District attorney provides update on HCCA investigation

Pete Vander Poel, Tulare County District 2 Supervisor, speaks to Tulare County District Attorney Tim Ward during a March 6, 2018 Board of Supervisors meeting. Tony Maldonado/Valley Voice

An investigation into Healthcare Conglomerate Associates’ (HCCA) conduct while managing Tulare Regional Medical Center (TRMC) continues, Tulare County District Attorney Tim Ward told the public on March 6.

At a presentation before the Tulare County Board of Supervisors, Ward stated that his office’s involvement began in the summer of 2017, when the office attempted to force the Tulare Local Healthcare District board and the hospital’s former management company to recognize Senovia Gutierrez as a newly elected district board member.

It then served a search warrant on the Southern Inyo Hospital, also managed by HCCA, and has since expanded its work to include 15 search warrants served, with one served as far away as Michigan.

“[This] will be the largest investigation ever undertaken by the district attorney’s office,” Ward told the board.

Ward made clear that his office’s investigation was not prompted by the Tower of Shame report released by the Tulare County Grand Jury in March, 2016. The grand jurors in that case did not refer the case to his office, he said.

Four warrants were served at hospital locations — two at the Southern Inyo hospital, and two at TRMC. Nine have been served on financial institutions, including an accounting firm in Farmington Hills, Michigan.

“Travel so far — we’ve had three trips to Inyo County alone, Los Angeles, Fresno, and San Diego; working with our investigative partners from an outside agency, two trips to Orange County, for service of search warrants there,” Ward said.

The costs associated with travel and additional data storage needed during travel totaled, so far, nearly $15,000, he added.

“It’s a shame that the taxpayers are footing the bill here on charges in and out of court which lack foundation,” Marshall Grossman, an attorney for HCCA, told the Voice.


Outside Assistance

Two full-time forensic accountants from the California Department of Justice have contributed to the effort, and the FBI has assisted in “search warrant activities and investigation dealing with financial institutions,” Ward told the Voice.

California Attorney General Xavier Becerra has worked with the office from the outset of the investigation, Ward said, including in his office’s initial efforts to seat Gutierrez on the board.

“Mr. Becerra assigned us two full-time accountants, and any investigative assistance that we’ve needed from his office, he’s been there,” Ward said. “I cannot enfathom any situation where we’ve needed more from Mr. Becerra that he hasn’t provided us.”

Additionally, Ward stated that the United States Department of Justice is “monitoring” the process.

“Everything we’ve discovered appears to be a type of a crime that we would investigate, not the US Attorneys,” Ward added. “They’re really not involved.”


Investigative Resources

Nearly 2,400 hours of staff time have been dedicated to the case, and will likely end up 75-100% over the office’s budget in overtime costs.

“One attorney has already spent the equivalent of 400 staff hours,” on the case, Ward said.

The evidence gathered, so far includes, roughly 8 gigabytes of data from the Southern Inyo Healthcare District; thumbdrives, computers, cell phones, hard drives, and “several boxes of documents” in Tulare. Four boxes of documents were seized from the Michigan accountant.

One search conducted in November took “well over 33 hours straight,” a prior statement from the DA’s office claimed.

Additionally, 57 bags of shredded documents were also recovered — each estimated to have 5,000 pages — totalling an estimated 285,000 pages of documents.

Many of the seized documents likely contain doctor-patient and attorney-client privileged information, Ward said, requiring a special procedure to ensure that those documents are not used in the investigation.

Documents from the Tulare warrants were recently released to the DA’s office, and an agreed-upon solution will be followed by the office: a separate team of investigators — one supervising, and three additional — will begin working independently from the criminal investigation team to separate any attorney-client or doctor-patient privileged information from information seized at the hospitals.

“At the hospital search warrant down in Tulare, which are the documents only recently released to us — that team spent, in one weekend, over 13 hours of time reviewing well over 200,000 documents,” Ward said. “From a budget aspect, this is going to be very costly for us.”

That process is only the tip of the iceberg — nearly 400 gigabytes of data was seized from computers and electronic devices in Tulare.

“Experts estimate that it could be approximately 20 million pages of information,” Ward said. “If we put a person behind a desk and he or she reads two pages or two emails a minute, that’s roughly 1,000 pages in an eight hour day — that’s 20,000 eight-hour days that would be needed to complete, or one person working eight hours a day for 76 years.”

“Now, remember that two teams have to review the data to satisfy the privacy requirements,” Ward said.

Ward said that a significant amount of data could be whittled down electronically by using an independent forensic analyst to search for, and automatically filter out, data from the district and HCCA’s different law firms.

Even with the data narrowed, Ward said several investigative interviews would need to be conducted after data was analyzed.

“Our office has every available resource committed to see this to a conclusion,” Ward said.


Public Reaction

Cindy Summers, the District Manager for the Visalia Public Cemetery District, asked the supervisors to increase the District Attorney’s office budget to ensure that any work relating to embezzlement from the cemetery continues unhampered by Tulare.

“I assure this board and I assure Ms. Summers, that in no way will that case suffer from this,” Ward responded. “We have a full-time attorney assigned to that case, and a full-time investigator as well.”

Many Tulare citizens spoke to the supervisors, and Ward, as well.

Dr. Patty Drilling-Phelps, a Tulare dentist, spoke regarding some of the challenges surrounding reopening the hospital.

Drilling-Phelps is a member of Citizens for Hospital Accountability, the group which challenged HCCA’s management of the hospital.

“The hospital board cannot speak to this, but as a concerned citizen and healthcare provider, I can. Dr. Benzeevi could release the lien on Evolutions any day, but the district needs capital to reopen through potential loans, and collateral is not available at this time,” she said.

“Benzeevi filed a lien on Evolutions gym right before the closure of the hospital. That’s going to take time in court to resolve.”

Dr. Benny Benzeevi is the CEO of HCCA.

Deanne Martin-Soares, a former Tulare Local Healthcare District board member and member of Citizens for Hospital Accountability, also spoke in support of Ward’s investigation.

“I can only imagine the cost of this investigation, because it’s long overdue, and I’m assuming that it’s extremely complicated,” she said. “There has been corruption in this public entity for at least 10 years.”

“The importance of completing this process is essential. What will be discovered is going to be in the caliber of what shows like ‘American Greed’ are all about,” she added.

In Depth: Tulare Regional Medical Center

35 thoughts on “District attorney provides update on HCCA investigation

  1. I am very concerned about what seems to be the current plan to re-open the hospital…

    I keep hearing that: HCCA/Benzeevi “put many road blocks”, or needs to remove the lean on the hospital for it to reopens. People need to understand that he can’t just lift the lien. He has to pay off the loan for the lien to go away. That is how leans work. Are you seriously waiting for him to be so kind to pay the lien of his own money so that Tulare can have a hospital again?….
    If all we are doing is waiting for that to happens. Then the hospital will never re-opens until the issue gets resolved in the Courts… That would likely take many years….

    We have to come up with different sources of funding and solutions to re-open the hospital. If all we are doing is blaming Benzeevi for everything (even though it is true) and waiting for the kindness of his heart, then we will not have a hospital anytime in the next few years…

    • Logic this is not your usual lien. This was a lien signed by Benzeevi without authorization and the day before filling bankruptcy. There are lawsuits that have been filed to have the lien removed.

    • Logic:  I may be wrong, but I believe the lien is held in either Benzeevi’s or HCCA’s name, not a financial institution, so it would only require a signature to remove.  I also want to assure you that if you attended the Board meetings you would find that the Board is not sitting around “wringing their hands”, but are actively seeking alternative sources of funding to reopen the hospital. Any and all suggestions from the public are welcomed and will be considered.

      This article is about the largest investigation ever undertaken in the history of the Tulare County District Attorney’s office in conjunction with State and Federal authorities, so I’ll go along with the theme of discussing Hospital Boards, but instead of discussing the current Board, I would like to discuss the former Board.  In order to do so I need to define the word “fiduciary”.  “A fiduciary is a person who holds a legal or ethical relationship of trust with one or more parties.  A fiduciary prudently takes care of money or other assets for another person or entity.” 

      The former Board had a choice of four experienced hospital management firms, yet chose a company, that didn’t even exist until it was chosen.  A company headed by an emergency room doctor with no hospital management experience.  The contract presented to this Board paid the doctor nine times the average for hospital administration.  The contract, easily described as the worst hospital management contract ever signed, gave the company total control of the hospital, its employees, and finances.  The Board signed a contract that did not allow them in the hospital without prior permission, and said they would be held legally liable if they criticized the management company.  The Board, and each of its members, then proceeded to never vote no to any proposal the company made.  Even when the company asked for the authority to obtain a $22 million dollar loan, as the financial house of cards was starting to come down,  without divulging why the loan was needed, any terms of the loan, and more importantly where the money was going.

      So what does looking back to the past have to do with the District Attorney’s investigation and the article above?  The previous Board was certainly judged and voted out by their constituents, but it is my hope that such a massive failure of fiduciary duty would raise red flags with the investigators and they are looking into how the former Board used their ethical and legal position of trust to prudently take care of assets for the hospital management company, and not the citizens they were elected to serve.  The community deserves to know why this happened and how justice will be served.

  2. okay. its a sneaky lien. He sneaked it in under the wire. The bankruptcy judge will have to decide if sneaky liens count.

    • Enuf, sneaky is an understatement but yes the bankruptcy judge will decide. Meanwhile the hospital is dying on the vine from the inability to get a loan. Why? Because Benzeevi’s lien and Benzeevi playing chicken with our healthcare

  3. The DA is conducting an investigation of a complaint, whether he is doing it for political
    purposes or not, it’s the correct process to take. If there was malfeasance with the previous Board it will be discovered, and will have to be proven if deliberate and and willfull vs poor decision making. That will be in a court. Benzeevi was not a public official. He had a contract which gave him too broad of authority and as shrewd as he is, he used it and if he was that cunning, he probably left very little electronic trail. So it maybe the DA is looking for a needle in a haystack.
    Chris I realize your husband is a current Board member, and it’s admirable your standing by your man, but the current Board is giving away the same authority to HFS/Wipfli by authorizing them to act on behalf of the District Board in financial matters. Additionally HFS/Wipfli is claiming they are owed 1.3M to date for services which they say haven’t been paid. Now by my calculations they are getting paid about 300K a month which is far greater than the HCCA management agreement. I can’t say for sure of this because no where can I see the financial component of the HFS /Wipfli agreement, although I have asked on this site and was only directed to the scope of work. This Board continually spoke of transparency and yet deadly silent on this. Still hospital is closed, 550 unemployed, and this Board is doing nothing different. Same old same old for Tulare.

  4. EH: Your posts are very redundant. From article to article you have the same recitation of your supposed facts trying to draw parallels between the old Board and the new Board. I assume it is an attempt to steer the conversation away from the fact that the District Attorney’s Office, The FBI, the State Attorney General’s office, and State Investigators from the State Auditor’s office are all investigating HCCA and their ransacking of the Tulare Local Healthcare District. I find condescending your statement that I am “standing by my man”, as though I wouldn’t have independent thoughts on the matter. I also now know that you only look at the published agendas for the Board meetings and not the actions taken at the meetings because if you attended a meeting you would realize that any authorizations given WipFli have been amended to either require all actions come back for Board approval or amended to specify only authorizations to open accounts. NEVER would this board give carte blanche to anyone the way the former Board did. I invite you to attend a meeting, ask questions of those that can give you the answer, get involved, maybe even come up with solutions…now that would be refreshing.

  5. Chris, where is the financial disclosure of the contract with Wipfli/HFS? Why do you skirt this question?

    • Why would I know where the financial disclosure of the contract with Wipfli is? I’m not skirting your question…maybe your problem is that you ask people on this webpage versus attending a meeting and asking your questions, looking on the District website, calling Larry Blitz, or emailing a Board member?

      • Skirting issue. She doesn’t want to admit that the “full transparency” that this new Board jammed down everyone’s throats, isn’t being done. They are being hypocrites. Tell the community how much you’re paying Wipfli??? Nearly 5 months no hospital.

  6. Chris, you and VV pointed me to the website a few weeks back when I had asked. I have been very specific about wanting to know the financial obligation of the contract with Wipfli and it’s not there. I don’t need to go to the very late Board meetings if the minutes that are posted are accurate. I’m not being contentious, I certainly think the past Board made mistakes, i support the DA investigation and audit but if folks don’t keep pointing out that the past mistakes are beginning to look all to familiar with this Board, then the removal of past Board members will be for not. Tulare has had an all too familiar theme of repeating past mistakes, lack of transparency with the hospital and cemetery, problems with City Council and Mayor and police chief. Community needs to stay alert and challenge when things don’t look right. Board members are volunteers, I know the amount of time and energy they put in, and they aren’t Hospital experts. They count on the people they bring in to be diligent in their work. But honestly in the time they have been there, something more concrete should be happening other than they keep uncovering stuff. Of course they have and will continue to uncover, it’s a mess, but get things opened, get people back to work, or find someone who can. What they are finding is no different than what HCCA told the Board all last summer. This is not news

  7. What does “additional feature storage needed during travel” even mean?

    They had to go buy a couple 3 terabyte hard drives from the local office store? That’s a few hundred dollars. Why is that significant?

    • That’s Ward’s description of what was included in the ~$15k figure, so I didn’t want to leave it out and have it be inaccurate.

  8. EH, I find your negative comments very offensive! As a previous employee since 1986, I am so thankful for the new board who have gone “above & beyond” to work through all the mess the previous board created! I don’t think you have any idea of the scope of problems facing this board because of the old board & HCCA! I am so thankful they cared enough about the hospital & this community to disrupt their own lives & work as hard as they are to reopen our hospital! It will open again because of the hard work of these dedicated citizens!

  9. Blind faith like Pat’s is what got us into this mess in the first place. Asking the board questions is certainly not negativity, Pat!

    Wipli says they are not getting paid. The recent statements indicate significant payments to “consultants”. The numbers point to interim manager fees that approach the ridiculous fees granted by HCCA. Its true there is never much incentive for an interim manager to do much of anything let alone upset the applecart. Thats why there are still cronys around including employee cronys doing what, exactly? Calibrating equipment?
    The board needs to explain this in the next meeting.

    The board could hire their own experienced CEO for a fraction of the fees paid to wipli and that person could be incentivized to clean house and hire their own local manager team.

    You people want to blame the old board till the cows come home. They did a horrible job and should be publicly shamed but whats done is done, you wont get money out of them to rebuild the hospital. And probably not Benny either for that matter. At the end of the day he will probably need to be paid off to go away too. Where is this cash gonna come from? This is not a good public asset and privatization should be front and center on the table.

  10. We should be able to express our concerns, but when we do they get offended….. I don’t get it! They keep finger pointing vs move on and get it done! This Soares lady is not even part of the board, Senovia barely speaks……They are spend more time accusing the past board rather than resolving issues!!! THAT IS A PROBLEM!

  11. I am glad to have someone who thinks for himself like EH. Everyone else jumps to support the new board without questioning them, and history will repeat itself. The DA is running for office again and this search for a needle in the hay stack is definitely for his political gain. We need to question the new board and we need transparency on all their decisions. The finger pointing culture needs to stop, we need to work together to move forward and put our energy in solving the problem.

    • The Truth, EH, Perpetual Crisis, and Mickey are all trying very hard to create the impression that this new Board is hiding something….that the DA’s office is conducting the largest investigation in County history looking for “a needle in a haystack”…statements that show the District is spending big money on consultants. If they, or anyone else has questions about the activities of the Board they can come to a Board meeting and ask, look on the Board’s website http://www.tularelocalhealthcaredistrict.org, call Larry Blitz, submit a request for public information, or ask a Board member. I would not, however, get your facts from anonymous posters on this webpage who post inaccuracies as though they are facts…go straight to the source. I do agree, though, with the statement “we need to work together to move forward and put our energy into solving the problem”. I look forward to your proposed solutions.

  12. The board needs to come together. How can they be accomplishing much without regular meetings. Sad state of affairs that they have had no guidance on how to be a public board and Wipfli doesn’t seem to be helping with that guidance.

    People must question this board and not just believe that they are better than the previous board. It seems like they are desperate and unorganized in their lack of actions.

    • Another example of what I am talking about. The Board meets the last Wednesday of every month at 6:30 p.m. at the Tulare City Council Chambers in the Tulare Public Library. In accordance with the Brown Act, Special Meetings are noticed 24 hours in advance. Notifications are posted on the website http://www.tularelocalhealthcaredistrict.org and sent to the Valley Voice, Visalia Times Delta, Fresno Bee, as well as other media outlets. Real facts.

      • During the last board meeting it was indicated there was only two weeks of cash left. If so is the board waiting to act an additional two weeks after they run out of money. This is a public entity, with only two weeks of money available shouldn’t that be further discussed by the board. Are they making the payroll, doesn’t the public get to know that.

  13. Are you referencing one of the Board meetings you said they aren’t having? I listed in a post above how you can ask questions of the Board. I encourage everyone to attend the meetings and join in the conversation.

  14. Chris, during the period of public comment, which is where I am assuming you expect folks to “ask” their questions, Board members cannot respond to the public as comments are not agendized. Why sit through a meeting that starts so late and full of attaboys(girl) and a management group who is paid or not paid millions of dollars complaining they keep uncovering a mess. Of course they are and will continue to do so. The Board whatever composition it was but clearly Kevin was there were told repeatedly the dire situation and the billing mess due to a conversion of some sort. The DA will find what he finds and due process will take its course. However this is really no longer a TLHD issue, it has now become a county wide issue as resources will now be taken away from gang intervention, human trafficking, drug related crimes and so forth. The pressure from this debacle has already strained the healthcare system in this county. TLHCD has significant properties, certainly more than the bankruptcy amount, perhaps if no can get along, time to privatize. The rest of the county taxpayers shouldn’t have to shoulder the burden of inept Hospital Boards, egregious management contracts and the systemic problems associated with the hospital or now lack of. The current hospital board should expect more scrutiny due to the latest DA involvement from folks outside the District. It’s now a Tulare County issue.

    • Thanks to the Valley Voice you can watch the Board meetings on their Facebook page. You will see that the Board does not adhere to hard and fast rules about public comment because listening to the public is a priority. As for the starting time for the meetings, I consider 6:30 pm as a time that allows for more public participation, not a “start time so late”. The previous board set a 4:00 start time for their own convenience and to minimize public input.

      • If the board doesn’t adhere to hard and fast rules about public comment what is the assurance they are adhering to other rules about the conduct for a public entity. If there is only two weeks of money left how do they know what is happening without a meeting and how do we fond out if there isn’t a regular update.

  15. What a bunch of pathetic ‘comments’. The trouble with Tulare is clear: S__PID people ignoring facts in favor of backing their ‘favorite’ politician, investigator, CEO etc etc.

    Tulare: you burned yourselves by putting Benny the Fox in charge of the Hospital Hen House.

    He handpicks a board that rubber stamps his profits$$$

    Simple as that.

  16. District hospitals in general are obsolete. Most have closed. KD is a rare exception due to larger market area and weak boards dominated by the CEO there. It is time to let this one fade away now. Forward thinking board members would realize this and take the next bold step. Local town hospitals are doomed. The local market is already being served by a number of expanding and new clinics in Tulare. Someone should show how there is a crisis of health care in Tulare without this hospital. If this hospital opens it will be doomed once again to perpetual crisis and ultimately history will repeat itself. An option to consider is a free standing ER facility operated by TLHCD for which the hospital could probably get a permit, its been done before in Ca.

  17. It would be great to successfully reopen the hospital however it may take a very long time to happen (years??). In the interim I hope this new Board considers reopening at the very least most of the first floor of the hospital as a 24-hour Acute Urgent Care Facility. At least that way some in the community will have a place to go for emergency care treatment and for most in the community they will continue to use the hospital as their primary doctor’s office as a source for medical treatment when needed. It could be fair to say that was how the hospital was viewed and used for the most part these past years. Across this nation there are many smaller hospitals closing and the smarter cities have creatively turned these closed hospitals into urgent care facilities for their communities. It can be a win-win situation in the short and long term for that matter. If or when the hospital reopens there could be a money making urgent care facility already established as the ER. I also want to commend Chris as a spokesperson for the Board. You are very articulate, knowledgeable, and show tremendous patience in all your responses and I thank you for your time and effort!

  18. Barbara, I agree, something needs to be done now, urgent care is a great idea, perhaps then move To outpatient procedures that don’t require a stay overnight or higher level of care. What has happened to the home health?
    The Board should not have a spokesperson, they should speak for themselves and have been very silent, which is why Chris is probably responding. I am sure neither she nor the Board would want her comments viewed that way. Yes, I do appreciate her dialogue although I disagree with much of her perspective, indeed she is articulate

  19. The problem is that the new board falsely claimed to know what they are doing and fooled people into thinking that they can reopen the hospital. They closed down the hospital because of personal vendetta to kick out HCCA, and now 500 people are out of a job and we have no hospital. Even if the hospital can reopen, it will only be a matter of time before more financial woes will occur again. Just look at the history of the TRMC the last ten years. How can we expect board members to run a hospital who are elected officials who do not have any experience on how to run a hospital to succeed even if they meant well? It is like asking an engineer to do an open heart surgery. Wake up people.

    • Get the story straight, the hospital closed because Benny was laying all of the HCCA employees off with hardly any notice from what I recall. The District had no employees and hadn’t for a few years. Suspending the license had to be done, a move that Benny wasn’t anticipating. He doesn’t want any success for the organization.

      By the way Sherrie Bell put Benny in charge with absolutely no experience but you obviously don’t complain about. Was that a “personal vendetta” in picking him over an experienced hospital organization or did she benefit some how.

      The board shouldn’t run the hospital, they need to pick someone who can and then get out of the way to let them do it. If they don’t do so then history will repeat itself.

  20. Benny prowls these pages still from his hideout. the truth is, board members are just regular citizens with experience in other walks of life. One can only expect they have the common sense to question things that do not sound or feel right. The prior board was bought, they had financial motives of their own. Benny is not especially smart but he is a con man and con men are skilled at manipulating others to do their bidding for them. That is certainly what happened.

    Fast forward, the citizens finally realized they were being conned – Benny is not even a skilled con man unlike his brother. Benny, there is no personal vendetta. You were discovered and ousted. Perhaps not fast enough to save the hospital but there are other market forces in play too.

    The current board members are not hospital experts, just honest citizens doing their fiduciary duty to the best of their ability. They rely on the advice of the public and the interim officers. It would probably be useful at this time to find their own CEO for a fraction of the cost of a consultant group and explore all options including selling the property. And it is hoped, the legal experts will stuff any further flow of money to Benny and his ilk, if not recover some of his ill gotten gains.

  21. “to ensure that any work relating to embezzlement from the cemetery continues unhampered by Tulare.”

    What’s this? The cemetery is embezzling money? Or their money is being embezzled? And the DA wants to make sure it continues?

  22. Hope4good, the hospital closed because the Board filed for bankruptcy and then asked to suspend the license for fear Bennye would shut it down and that would make it more difficult to re-open. With no license you can’t operate and hence the layoff HCCA did with employees. Don’t get me wrong, I’m no Bennye fan but let’s stay accurate to events that occurred. The Board must take full responsibility for that piece. Yes, there was and is significant financial constraints which contributed to a BK filing, but was it done to get out of the Bennye agreement, probably. Was there a vendetta against Bennye? Well it probably started with Kumar and since Bennye aligned himself with Kumar, that may very well be the case.
    Regardless, the Board is responsible for the hospital closure, loss of jobs and the hiring of Wipfli and from what I can tell entered into an agreement that is financially just as bad and have done nothing but complain and blame for 5 months. At the very least Bennye closed up the Tower within the same time period so it wasn’t flopping in the wind.This Board spouted transparency and there isn’t any. Just as bad as before if not worse. I look forward to the audit and DA investigation, I don’t think it will prove Bennye as damning as folks would like. Maybe unethical, self serving but not so sure about criminal. After all the Board gave him a contract and too broad authority he’s probably cunning enough to stay within those bounds.

  23. And further if the DA or audit shows criminal activity, I hope they prosecute to the fullest and if not, I’m sure he will find away to financially go after his accusers. I’m afraid this is a long road ahead, meanwhile no hospital and people out of work, just shameful

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