Show Me the Money
Warrant issued at Southern Inyo Hospital on suspicion of embezzlement
Two things most people hope never to hear are: “‘60 Minutes’ is at the front door and wants to talk to whoever is in charge,” and “You are hereby served with a search warrant.” The latter occurred at Southern Inyo Hospital on Tuesday as a search warrant was served by five representatives of the District Attorney’s office in Tulare, along with two Tulare County sheriff’s deputies
What information is gathered, on behalf of the Tulare Healthcare District, is hoped to shed more light on the relationship between the Tulare Regional Medical Center, Southern Inyo Hospital and the company that manages both, Healthcare Conglomerate Associates, otherwise known as HCCA. Both THD and SIHD are HCCA clients.
The warrant served at SIH was specifically looking for lost, stolen or embezzled “things used for the means of committing a felony,” according to SIHD bankruptcy attorney, Ashley M. McDow.
In addition to equipment or medications that “may” have been taken from the Tulare Regional Medical Center and sent to SIH, the search warrant also sought all hard copy files or electronically stored computer files pertaining to invoices, receipts, billing and payment slips, purchase orders, equipment and supply transfer and receiving slips.
McDow asked the bankruptcy court to release SIHD from its contract with HCCA for possible financial mismanagement and “unauthorized use of the district’s bank accounts.”
SIHD, which owns the Southern Inyo Hospital facility in Lone Pine, Calif., hired HCCA to oversee the day-to-day operations of the hospital and assist in its bankruptcy case after it virtually collapsed in December 2015, and was unable to pay its bills or employees. The current SIHD board signed a management agreement with HCCA on January 4, 2016 in a desperate attempt to keep the hospital operating. That decision was largely based on HCCA’s touted success at turning around the Tulare Healthcare District.
The SIHD board voted on October 11 to immediately terminate and reject its contract with HCCA after learning of alleged financial mismanagement.
During a phone interview, SIHD Board President, Richard Fedchenko, said that the Southern Inyo contract agreement is not as restrictive as the one HCCA has with THD. While employees at the Tulare Regional Medical Center are considered HCCA employees, SIH employees are not. Additional differences between the two contracts include a lower termination fee for the agreement with SIHD, and a shorter contract period. He went on to say that, since SIHD is still under bankruptcy protection, it should be able to get out of the contract with HCCA. (THD filed for bankruptcy protection just last week). The bankruptcy judge will make the final decision.
Both healthcare districts are alleging that HCCA has not been forthcoming in sharing the districts’ respective full financial records. They are concerned based on those records they have seen that there might be major problems being hidden from district staff.
In one instance, it appeared that $700,000 was transferred from an SIHD account in late 2016 to the Tulare Health District. This was discovered as the SIHD board was looking for funds to pay for a replacement CT scanner. SIHD Board members are considering a proposed upcoming bond measure which was discussed at the Board’s October 10 meeting.
