This article has been updated with information about the invoiced repaid with the $800,000 loan. See the section marked ‘UPDATE’ below.
The controversy over the Tulare Local Healthcare District’s (TLHCD) $800,000 loan hasn’t died down, if Wednesday’s regularly scheduled TLHCD Board Meeting is any indication.
At Wednesday’s meeting, Visalia attorney Michael Lampe presented new information on the loan, producing emails that further his contention that Dr. Parmod Kumar, a board member, did not truthfully represent the purpose of the loan.
Dr. Benny Benzeevi, CEO of Healthcare Conglomerate Associates (HCCA) the company that day-to-day management of TRMC has been contracted out to, appeared at this month’s meeting after being absent from the district’s regularly scheduled September meeting and its special October board meetings. He made a full-throated defense of HCCA’s stewardship of the hospital’s operations.
The $800,000 Emails
During the public comment section of the meeting, Lampe — who is currently the attorney in two lawsuits against the District — discussed new documents provided to him that further detailed the purpose of the District’s $800,000 loan.
Those documents came in the form of two emails. One, from Delbert Bryant, TRMC Controller & Compliance Officer, is dated July 18. He asks John Thomas, a loan officer with Bank of the Sierra:
“John, what is the good news on the loan application? We have been on this journey since May 12.”
An email from Thomas to Bryant in August informs Bryant that Bank of the Sierra is ready to proceed.
“[…] I have finally reached the point of being able to say we are ready to do the loan if you still want it,” Thomas writes. “This has become the most complex and difficult loan I have ever been involved with.”
Another, dated September 7, also from Bryant to Thomas, asks Thomas to immediately wire the funds to Cardinal Pharmaceuticals, and includes details for Cardinal’s bank account at Wells Fargo in San Francisco.
“Please make the wire today. THANKS,” Bryant requests.
Lampe used the emails to fortify his argument that the board either was in the dark, or deceived the public, in stating that the $800,000 loan was simply a line of credit with no preconceived purpose.
“The question I have for the board is, was the board aware that Delbert Bryant was attempting to negotiate an $800,000 loan for the district as early as May 12 of 2016? There’s another email from him dated September 7, which again is addressed to John Thomas, the subject matter is ‘Cardinal wire instructions’ — that’s the wire to Cardinal Pharmaceuticals that we’ve talked about and has been the subject of some press,” Lampe said.
“There’s an attachment to this email which is fascinating, the email’s dated September 7, and the attachment says Tulare Hospital District Past Due, 9-7-16.xlsx, that’s an Excel spreadsheet that the bank did not produce, we’ve not completed the deposition because I want to see that spreadsheet, but it raises some interesting questions, and that is: did the board know that the entire $800,000 was going to be sent to Cardinal Pharmaceuticals as early as September 7?”
Lampe continued by asking whether the purpose of the loan was known to the board.
“[…] was the board aware of the falsity of those statements when Dr. Kumar falsely represented at the September 1 Board Meeting that, ‘if that check is cut it will be approved by the board, it will come here’ — was the falsity of that statement known to the board at the time,” Lampe asked, “or the alternative, did the board actually meet at a later point in time in a non-agendized meeting to approve that loan to Cardinal Pharmaceuticals? These are questions that I would invite the board either collectively or individually to answer to the public.”
UPDATE: Loan Invoices
Before the publication of this article, the Voice filed a public records act request for any information relating to the expenditure of the $800,000 loan — specifically, what invoice(s) the loan was meant to pay.
A spreadsheet made available to the Voice on Thursday through this request appears to be the same spreadsheet sent by Bryant to Thomas, and outlines invoices to Cardinal that the district was in arrears on: it includes the amount owed, the invoice date, and the date each invoice was due.
The sheet starts out with $46,747.33 worth of invoices past due in November 2015, and that amount rose to an average of $150,276.22 in December of 2015 and January through April of 2016. The past due amounts fell to $29,793.91 in May, where the spreadsheet ends.
The spreadsheet is available for viewing below, and summarized data is available to the left.
Lampe’s statements came on the heels of a Moody’s upgrade, which saw the district keep its “Baa3” bond rating but revised the outlook of the bonds to “stable.”
“Affirmation of the Baa3 and removal of the negative outlook reflect continued tax base growth emerging from the recession with assessed valuation exceeding a pre recession peak for the first time in fiscal 2017; improved operating performance beginning in fiscal 2014, driven by a new management team; and identified funding opportunities to complete construction on a planned addition to the medical center following voter rejection of a proposed GO bond in August of this year,” the press release from Moody’s states.
Novia’s Past Due Settlement
Lampe’s questions also call attention to documents recently received by the Voice, which detail a settlement between Novia Strategies — a healthcare consulting firm — and the district over past due payments.
“As you know, on or about June 10, 2015, Mr. Germany executed the Agreement on behalf and Novia fully performed the contracted services from June 2015 through February 2016. TRMC, however, failed to timely and fully pay Novia for services rendered, nor did TRMC reimburse Novia for expenses advanced to TRMC per the terms of the Agreement,” the letter reads in part.
“Despite assertions in Mr. Bryant’s email concerning inability to pay Novia, TRMC’s website currently touts the hospital’s financial turn-around, including returning TRMC to profitability, significantly increasing days of cash on hand, and providing significant raises to TRMC workers. In light of the foregoing, Novia believes that TRMC has no legally cognizable defense to continue to withhold or otherwise delay the significantly overdue amounts payable to Novia.”
The email from Novia’s Corporate Counsel, Dan Stein, stated it rejected an offer proposed by the district to settle the debt for 50% — approximately $22,250.45 — and instead counter-offered to settle for $35,000.00.
Bryant accepted the settlement, stating in a reply:
“We will accept the offer of $35,000, conditioned upon execution of a settlement agreement which includes a full release of claims.”
“The real question that should be asked is why are some members of the community trying to viciously and falsely discredit the greatest success Tulare Regional Medical Center has had in its history,” a statement from the hospital to the Voice read.
“Anybody who’s anybody knows that cash flow and profit are two different things. Any smart business will do what it can to maximize cash flow. The profits of the hospital for the last three years are indisputable. Two audits have already confirmed this and a third one is on the way. Four total credit rating agency upgrades (FITCH Ratings and Moody’s) specifically mention HCCA as being the cause of the dramatic turnaround and further confirmed it.”
“As for Michael Lampe and his political stunt, all that did was cost taxpayers more money for lawsuits without merit, as evidenced by individuals being named and then removed from the lawsuits. This is exactly the kind of baloney that these people have done before and have obviously not learned their lesson. They are repeating the old ways, which in the past have brought the hospital nothing but failure, disgrace and shame.”
Wednesday’s meeting also produced another surprise: fliers that were placed on seats at the meeting charging TLHCD Board Chairman/President Sherrie Bell’s opponent, Kevin Northcraft, with falsely representing himself as a “neurophysiologist” and “neurologist.”
In red handwriting at the top, the flier states “This is not transparency!” — the flier is available below.
Northcraft’s supporters claimed that the fliers were placed on every seat before the meeting began.
“When we got here early today, these were on every seat, Sherrie. To conduct a campaign like this — it’s not right. This was on every seat, regarding Kevin Northcraft, of a locked room. How did they get in here? It had to have been someone with access — not the public,” Jennifer Burcham said of the fliers, during the public comment section of the meeting.
“And this is unacceptable tactics on behalf of whoever did this; and, since it’s your opposition, I’m assuming someone that knows you. I’m not necessarily blaming you, but this is disrespectful, and this is Moreno Valley tactics, and we don’t want that here in Tulare.”
Research by the Voice reveals that the flier was based on Northcraft’s Trustoria.com webpage.
Trustoria bills itself as “the largest open collection of professional US profiles in the world,” but unlike LinkedIn, a similar service, Trustoria’s profiles are not created by their subjects, but instead, they appear to be created by automated processes. Trustoria then charges users to view these computer-generated profiles.
Reviews of Trustoria’s parent company, Radaris, reveal that information gathered by the company can be inaccurate, which Northcraft also charges:
“The info apparently comes from an old listing when I was a part time massage practitioner in San Diego, part of several fun jobs I’ve tried in retirement. It lists a category, not that I was all those occupations; a huge misrepresentation of the truth,” Northcraft said in a statement to the Voice. “It has nothing to do with my candidacy and smacks of desperation by the other side, that is stooping to Moreno Valley, dirty politics style. They are trying to bring machine politics, underhanded approaches to Tulare. Our citizens are too smart to be tricked by those approaches.”
In Defense of The Status Quo
Bell took part of the meeting to defend her time and work on the board.
“The ten years from 2003 to HCCA coming on board, we lost over $5m in operations. It was never going to happen. Not only that, they hired an architect that was unqualified, it went through the bid process, but we didn’t narrow our bid properly, and so the construction company had never built a public hospital, so we had a tower that was destined to failure,” Bell said.
“So when I walked in, it was delaminated cement and pretty much construction had stalled. And over $69m had been spent of the bond. So let’s also talk about the past. In 2008 we had the OIG, which is the Office of the Inspector General, and the FBI show up at our hospital in early 2008. We had signed the board had signed illegal contracts with physicians, the estimated fine was going to be over $24m. Because it would close the hospital, they agreed to fine us $2.4m instead.
“We had no money, and so we were not investing into our hospital. That is the past. Personally — let’s not go back to that.”
Sharing a common theme, Benzeevi also used his speaking time to defend HCCA’s work at TRMC.
“What’s astounding to me in all of this commotion is that with elections going on, I’ve yet to meet with any of the candidates. I would think that it would be a great interest to try and sit down and talk and see what’s actually going on in the hospital, especially somebody who’s running for office to sit on this board,” Benzeevi said, extending an invitation for the candidates to meet with him. “This is not a game. This is serious business.”
Benzeevi walked the audience through TRMC’s past as an independently managed organization, stating that the HCCA stepped up to the plate when few would — through the previously-mentioned OIG investigation, the tower construction failure, profit losses, and staff turnover.
“How many of you would have walked into a situation like this?” Benzeevi asked the crowd.
Benzeevi wrapped up his speech with an announcement that the district now had the ability to complete the tower without an additional bond or additional taxpayer dollars.
“It’s easy to call people corrupt, it’s easy to call people names, it’s easy to undermine any progress that’s being made,” Benzeevi said. “It’s much harder to come from this and get to a place where we can even be in a position where we have enough position to be calling people names and to throw insults at people.”
Source documents mentioned in the article are available below, as is audio of the meeting.