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Ventura County officials are investigating a fired health care manager’s claims of irregular and fraudulent financial practices in the county’s public medical system. The allegations were cited in a $5.24 million retaliation claim filed against the county last year by Timothy Patten, chief deputy director and No. 2 person in the Ventura County Health Care Agency for most of 2016.

Patten said he had identified more than $100 million in activities he suspected were aimed at defrauding government agencies, the Ventura County Board of Supervisors, financial rating agencies and bondholders – a description the county’s chief financial officer found absurd. In Patten’s view, county officials had violated laws related to employment as well as abuse and fraud of Medicare and Medi-Cal, the government insurance programs that cover the bulk of patients in the Ventura County Medical Center system.

The VC Star reports that Patten settled with the county for $151,000 in severance, an agreement that required him to provide the factual basis for his allegations. A team of county legal and health care officials has been investigating the information in that document for the past seven months.

No evidence of broad losses, waste or fraud was identified in an analysis of the investigation that County Counsel Leroy Smith released Thursday. The team has not found any clear legal violations that need to be immediately corrected, based on a preliminary review of financial reports and interviews with 20 employees and officials with knowledge of the agency’s accounting practices, Smith wrote.

A few questions Patten raised about licensing issues at clinics and the size of physician payments did merit further review, Smith said.  The latter involved whether physician time sheets were accurate and some doctors were paid over the recommended rates and outside the normal review process, Smith’s report stated.  

Smith has said the accounting firm of Moss Adams and Huron Consulting Services, which the county has already retained to retool Ventura County Medical Center, may be asked to look at remaining issues. He expected the probe to be completed sometime this year.

Patten provided a five-page, typed statement to the county to back up his claim. The disclosures were based on more than 30 years as a health care executive in a variety of sectors and experience in investigations and compliance, he said. The document described what he called “accounting irregularities” and “potentially fraudulent accounting practices” in the system that is projected to spend $877 million this fiscal year.

Virtually all of his assertions were denied by Chief Financial Officer Catherine Rodriguez and Health Care Agency Director Johnson Gill, who said they indicated a lack of understanding of how public hospital systems work.  “There are basic principles that are totally missed here,” Gill said.

Patten said the budgeting process was incomplete and inadequate for such a large operation, the accounting methods were inconsistent and the agency moved money around to balance the books. At cash management meetings, finance staff would make up numbers to balance projections, he said. “Millions of dollars were added and subtracted without any backup or consent on the part of the operational leaders,” he wrote.

Rodriguez and Gill said the transfers are part of authorized shifts from the county to the state for the cost of the Medi-Cal program. Operational leaders were present at meetings where cash flow was discussed, Rodriguez said.

Smith agreed with Patten’s assessment that budgeting should be improved, saying it’s understood that the accounting systems and resources are not adequate for the demands of the large health system. But Patten’s claim that at least 10 clinics never had budgets seems to have no basis in fact, Smith’s analysis said.

Patten claimed it was also wrong to book a $15 million payment that was two years away. Rodriguez said the entry was justified because it was supported by law, could be estimated and was probable.

It appears Patten correctly pointed out that some clinics were not properly licensed, leading to billing problems. Gill said the situation at one clinic has been resolved but that the other in Santa Paula cannot be licensed until a state-authorized building is found. Smith doubted the county was submitting erroneous bills for payments to clinics without proper licenses but said the issue merited further review.

Patten said the financial position of VCMC was overstated because it failed to show a $15 million liability for drugs that were incorrectly given to patients who were not low-income. Gill said the problem was being corrected by the time Patten arrived in 2016.

Another section of his statement was devoted to what Patten called potentially fraudulent activities. He said the process physicians use for filling out time sheets violates federal standards because doctors are signing blank time sheets, then employees fill them in without knowing how much time the doctors have worked.

Cash transfers between the county and clinics exceed approved amounts and physician pay rates may exceed accepted standards, he said. Among other issues he reported: purchase orders from physicians do not follow federal guidelines, contract amendments are not being done in writing, and an unapproved accounting transfer of roughly $4 million was made from VCMC to the health care plan run by the county.

Smith said the issues had either been corrected, were not substantiated or were being addressed. He said the transfer Patten identified was approved by the Board of Supervisors.