Tulare hospital sues HCCA, claiming $3m leaseback executed without permission

Healthcare Conglomerate Associates (HCCA) executed a $3m sale and leaseback of some Tulare Local Healthcare District assets in August of 2017, depositing the proceeds into its own accounts instead of the district’s, according to allegations in a new lawsuit filed by the district.

The 22-page filing contains a laundry list of allegations against the company, which previously managed the Tulare Regional Medical Center until its contract to do so was rejected by the district in United States Bankruptcy Court.

The district’s attorneys also allege the company presented false financials to the district’s Board of Directors, withheld other records, transferred the district’s assets, and misappropriated bond proceeds.

$3m Leaseback

“In order to secure the proceeds, HCCA wrongfully and without the District’s authorization, sold District assets to a Celtic Leasing under a leaseback arrangement,” the district claims.

The arrangement saddled the district with an $80,000 per month payment for an arrangement that, it claims, only benefited HCCA — an obligation it can’t exit out of, unless it wants to lose the assets sold off.

The $3m was allegedly received from Celtic and deposited into an account controlled by Tulare Asset Management on August 31. Public documents show HCCA’s CEO, Dr. Benny Benzeevi, listed as the Tulare Asset Management’s “manager,” and his home address as the company’s mailing address.

The district states that any loans or leaseback arrangements — to say nothing of transfers to HCCA or other companies — were unauthorized: hospital board members Kevin Northcraft, Mike Jamaica, and Senovia Gutierrez voted on July 27, 2017 to remove any authority the prior board gave for the company to pursue and execute loans under the district’s name.

HCCA — and its attorney, Bruce Greene, who also represented the district — declared during the same time period that Gutierrez wasn’t a legitimate board member, stating that the board must declare her as one during a meeting.

Former board members Linda Wilbourn and Richard Torrez backed Greene’s interpretation. That interpretation, he later stated in separate filings, was backed up by two other attorneys. One represented Dr. Parmod Kumar, whose board seat Gutierrez took over after a recall election, and the other worked for the same firm.

The sole reason for the protracted challenge to Gutierrez’ legitimacy, the district claims, was to execute loans under the authority previously given to the company by the prior board.

“On information and belief, HCCA asserted this meritless legal argument regarding Ms. Gutierrez for the sole purpose of securing loan money,” the filing states, “and/or sales proceeds at the District’s expense and for HCCA’s sole benefit.”

The Evolutions Deed

One day before the hospital district filed for Chapter 9 bankruptcy, HCCA filed a “Deed of Trust and Assignment of Rents” against Evolutions, a Tulare gym owned by the district, and a parcel of property adjacent to it.

The deed was stated to secure promissory notes and loans made by HCCA to the district, totalling $10,223,950.05.

Copies of the notes and accompanying “requests for funds” were provided to the Visalia Times-Delta in September 2017. None of those notes were signed by members of the board, but under the former contract, the company was allowed to loan money to the district even without the board’s consent.

The district, however, claims that HCCA hasn’t provided copies of those notes to them — and that the notes referred to in the deed are “fraudulent and void.”

HCCA did, however, provided a copy of a “request for funds” and its associated promissory note in court documents last year. But those documents weren’t provided to the Times-Delta in the same form as provided to the court.

The December 21 “request for funds” provided to the court had a handwritten note from Kumar, while the copy provided to the local news outlet didn’t.

“The District is unable to advance the funds at this time,” Kumar’s note on the request read. “Parmod Kumar MD, 12.2016, Vice Chairman of Board.”

Both requests are for the same amount, $1,064,729.80, but the copy provided to the Times-Delta had Benzeevi’s signature digitized and stated the funds were for “operating expenses.” The copy with Kumar’s signature stated the funds were needed to “meet the payroll due and payable to the personnel working in the District’s hospital.”

Additionally, the associated promissory note provided in court documents featured signatures from Benzeevi, Kumar, and Alan Germany, HCCA’s Chief Financial Officer. The copy provided to the Times-Delta only included Benzeevi.

“Artificially Inflating the District’s Books”

The district additionally claims that HCCA “artificially inflat[ed] the District’s books and reflect[ed] monies that were no longer held in the District’s accounts” to disguise “improper transfers of money out of the District’s accounts.”

HCCA also transferred medical equipment to Southern Inyo Healthcare District’s Southern Inyo Hospital and misappropriated medical supplies, the lawsuit alleges.

Those allegations mirror those made by the Southern Inyo district in October 2017.

The Southern Inyo district claimed that HCCA presented “incomplete or inaccurate financial reports” and extended “fictitious loans.”

At one point, the company allegedly failed to make a required “intergovernmental transfer” payment, which government entities match two-for-one. Because of the lost profit, the Southern Inyo district claims it was forced to pull money from a line of credit extended by Benzeevi’s financing company, Vi Healthcare Finance, to cover operating expenses.

Tulare’s latest suit references Southern Inyo’s allegations — but those allegations were later retracted by Southern Inyo in an agreement with HCCA to ensure the company’s speedy exit from the Southern Inyo Hospital.

In those documents, the Southern Inyo district claims Tulare may owe them upwards of $418,000.

Kevin Northcraft and Dr. Benny Benzeevi did not respond to requests for comment; if any responses are received, this article will be updated.

The full legal filing is available below.

In Depth: Tulare Regional Medical Center

27 thoughts on “Tulare hospital sues HCCA, claiming $3m leaseback executed without permission

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  1. In addition to being civil wrongs, this certainly sounds like criminal conduct. Where is Mr. Ward? Where are the DA investigators? No doubt too busy planning the next re-election golf tournament to bother for a little matter like the apparent theft of government property.

    • Crooked benny and all involved deserve nothing less than ORANGE JUMPSUITS for a very long time!

      Whenever I think of Crooked benny and Tulare I see the image of a man walking in a bank by gunpoint and walking out with a bag of money and not even trying to get away. After the man robs the bank he casually walks back and forth in front of the bank – waving his gun and bag of money.

      All the Tulare citizens see what is going on and that the bank has been robbed and the man is right there flaunting it and not leaving the crime scene.

      However, the Tulare authorities who are also right there are “pretending” to be clueless that the man with the money and gun is right in front of them.

      Thank god for the new board!

  2. Hooray!!! And so it begins. Get ready people we are about to find out how illegal and crooked this HCCA group actually was!

  3. We have believed for some time that the former hospital administration was motivated by greed and not public service. We doubt we have found all the wrongdoing and will keep looking. The illegal loan and other bad actions of the former board’s administration must be uncovered and justice must prevail.

  4. How long will it be before Benzeevi rolls on th real puppet master Kumar. His greed is evident and there are numerous community players that helped in allowing it to happen. They should all be ashamed of themselves. Question is who are all th people that helped and for what reason. Does Sherry Bell sleep well at night by turning the blind eye? What about Skip? Where is Kim, Teresa or Anna now, what did they gain from compromising right verses wrong.

    Remember these names and many others every time you think of the hospital being closed.

    • Refer to the article Tulare Board Backs Audit. There is a long list of names of those who had knowledge or were directly involved in the misappropriation of the district’s funds since 2009. Truth will prevail and we must continue to support our Board and our hospital.

  5. I truly believe we are all complacent in this mess. So much turmoil at our hospital made people apathetic to what was going on. It was constantly something! Sadly we turned a blind eye. Now we are trying to clean up this mess! Please please do not be apathetic now. If you know something, tell it!!! Theses people are all dishonest ( or just plain stupid) and they gave Kumar and Benzeevy the ability to rape this community financially. Shame on all of them, yes….but please if you know something communicate with the authorities that are FINALLY paying attention(even though they did take campaign funds)!!!

    • Please don’t forget Kumar and Sherrie Bell and Richard Torres also gave Shawn Bokuki 5 years to bring the hospital to the brink of bankruptcy and then brought him back again to do more damage. That’s how Benzeevi got his foot in the door. Please don’t let Alan Germany go unnoticed in this mess.

      • Amen…..there is a very long list! As I said before….do not remain quiet if you have info on amy of them. Those 2 so called doctors didn’t do this alone. Aiding and abetting is a crime!!!

  6. Prayers for every bit of illegal activity to be addressed and accountability of those involved!
    Thank you to Citizens Group and our new board, attorneys, CEO, CFO, etc for moving forward to save our hospital!
    Hope they force real action from our law and government entities.

  7. PTO or any other obligatory money owed to employees has still not been paid by HCCA!!! Obvious criminal act of fraud! Our community suffers without a hospital, dedicated employees without jobs and yet Benzeevi and Kumar sitting like fat cats laughing in how they duped and robbed Tulare! Anyone who believed in them I bet you feel pretty stupid about now! Huh? If not you should!!! They made asses and fools of you!! Maybe next time you will really listen to the song the pied piper is playing before you jump on a bandwagon of criminals, liars and thieves!!

  8. Look at the list on the court papers there are a few which are criminal. I am sure or hopeful that the DA is looking at all of this. I commend the board for digging thru this pile of disgust. And because of this. Our hospital is in limbo. Obviously we had poor or no management for many years. With CRMC coming in, I hope it will be a great turn around. Let’s all hope we can hang on. Let’s hope CRMC is still with us!

    • The DA is bought and paid for. He took thousands from the HCCA types. Not surprisingly, nothing has been done despite the obvious. The DA is only interested in 1 thing-enriching is campaign accounts. That’s why I am voting for Matt Darby for DA.

  9. Its hard to believe the community is suffering without that poor excuse for a hospital. Any capable talented employees have long departed for real jobs. A few hangers on have gotten jobs with the new administration pulling weeds and otherwise wasting the taxpayers money doing as little as possible. The doctors in town and clinics have picked up the slack. Theres a decent new xray and imaging lab, new pharmacies, etc. Most sane people have been going to Kaweah Delta for years anyway. No one is dying unnecessarily in surgery and the ER anymore !

  10. Visalia is impacted with long wait hours… yes enuf I have also seen people pulling weeds, I wonder how much they’re getting paid doesn’t seem like a necessary job in their current operating state. Oh and I heard people are coming back without jobs being posted I wonder how administration decides who’s deserving of a job when so many people are unemployed and someone gets called in to work and they didn’t post an opening so that others could apply, doesn’t seem right if you ask me. Same ole same ole, poor management making frantic decisions without following a proper process.

  11. Come on guys, think it through and get it right Tulare needs Quality care with qualified individuals working in the appropriate areas. And let’s get this hospital open already!!!

  12. Ed you sound like you sour, bitter and out dated! You heard? give us something substantial other than “oh and I heard” are you a rooster a cackling hen? Gossip!!! Stop being a problem and be a part of the solution! Damn tired of the oh and I heard BS! Got nothing better to do than be suspicious and negative!!

  13. Ok well “I heard” is actually someone told me but out of respect I’m not going to put them. Not gossip, the truth. But unless I was there then you’d just say it was hearsay but this is a very trustworthy source. Ur an idiot gender doesn’t matter, but I guess I’m a rooster since I’m a male.

  14. Eyeroll you sound ugly vile and malicious.. who uses rooster, hen, “cackling” I must add truth telling is not gossip or problem starting it’s opening a conversation for a solution. My oppology but ur incorrect in ur assumption. post ur real name so we can have a real conversation

  15. Eyeroll clearly got a nerve struck you are definitely a cackling hen probably still working there to be so defensive about the truth. People talk end of story. You are in denile if you think you can convince otherwise. Employees say to others who’s working and who is not. Employees tell others they were called back to work, that is what makes the ones at home waiting upset about why they were not given the same opportunity, please empathize that not everyone has been fortunate and is still loyal holding in to hope that they will be called.

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