Board, the Grand Jury found, appeared to justify its wishful thinking with unsupported estimates of the District’s reserves and unrealistic projections of its future earnings.
Hospital Still Tight-Lipped
Now that the Grand Jury has released its report, the TLHCD Board has 90 days to file an official response. What they might say is anyone’s guess, as the Board and its representatives have chosen to continue their silence despite a written request from The Valley Voice for an interview with TLHCD Board Chairwoman Sherrie Bell and Dr. “Benny” Benzeevi, CEO for Health Care Conglomerate Associates (HCCA), which operates TRMC and is tasked with completing the Tower Project.
The Grand Jury, too, ran into resistance during the course of its seven-month investigation into the TLHCD Board’s conduct.
“We worked hard on this one,” said Grand Jury Foreman Chuck White. “It was a fight all the way.”
White said the District’s recalcitrance with the Bond Oversight Committee and the public continued during its dealings with the Grand Jury, and their representatives presented a difficult attitude.
“I felt that they were not forthcoming,” he said, “like they were above everybody.”
Careful, Thorough Investigation
The Grand Jury’s investigation included detailed interviews and extensive review of more than a decade’s worth of records.
“We interviewed at least a half dozen people. We interviewed several members of the board of the Tulare Local Health Care District and several members of the Bond Oversight Committee,” said Grand Juror John Hobbs, who headed the committee that investigated TLHCD. “Those interviews plus, I have to say, what the public doesn’t see is all the research that has to be done.”
The District did not give up its archive easily.
“We ended up subpoenaing a lot of documents from their attorneys in Los Angeles,” said Hobbs. “Those documents lie at the heart of our investigation. We gleaned a lot of things from them, not the least of which were the number of change orders … that increased the budget by $17.5 million.”
More than 700 change orders were issued during early work on the Tower Project. Later, 9.29% of the $85 million in bond funding would be spent in a court-ordered settlement with the construction firm originally contracted to build the expansion. All this, the Grand Jury found, happened against a background of tumultuous turnover at the highest levels of hospital administration, distracting the Board from the Tower Project, leading to further delays and added costs.
Thankfully, a quirk of fate aided the investigation immensely.
“I was very lucky. One of the jury members spent a career working for the insurance industry looking at hospital construction documents,” Hobbs said. “That was invaluable. He spent hours and hours pouring over those documents to come up with those recommendations. No one can fault us for not looking into this carefully and thoroughly.”
Disclosure Without Delay
Concluding the Grand Jury’s report are three “recommendations” that must be addressed in the Board’s response. The Grand Jury recommends members of the Board undergo training in governmental transparency and the disclosure requirements related to spending public funds; full release “without delay” to the public of how the $85 million in bond funding was spent during the period from September of 2007 to December 2015; and disbanding and replacing the Bond Oversight Committee, giving it all the necessary tools to conduct true oversight.
“What the Grand Jury would like to see, and what I think would be the only appropriate response, is how they spent the $85 million in bond money,” said Hobbs. “It’s been 10 years and they have not provided a full disclosure. It’s been a full decade.”
$50 Million Missing
While the Grand Jury does not disclose specific details of its work, its findings closely mirror those of Alberto Aguilar. The retired postal worker, Tulare resident and former Tulare County grand juror became frustrated while trying to do his job as a member of the Bond Oversight Committee and began digging for details.
“What I’m looking for basically is transparency and accountability,” Aguilar said. “I’ve been told by the attorney for the hospital that information will not be provided to me as a member of the Bond Committee. I want to know where the money went.”
Aguilar started with the limited audits that were available, comparing the District’s fiscal year reports with the reports it issued on the bond funds. He says he found huge discrepancies.
“There’s approximately $50 million that’s not accounted for,” he said.
Projects Out of Scope
When he started to review the flood of contracts, invoices and reports on the expansion project he received in response to his demands for data, Aguilar said he also found bond funds were spent inappropriately.
“They thought they were going to inundate me,” he said. “Some of the information was so small I had to use a magnifying glass.”
Aguilar says documents the District supplied him show $39,000 in bond money was spent to move a modular building from Tulare to Woodville, where the District operated a clinic. A construction trailer was renovated at a cost of $100,000 in bond funds. Another $100,000 from the bond issue was spent on the construction of a new marquee. All these projects, Aguilar said, fall outside the scope of the Phase 1 Tower Project.
All of Aguilar’s findings are carefully documented, and he had help compiling them from former TRMC CEO Bob Montion.
“I asked the former CEO Bob Montion, who has since passed away, to help us,” Aguilar said. “He compiled a report. I told him he needed exhibits so people won’t think you’re making this up.”
Why $55 Million?
Aguilar also wants to know why the District is preparing to ask voters for another bond issue, one much larger than the amount needed to finish the tower.
“They are going to be putting another bond before us,” he said. “Last March, there was a motion to put a $55 million parcel tax. It was supported by our city mayor.”
That $55 million request raised a red flag for Aguilar, who wants to know why the amount far exceeds the estimate the District has given for completing Phase 1.
“Their own auditor estimates only $20 million is needed to complete all construction,” he said.
Nothing but Frustration
As Aguilar searched for answers, he found nothing but frustration.
“When I started seeing how money was being mismanaged and misused, I went to the people who spent it, especially the CEO (Benzeevi),” he said. “When he wouldn’t address my concerns, I took it to the Committee and the Board.”
Then in February, Aguilar received a shocking message from his radio. The Bond Oversight Committee, he was told while listening to TLHCD Chair Bell being interviewed, had been dissolved. He decided to confront her in person at a Board meeting.
“At Wednesday’s meeting, there was a lot of commotion going on. I asked Sherrie Bell if I could speak to her. I wanted to get information from the horse’s mouth,” he said, recalling the questions he asked her. “’You indicated on KTIP radio the Bond Committee had been dissolved. Why wasn’t I informed? Why haven’t we been allowed to take a look at the financial data?’”
Aguilar said Bell told him the BOC hadn’t been dissolved, but that it was no longer meeting. The Board, Aguilar said, is responsible for arranging BOC meetings and providing the data they are to review; it simply stopped scheduling meetings, he said.
Final Frustration
In his efforts to find a way to access real numbers on the Tower Project, Aguilar wrote a long letter to State Assemblyman Devon Mathis (R-26), asking him to initiate an audit through the state’s Joint Legislative Audit Committee. To his shock, Mathis refused. The shock became anger when he leaned why.
“He (Mathis) said he won’t do it because he owes Dr. Benzeevi a favor,” Aguilar said. “Apparently, he’s (Benzeevi) helping him (Mathis) with a hospital in the Sierra.”
According to Mathis’ Form 460, HCCA donated $3,500 to “Mathis for Assembly, 2016” on 31 December, 2015.
Benzeevi and HCCA recently signed an agreement with the Southern Inyo Hospital District to take over management of that district’s only hospital, a small facility that had recently closed. There, a newly-elected board in office for just four days agreed to a 5-year contract with HCCA. HCCA will apparently provide $2.5 to $3.5 million in loans to SIHD, as well as paying for the struggling district’s Chapter 9 bankruptcy, according to press reports.
Both sides in that agreement had 30 days to back out; however, that period elapsed before the release of the Grand Jury’s report. Dick Fedchenko, chair of the SIHD board, said he was not aware of the report.
“At this point there’s nothing I can say about that as I haven’t read the report,” he said. He was, however, briefed on the replacement of TRMC’s medical staff and had questions for Benzeevi.
“I’ve been made aware of the situation with the medical staff, but not in any great detail,” Fedchenko said. “I’ve asked Dr. Benzeevi for some time on his next trip so we can sit down and discuss it so I can see his point of view.”
Assemblyman Mathis has not responded to repeated requests for an interview.
”What Went on in ’07?”
Former TLHCD board member Deanne Martin-Soares served on the Board when the bond was passed by voters.
“I was there in the planning phase in ’05,” she said. “Then it got all screwy.”
The first of the bond money was spent in 2007, and by the time Martin-Soares left the Board she hadn’t seen a single accounting of the project.
“For a year and half, I never saw any financials,” she said. “My big question is what went on in ’07? The revenue bonds were resold, and there could have been more revenue. That’s why I think this bond is for $55 million.”
District reports, Martin-Soares said, show the District has spent a lot more money than it raised.
“If you look at the audited financials of 2015, they are showing $130 million put toward the tower,” she said. “More than $85 million was spent.”
Since the District will not release any data, no one knows for sure what was spent and where it came from. The reason the District and HCCA won’t talk remains a mystery.
Citizens Get Priority
It could have remained a mystery much longer, perhaps forever, if it weren’t for citizen complaints to the Grand Jury, said Foreman White. Grand juries in California are required by law to act swiftly when they receive a credible complaint from a citizen.
“We look into it, and we look into it right away,” White said. “That should be distinctly different in your mind’s eye. The Grand Jury can initiate an investigation, but it doesn’t carry the same weight.”
There was also some personal satisfaction in this case, White and Juror Hobbs agreed.
“We’re all excited we were able to accomplish our mission,” White said.
“That’s in no small part due to the print media,” Hobbs said. “You could have ignored it (the Grand Jury report), but you didn’t. I held my breath.”
While the Grand Jury’s term is limited, citizens and media have a responsibility that doesn’t end, White said.
“Grand juries come and grand juries go. Our term of office will expire on June 30th. We will have no power,” he said. “You guys will continue. I hope you guys stay on it and keep asking the question, “‘Why not?’”