Tulare Hospital In Arrears, HCCA Claims Breach of Contract

See also: an interactive timeline, “Tulare Regional Medical Center: A Past Due Timeline”

The Tulare Local Healthcare District is in breach of its obligations to Healthcare Conglomerate Associates (HCCA), the company has claimed in a recent letter, including upwards of $8 million in money owed to the hospital management company.

HCCA is putting the district on notice: if it doesn’t pony up at least $8,176,749.25 to the company within 10 days, the district will be in default of the Management Services Agreement, the contract which prior board members signed with the company.

If the district is in default, that could trigger the agreement’s massive break-up fee, which is at least $8.4 million by itself.

At the same time, Southern California Edison claims that the hospital is in breach of its financial obligations for electric service, and could shut off electric service to the hospital’s tower, potentially impacting construction efforts.

Marshall Grossman, the attorney representing HCCA and its CEO, Dr. Benny Benzeevi, states that coughing up the cash may not be enough to get them out of the woods.

That’s because the company is repeating its claims in a prior letter that statements by Kevin Northcraft and Mike Jamaica have caused an impediment to HCCA’s day-to-day operations at the hospital.

“Certain actions resulting in damage and liability to HCCA are not capable of being cured […] If you consider otherwise, please so state and explain how they may be cured in reply to this letter.”

Broke down into specific categories, the company claims the district owes them:

  • $5,532,047.79 for “expenses and charges incurred in connection with the Leased Employees” since July 31, 2015,
  • $2,118,634.60 in funding for operating and non-operating expenses since December 21, 2016,
  • $526,066.86 in management fee payments since August 1, 2017,
  • Unspecified amounts in “monthly expenses” incurred by the hospital management firm “on behalf of the District” since August 31, 2017.

The letter doesn’t make clear whether the $5.5m amount includes any amounts that HCCA may have set aside towards the possible purchase of the hospital, a practice authorized under the hospital’s “option agreement.” Any purchase would have to be approved by voters of the district.

Northcraft, elected chairman of the board by Michael Jamaica and Senovia Gutierrez, states it’s the first he’s heard of any issues.

“I haven’t received a phone call, text, email, in-person, anything from HCCA,” Northcraft said. “Except their attorney, arguing that democracy doesn’t exist for our district.”

Requests for comment from Benzeevi were not returned by publication time. When a response is received, this article will be updated.

He also stated that HCCA should be looking inward, not to the district, for money. That’s because the Management Services Agreement states that the district is to transfer money in its “Gross Revenue Fund” to the company daily.

“Every dime we have is turned over to HCCA every day,” Northcraft said. “If they’re not generating revenue and they have total control of the hospital, then that’s on them, not us.”

Funds from District bank accounts are transferred to bank accounts controlled by HCCA daily under the terms of the MSA.

But the hospital management firm isn’t the only one looking for cash: Southern California Edison has stated that the hospital hasn’t paid its bills for electricity usage at the hospital’s beleaguered tower construction project.

“Southern California Edison has been working with representatives from Tulare District Hospital for months to ensure it can continue with construction of a vacant tower.  After many conversations, Tulare District Hospital has refused to pay for electricity usage to the tower. As it does for all similarly situated customers, Southern California Edison on Aug. 29 served a five-business day utility shut-off notice to Tulare District Hospital,” a statement from the electric utility read.

Any move to cut off service to the tower wouldn’t affect those at the main hospital, the statement stressed.

“Should Tulare District Hospital refuse to pay, the resulting shut off will affect only service to the vacant tower.  The medical care of patients will not be impacted.  SCE never takes lightly the decision to disconnect any customer.  However, SCE has determined that Tulare District Hospital’s refusal to assume responsibility for its utility account and electrical service to the tower is grounds for disconnection.  SCE officials will continue to work with Tulare District Hospital’s executives to try and resolve this issue.  So far, a satisfactory resolution has not been reached,” the statement continued.

Northcraft told the Voice he hasn’t been put in the loop on any of those talks.

“A lot of people, a lot of employees are at risk due to HCCA’s incompetence,” Northcraft said. “We’re getting no information whatsoever, so any problems are at the foot of HCCA.”

In Depth: Tulare Regional Medical Center

26 thoughts on “Tulare Hospital In Arrears, HCCA Claims Breach of Contract

  1. HCCA hasn’t been paying the bills or providing upkeep since their inception. Look at the sky high payables. Wasn’t it recent that Benzeevi was bragging about record profits.

    On top of that they are lending District money to southern inyo while in bankruptcy. Under Benny’s leadership he initiated personal lawsuits, how much has all of that cost the District.

    But the main bleed is their astronomical management fee that was impossible to pay, especially for such poor leadership. What was the previous board thinking.

    Word out there today is that the linen company was picking up their linens for no payment, extra security guards were brought in to protect linens that are owned by someone else.

    Is this at rock bottom yet?

  2. I guess what I posted earlier today was no hearsay but true. Edison did cut the power off at the hospital. The only was they are going regain the hospital is to get rid od Kumar and Benny.

  3. Can you say “Anti-SLAPP?” They’re really going to sue an elected official for statements made at a noticed, public meeting? Good luck with that.

  4. Great reporting by the Valley Voice. Our most important source of information about HCCA here in Tulare. It is a shocking disgrace that should have have been stopped long ago. Thank you for your important work. Never give up!!!

    Ruth Moderhak Wyrick

  5. People its time to take a stand!!! The new board needs to cancel HCCA’s contract!!! Do we need to protest? They have run TRMC into the ground!! Everyone is on credit hold–we can’t get vital supplies needed for patient care–do we need to march to Sacramento?? Wake up–Benzeevi is stealing from our community!!! He calls the community haters and evil people (I hear that in all staff meetings). The board should terminate their contract and call for full audit and outside review of the financial records.

  6. The breach of contract has been perpetrated by Benzeevi/HCCA all along who entered the contract under false pretenses. His goal was to succeed in a corporate take over. Easy to set up and accomplish with the dumbed down Board of Directors that were in place at the time of the agreement…..nothing in that contract “protects” the hospital itself….only HCCA. A full and complete outside audit should be set in motion ASAP! Benzeevi has been raking in money hand-over-fist…..where is the transparency and accountability of HCCA and Benzeevi! Every dime needs to be accounted for.

  7. If you live in Tulare, I would strongly advise against using the hospital at this time. You will be putting your life in grave danger by staying at TRMC. The ICU specialist Dr Rashid has left, and even though hospital had several months of advance notice, they have not bothered themselves to hire a new ICU doctor. So if you end up in the ICU, you are out of luck.
    Still no dialysis either. Dr Ostrom, Benny’s puppet had promised dialysis services back on by September 4, but as usual Dr Ostrom lied.
    Practically all long term nursing staff have left or are in the process of leaving. Your nurse could be someone who just stepped off the plane yesterday from Florida. He could be a good nurse or he could be a nurse who couldn’t get a steady job where he lives.
    Do you get the picture? It is not a good time to be a patient at a hospital that can’t even pay its electric bill. Come back to TRMC once there is legitimate management in place. It’s better to go to Visalia now, than get worse at TRMC and wait many hours to be transferred to Visalia in a critical condition.

  8. Thank you TRMC Employee, we appreciate you speaking out. I have complete faith in new board, but getting HCCA isn’t a quick process especially with that contract that Bell, Kumar, Wilborn, Gadke and Torrez signed. They are the ones that screwed the hospital. I believe HCCA is doing what is shown in exhibit 1 using the money to buy hospital

  9. That was probably their plan from the beginning. The board of directors that signed that contract should be held accountable.

  10. I would like to also let you know that the patients are being surved meals by Sysco, however, the Cafeteria s closed for 2 weeks while they “Reorganize”.
    This all came about yesterday, 9/11 at 3pm when we were all told that the previous company in charge of Dietary was packing and leaving at 5pm. Management knew about this days ago but failed to tell staff.
    Linen services were in short supply, we ran out of clean linen. No saline bags to restock we were out. We had to scavenger for this and other medical supplies.
    And why is this happening? Because of HCCA total lack of fiscal and moral responsibility. I believe the patients, community, and employees deserve better. Benzeevi has clearly violated his own contract and obligations for this hospital.
    So Dr. Benzeevi, here it is from employees, just pack up and leave. You are not owed a single thing. You have put us in financial ruin, morale is at an all time low, good staff are quitting and leaving, ER Md’s have not been paid now in 12 days +, medical equipment is on COD pay basis. You have broken the law by CMS standards.
    Shall I go on? You sir need to just leave and go ruin Southern Inyo, or how about going with your brother Iddo, you both sound a lot alike. For all you out there reading this, look up Iddo Benzeevi, he is a So Cal businessman and has similar ways making his way in business by smooth talking others. Just do your research.
    IF this continues, the staff here currently will be conducting a one day strike. If you do not resign in the next 3 weeks, this will happen. Just move on. Resign with whatever dignity you have left.
    To the community, we will fight for you on the inside, but you all need to come together and get this done to make it right TOGETHER!!!!

    • May be the community will carry a sign with the employees. I know i will. How many others will. Keep us informed on how we can help you.

  11. Most self respecting employees have quit. Those who have not, elect not to do so for various reasons – local childcare, don’t want to drive elsewhere, poor hireability, deer in headlight mental condition, denial of the obvious,etc. A few stay because its really easy, like lab and xray, hardly any patients so its kickback time, if the hospital closes then collect unemployment. (Now thats a great attitude that any employer would seek out, yes!). Personally anybody who hasn’t left yet, they are damaged goods.

  12. Even worse is the few doctors and practitioners who stay to support the fraud. ER docs, radologist and not much more, mercenaries who I guess have no alternative either. Sadly, unsuspecting patients go there because they have no other alternative or so they think.

  13. So sad what you people are saying about this great hospital in this town.

    It’s disgraceful.

    Do you hear yourselves?

    Good thing we have a hospital to serve us and to employee people .

    • Great hospital. Are you nuts. This hospital has been going down hill since HCCA took over. Go to tje hospital and see for yourself.

  14. Dr Beenzeevi has been the CEO who forced out the medical staff and has misappropriated funds from the District and is now alleging that the District is owning him and HCCA more then 8 million dollars. He is the main reason the District is failing ,he needs to be held accountable. Yet he claims the newly elected board members and a few of our community are causing the demise of the hospital, really?

    The community needs to file legal action against HCCA for mismanagement of the District revenue. Do not let him buy the district which will require voter approval. OIG where are your, apparently no one else seems to have jurisdictions over this so called CEO! Tulare District is a vital member if the community.

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