Healthcare Conglomerate Associates’ (HCCA) management of the Southern Inyo Healthcare District’s hospital was ineffective, hindered the hospital’s regulatory compliance, and was fiscally irresponsible, a legal filing by the district claims.
The filing also repeats claims that the Tulare-based hospital management company shared money and supplies between the Southern Inyo district, which owns the Southern Inyo Hospital, and the Tulare Local Healthcare District, which owns Tulare Regional Medical Center.
The filing comes after HCCA requested $1,184,730 in back management fees, a $1,201,474 termination fee, and $137,850 in fees for the company’s chartered flights to Lone Pine, California, to visit and work at the Southern Inyo Hospital.
HCCA additionally requested the total of $2,524,054 be recognized as an “administrative expense,” giving HCCA priority in being repaid by the Southern Inyo district.”
Attorneys for the district, which owns the Southern Inyo Hospital, claim that the the hospital management company’s services weren’t beneficial to the district, cannot be given “administrative priority,” and claim that the company isn’t entitled to its termination fee.
“The District believes that HCCA’s mismanagement has caused damages to the District that exceed the amount claimed by HCCA in the Motion,” the district’s legal filing reads.
In a declaration filed in the United States Bankruptcy Court, Jaque Hickman, a member of the district’s board of directors, expands on claims that HCCA’s work was not to the district’s benefit.
“Throughout the entire term of the Management Agreement, HCCA failed to adequately perform its duties,” Hickman states. “In general, HCCA provided grossly deficient on-site management, failed to manage and collect the accounts receivable, entered into non-beneficial contracts on behalf of the District, hired improper personnel for various employee vacancies, and caused non-compliance with a number of state regulatory requirements.”
Marshall Grossman, an attorney for HCCA, disputes those claims, and others made by Hickman and the Inyo district.
“She is free to say anything to the media, but just wait until she is put under oath,” Grossman said. “Our comments will be made at that time.”
Repeating Withdrawn Claims
The Southern Inyo district previously agreed to withdraw declarations by its bankruptcy attorney, Ashley McDow, and Hickman, as part of a stipulation that allowed for the quick rejection of HCCA’s contract with Southern Inyo.
Those declarations included claims that HCCA failed to make intergovernmental transfer payments, which earn the district money that it can use towards its services, and that HCCA transferred funds from Southern Inyo to Tulare without the Southern Inyo district’s consent or knowledge.
The claims resurfaced in Hickman’s declaration to the court.
“The Board did not know monies flowed back and forth between the District and Tulare except to be told that the IGT money came from Tulare because it had to come from a government agency. Supplies came into the District from Tulare,” Hickman’s declaration reads, “but there was supposed to be an accounting entry that would reflect them as a vendor. This does not seem to be the case since no financials were ever presented.”
The filing also claimed that there were other financial misdeeds committed by HCCA.
“HCCA illegally transferred monies from the skilled nursing facility resident fund on April 11, 2017. HCCA transferred $11,000 from a patient trust account to the general account, then transferred $11,000 to the payroll account,” Hickman wrote. “HCCA did not return the funds to the patient trust account until August 31, 2017.”
Travel By Private Plane
Records submitted by HCCA to the bankruptcy court show the company chartered at least 50 different flights to Southern Inyo, at an average cost of $2,500 per flight.
A short video produced by the company detailing its work at the Southern Inyo Hospital shows Benzeevi sitting in, and later stepping out of, a Beechcraft 200 Super King Air. The plane, tail number N437WF, was registered at the time to Shae-Ron LLC, a Bakersfield corporation.
The travel by plane and lack of dedicated, on-site administration caused significant problems for the district, Hickman claims.
“HCCA personnel were almost never on site, and the Administrator’s office was empty 90% of the time. HCCA brought over personnel from HCCA headquarters, whose services were sporadic and ineffective,” Hickman writes.
Instead of staying behind and working at the hospital, Hickman claims that HCCA’s personnel would “drop off suggestions at the Facilities then leave,” and did not provide “team building, training, or follow-up” for the hospital’s employees.
“Because HCCA management was not on site at the Facilities, HCCA incurred significant expenses travelling to the Facilities. The Travel Expenses are even more unreasonable given the fact that HCCA always travelled to the Facilities using an expensive, private jet,” she added later in the declaration.
Hamstrung IT Projects
Hickman claims a contract that HCCA arranged with Medsphere Systems Corporation “has never worked to produce revenue,” despite costing $28,800 per month. Medsphere’s OpenVista product was purchased to provide an Electronic Medical Record for the hospital’s operations.
“HCCA did not provide the personnel, financial information, or training to make the Medsphere contract worthwhile,” her declaration reads.
A 2017 press release from Medsphere lauded the company’s “go live” of the OpenVista product at Southern Inyo.
“The go live of OpenVista Cloud at Southern Inyo is a highly significant event for us because it manifests our broader healthcare IT vision,” Dr. Benny Benzeevi, HCCA’s CEO, said in the release. “We appreciate the truly collaborative approach Medsphere took to the implementation and the efforts the implementation team made to meet the specific needs of a rural, critical-access hospital. This will change for the better the way we provide care.”
“When [Electronic Health Record] projects are essentially driven by the vendor, they are less successful. Southern Inyo ensured their own success by engaging from start to finish,” Medsphere’s CEO, Irv Lichtenwald, said in the release.
Additionally, she claims HCCA failed to oversee the hospital’s transition from its former patient billing software, Healthland, to a new billing system, Medworxs.
“HCCA did not manage or oversee billing software conversion from Healthland to Medworxs; and, as a result, accurate accounts receivable information was not available, leading to overstated and inaccurate accounts receivable in the millions of dollars,” Hickman wrote.
Southern Inyo’s situation with accounts receivable mirrors the situation at Tulare.
Dan Heckathorne, the Interim Chief Financial Officer of the Tulare district, stated that the company discovered “millions of dollars’ worth” of payments that had been delivered to the hospital, but not accurately reflected on patients’ accounts.
“There were payments that came in previously — the cash had came into the bank, but the payments weren’t posted onto the patients’ bills,” Heckathorne said.
At a Southern Inyo board meeting in August, numerous issues were raised by staff members regarding the status of the hospital’s IT projects.
“Mr. Burgess provided an update on MedWorxs implementation. He emphasized that I.T. is currently working collaboratively with MedWorxs and the clinical team at SIHD to provide solutions to the issues that have been raised,” the August board minutes read.
Minutes from a September board meeting indicated that “107 issues” were found with the hospital’s implementation of the MedWorxs system, some of which related to billing, and others to training.