BCHF Finally Exposed
OPINION: The Borrego Sun had it right: Borrego Health was riddled with fraud
Last updated 8/3/2022 at 11:40am
Borrego Community Health Foundation (Borrego Health) has admitted to fraudulent activities and criminal conspiracies within the organization; and filed a RICO, Racketeering lawsuit against 49 of the Foundation’s former board members, former CEO’s, officers, 15 contract dentists, Premier Healthcare Management, other individuals and vendors, and Does 1-250 in the United States District Court Southern District of California, on July 19, 2022.
Borrego Health is the parent company, funding and management source for the Borrego Springs Clinic. The two are tied at the hip and share a combined fate. The lawsuit will be a game changer one way or the other. Stay tuned: It will be fascinating to see what defendants charge Borrego Health, if they file cross claims.
To read the full court document go to the Borrego Sun website: https://www.borregosun.com/story/2022/08/01/stop-press/bchf-lawsuit/7246.html
In direct contrast to a public statement made by Sandra Hansberger, current chair of the Borrego Health Board of Trustees on March 22, 2022, when replying to a question about the organization’s legal problems at a fundraiser for San Diego County District 5 Supervisor Jim Desmond, she stated, emphatically, “When everything comes out, there will be no fraud.” Really? In the lawsuit, Borrego Health, names “Insiders” that include officers and former board members that are claimed to be complicit in draining the organization of public health funds for personal gain.
Dan Anderson, then chairman of the Board of Trustees, following the October 2020, FBI raid, stated to the Borrego Sun and others, “It’s no big deal; just a couple of bad dentists.”
However, the lawsuit claims the number of bad dentists that are known is 15, and counting. According to the lawsuit, the dentists accomplished their theft of tens of millions from Medi-Cal and Denti-Cal through unenforced contracts, phony client visit counts, phony patients, unnecessary dental work and marked up dental work for which they received financial kickbacks with the help of Borrego officers, and former trustees.
So why the sudden change of heart? Has Borrego Health finally found its conscience? Trying to clean the slate for a new start? One really hopes so for the sake of the Borrego Springs clinic. A cynic might say, however, that the board is throwing some bad guys under the bus to protect others. Or, maybe, by confessing to their sins, it reduces pressure on the FBI/DOJ to release their findings, which could be worse, by way of a state lawsuit. Maybe, Borrego’s MEA CULPA saves the state the embarrassment of indicting its own employees for either negligence or bribery. And, perhaps, some of those government folks involved weren’t just employees, but in prized appointed and elected positions, which would be a good reason to put a damper on a state lawsuit and settle for Borrego Health’s confession.
On the other hand, some folks in positions of real power might have told Borrego to fall on their sword, or else. Why would they do that? To protect government officials who wanted a better retirement plan, and conspired with Borrego Health. Keeping the story and focus small on Borrego’s illegal dealings, makes a lot of a bigger government heartburn go away at the federal and state regulatory levels. At both the state and federal government, regulators in positions of responsibility for protecting public funds, at the very least, were asleep at their desks, and missed all the red flags, which the Borrego Health tax returns flaunted for nine years.
The individuals and corporations named as Defendants are divided into categories: Insiders, Board Insiders, Premier Health Management, Dentists, and Others.
The lawsuits list of Defendants includes: “Insiders” identified as people in charge that were responsible for the criminal activity that has harmed Borrego Health. They are Karen Hebets, Vice President of Business Services; Mikia Wallis, CEO; and Diana Thompson, Chief Financial Officer. Then there are the “Board Insiders” – Charles Kimball, Harry Isley, and Mike Hickok.
The 153-page lawsuit consistently attempts to substantiate how all 53 causes of action and claims of harm to Borrego Health happened without the knowledge of the two recent Boards of Trustees, the current Board under Chairman Hansberger, and previous Chairman, Anderson, who became chairman in 2018.
Why aren’t they indicted as “Board Insiders”? Both signed off on fraudulent IRS tax returns, and both have denied any illegal activities, or knowledge of fraud, despite a 2020 in-house legal report that recommended firing all officers as compliant. Borrego Health blames Insiders for nepotism and inflated salaries. Yet, both Anderson and Hansberger approved and defended the outrageous salaries and benefits. Salaries, the suit claims, were used to pay back for nefarious deals, or to enrich families and friends of officers and managers without the expertise or experience to serve in their positions as officers, managers, or gardeners. Now, they are blaming other Insiders for this illegal activity. Plus, the two have served on the board of trustees for about 10 years, long enough to know what was going on, or at least ask.
The lawsuit claims that “All of the board Insiders have resigned or have (since been) removed from the Borrego Board of Trustees.” Not from my perspective.
One of the most egregious statements in the lawsuit is that the multiple “Schemes,” as identified by the Borrego Health Plaintiffs, “Were concealed by the Defendants, and most did not come to light until, at the earliest, October 2020, during a government investigation (FBI/DOJ raid). But for that UNRELATED investigation, the Schemes may have remain (sic) undiscovered.”
There’s something very wrong with this statement. The FBI investigation began with surprise raids of defendants named in this very lawsuit: Borrego Administration, Mikia Wallis’ home, Dr. Husam Aldairi’s dental offices, and the Premier Healthcare Management’s offices. Who dreamed up the fiction that these raids were unrelated to the lawsuit? And, secondly, the “Schemes,” as the lawsuit categorizes the crimes, were not “undiscovered” prior to the raid. In fact, it was media reporting of the crimes that led to the raid and investigation.
For the years from 2018 to 2020, leading up to the FBI/DOJ investigation, the Borrego Sun consistently reported on most of the illegal and unethical activities, which are now foundations of this lawsuit. In fact, the newspaper was the first to uncover and expose the entire contract dental/ Premier Healthcare Management fraud.
Prior to this period of reporting, Ellen Fitzpatrick wrote about Borrego Health’s illicit activities the Borrego Sun saw to be occurring from 2013 to 2015, covering such deals as the Dennis Nourse, Bruce Hebets,’ and Daryl Priest’s property scam of $440,000 for Nourse’s land on Palm Canyon Drive to build a new clinic. This happened while Nourse was on the Borrego Health Board of Trustees. Talk about conflict of interest. The new clinic never materialized, and Nourse walked away with a windfall from tax-payer funded health insurance. The suit, notably did not mention, or was not aware of Borrego’s $2 million loan to Nourse, which was, according to a retired accountant, written off as a bad debt by the Trustees. One can bet that bad debt found its way into a few private bank accounts.
A word to the Plaintiffs’ attorneys, there are people that know more about the alleged crimes, than most of the Trustees, or self-serving individuals, coming forward in hopes of saving their own careers by pointing guilty fingers at others. Plus, the court case has attempted to excuse perpetrators, like Dr. Timothy Martinez, chief dental officer. Disclosing pages about the Integrity Accountability plan that he and Dr. Nithya Venugopal, dental ethics officer, developed, and nothing about his role in protecting Dr. Aldairi, and Premier from whistleblowers; nor his use of his position on the State Dental Hygiene Board to influence State Dental Board members and staff on licensing known criminals like Dr. Aldairi, and punishing whistleblowers, like Dr. Maura Tuso.
The other Defendants are categorized as Premier, Priests and other Priest Related Entities; Defendant Dentists; James Hebets and His Companies; and Others: Julian Medical Foundation/Chuck Kimball; Timothy Martinez, chief medical officer; and Dr. Alfredo Ratniewski, chief medical officer.
Martinez, even after naming him as an “Other” Defendant, is represented as the “no-fault good guy” hamstrung and unable take action against crooked dentists because his higher ups – Insiders, like former CEO Mikia Wallis, Karen Hebets, and Diana Thompson – were protecting them. Characterized as heroes, he and Dr. Venugopal, created “Team Integrity” to catch dental fraud; but, according to the lawsuit, were rebuffed and prevented from taking action by their higher up “Insiders.” Martinez was no more a victim than the Boards of Trustees. He may, however, have been a Dr. Jekyll and Mr. Hyde. He could, at any time, have alerted regulators to the abuse of federal and state health and dental funds.
In fact, any of the officers or Trustees could have done so. One did. Her name: Sarah Rogers. She was removed from the board, “Because she held up meetings, asking too many questions,” as a fellow board member, pleased with her removal, stated in a letter to the Board Chairman, Dan Anderson.
Even worse, the lawsuit and lawyers for Borrego went out of their way to make a criminal case for a whistleblower, added to the list of criminal defendants. Evidently, Maura Tuso, who reported and documented fraud happening in Dr. Aldairi’s dental office to Martinez, wasn’t credible as a witness, because she was a criminal, working with a suspended license.
On the (recorded) phone call where she agreed to discuss Dr. Aldairi’s illegal practices, Martinez invited Travis Lyon, chief operations officer, of Premier Health, to listen in. The lawsuit names Lyon, a Defendant, and aggressive, major enforcer for Premier. He was the guardian of Dr. Aldairi and other dentists that reported the impossibly, highest numbers of patient visits. Of course, Lyon protected the most productive, but crooked dentists, his company was being paid $25 per-dental visit by Borrego Health.
So how did 153 pages of criminal activity materialize so late in the game, and with a preponderance of evidence that was only known to a few, prior to preparing the lawsuit? Did the attorneys for the Plaintiffs get help from the Attorney General’s office? Which would be illegal.
Did they read all the back issues of the Borrego Sun? Or was this outrageous amount of public funds, which went into private pockets in the form of kickbacks, money laundering, unregulated bogus contracts, bonuses for bad deeds paid through rental agreements; inflated salaries, or hiring friends and family as rewards, something Boards of Trustees had been hiding for years? A great deal of information quickly surfaced when the current Trustees needed money to keep Borrego Health functioning, or to beat the state’s attorneys, possibly bringing additional indictments to the court.
A RICO victory can award three times the amount of injury incurred by the plaintiffs. That’s why the case is filed in the federal court. Dan Kramer, public relations consultant for Borrego Health, told the Desert Sun, “They are hoping for an award of at least $40 million.”
Questions of everyone, who knew what and when, aren’t all answered in the lawsuit. Probably because they are potentially self-incriminating, as stated in Borrego Health’s counter arguments in the Aldairi vs. Borrego Health civil lawsuit.
We knew, our readers knew, and the Sun questioned Anderson and Hansberger repeatedly about the “alleged” crimes, which are now to be litigated. Their failure to reply, or lack of honest responses are duly reported in back issues of the Sun.
Furthermore, the Borrego Sun publisher had meetings with the key offenders, Mikia Wallis, former CEO, following Bruce Hebets, the criminal mastermind; Dr. Alfredo Ratniewski, the executive chief medical officer; and Dan Anderson, chairman of the Board. In these meetings, which were held in 2019, prior to the FBI raid and investigation, he discussed the questionable criminal activities that were being uncovered and reported by the Sun.
Anderson knew what was going on from a number of other sources, prior to the FBI raid. Yet, he did nothing. So, four years later, after the Borrego Sun began reporting on Borrego Health’s criminal problems, Sandra Hansberger’s Board is finally admitting some of the truth; but, of course, without being accountable, “Because the defendants concealed their criminal activities.” Such a weak excuse for abdicating their responsibilities to Borrego Health’s 300 plus, unlucky and innocent employees that have lost their jobs, and patients who died, or were otherwise harmed by Borrego Health’s criminal activities.
It appears that Borrego Health was more interested in filling bank accounts of a select few, then providing the services to 33, once 36, community clinics, needed to protect the health of thousands unable to afford private health insurance, or access distant health facilities.
Like the dark version of the mythical Ouroboros, the snake that eats its own tail, continuingly devouring its self and being reborn from its self, Borrego Health sues itself; and is likely to be re-emerge with some of the same patterns of illicit practices. With many yet to be held accountable, it’s hard to see how things at Borrego Health will really change. There is hope that the state-appointed monitor placed in the organization to clean it up and bring it into compliance with the laws, will make a difference. He’d better, since he is, reportedly, being paid $990 an hour, and has been billing Borrego for two years.
For example, Defendant Number 49, Dr. Alfredo Ratniewski. There’s no explanation of why he is named a defendant except for cursory referrals in the court document. Or why he is listed as an “Other,” rather than an “Insider?”
His record of collusion, cooperation and as a co-conspirator begins with the MSO and IPA scandals, well covered in the Court pleadings, and past Borrego Sun coverage. Joining Bruce and Karen Hebets, and Mika Wallis, Dr. Ratniewski, was listed as an officer of the Hebets’ two shell companies, which were sold to Borrego Health for $2.3 million, and listed on the tax returns as a contribution to the IPA. Borrego Health also made a $440,000 loan to Karen Hebets for IPA.
Dr. Ratniewski’s reward, according to the lawsuit, was a hefty salary of $700,000 and additional benefits such as an agreement to hire his family members and pay them well.
Actually, Ratniewski would have required a kickback from the IPA deal. Besides protecting Hebets’ backside, he was really greedy, considering he sold two client lists as “clinics’’ to Borrego for $2.3 million. The state refused to cover the cost, and it ended up in court with the state and taxpayers the ultimate victors. The judge commented that “client lists are not clinics,” and there were not enough valid assets to require the state to reimburse Borrego Health the money they already paid Ratniewski.
The court suggested that Borrego Health should sue the good doctor for their money, but they did not. Instead, they made him the chief medical officer. Ratniewski’s naughty list is long, and the Sun has used enough ink about him to sink a ship. An example of how involved he was in every criminal act was reported by a manager, who claimed, every time Premier’s criminal enforcer, Travis Lyon, came to the office, Ratniewski met with him. He, along with Daryl Priest, probably gained the most from their relationships to Hebets. And just think, Ratniewski made a salary of $1.4 million every two years, working for Hebets for at least eight to nine years.
Even when Borrego Health claimed, per Dan Anderson, that Dr. Ratniewski was gone at some point after the FBI raid, it was discovered he had been hired back as a contractor and with a leaner salary of $440,000. It can be assumed with the lawsuit, “Dr. Rat” has finally been taken off the money spigot. But what of all the other officers and managers? They had to know the players and schemes. Were the salaries and bonuses just too good to take off the blindfolds. Major pals of Hebets, can be assumed to have been rewarded, like Corrine Velasquez, the newly appointed chief operations officer. Managers tag her as a graduate of the Hebets’ school of abusing influence. Her family members are still working at Borrego Health. Time will tell.
How about Anna Navarro, Head of Human Resources? She posted job qualifications, held interviews, and read the resumes. Yet, she hired every family member and friend Insiders wanted. She had to know the count of people without any education except high school GEDs that were paid outrageous salaries as officers and managers, playing at jobs, and earning salaries for which they were totally unqualified.
She coldly fired the Borrego Springs clinic, Nurse Practitioner, Jan Jones, and Dr. Pam McEvoy, the clinics only mental health professional, just before the pandemic; and then, told people they had retired. This, when Dr. James Huot, Borrego Springs only doctor, was at an undisclosed location for three months, leaving the clinic with no one able to write prescriptions. Navarro quickly processed the hiring of Mikia Wallis’ fiancée, who, apparently, had no sellable skills, so he was given a new position, overseeing the vehicle maintenance and leasing program, and paid $123,000.
Navarro’s back on the payroll.
We can’t overlook Defendant James Hebets and Hebets Insurance LLC. James sold; and the company pressed employees to buy his “lousy insurance plans,” according to someone, who discovered what was in the fine print when she retired and went to collect. But the big money maker for Bruce Hebets’ brother, James, was that special executive, monthly tax free, 162B plan, for which he was still receiving $240,000 a month in commissions in 2020. It’s complicated; but lawyers for the Plaintiffs did a layman’s job of explaining. Also, not mentioned in the suit, is the fact that James Hebets was Borrego Health’s Benefits Officer.
Got to admit he deserved the title; he was good at generating benefits for himself, brother Bruce, and other officers that received tax free bonuses of as much as $5,000 monthly, which they cashed out. James’ company also wrote an “Executive Salary Study,” that claimed Borrego Health’s multilayered benefit structure and inflated salaries were the norm. It was frequently used by Trustees to justify the salaries and costly administration overhead. Two Schemes that almost seem laughable, which is why the Sun never covered them, are what the lawsuit calls the “De Anza Country Club Scheme” and the “Julian Barn Rental Scheme.”
Seems that when De Anza was in a serious financial situation, Bruce Hebets stepped up at a community meeting, waving a check of $150,000 to buy the place. No one liked the idea from De Anza residents, to the Borrego Board Trustees, so it was dropped and De Anza returned the check. This was important to the Borrego lawyers because supposedly, Hebets had been encouraged to buy the place by two board members who resided in De Anza and would have somehow benefitted. Reads like more theory than proof that these board members were conspiring.
More than likely the man, who once owned five corvettes, was just showing off and liked the idea of owning a golf resort. One of the real challenges would have been explaining to the people in Washington and Sacramento that give out money for primary health care, why a FQHC health center should be reimbursed for a golf club? But, Hebets had an answer when pushed on the subject. He was going to add mental health residences to the property. That would have gone over big with De Anza residents!
And, who can forget the Julian Barn Scam. Borrego Insider, and former Chairman of the Board of Trustees, Charles (Chuck) Kimball, leased a horse barn to Borrego Health. The Barn was said to be a future clinic with Borrego as the landlord for 20 years. In a lease dated November 7, 2013, Borrego Health agreed to pay $7,179 in monthly rent.
Like so many of these deals, the papers were not presented to the full board by either the board chairman or the CEO. Board chairmen were notorious for not allowing the full board of trustees to review certain “sensitive” information. Dan Anderson, for one, would not allow the board to review the Premier Contracts, even when asked by board members.
There’s a lot more. Most of which has been covered in the Borrego Sun, like the $5 million Scheme to give Hebets a retirement bonus, which the attorneys describe as a buyout. According to a former Trustee, the amount, and, even trickier, how to disclose the money to the IRS, was the topic of a number of board and committee discussions, under Board Chairman Dan Anderson, and Vice Chairwoman Sandra Hansberger. The amount was lowered to $1.9 million, so as not to invite attention by the feds, and disclosed as salary. It was neither a buyout nor Hebets’ annual salary for working 40 hours a week. It was a gift – a big, illegal gift from the taxpayers. Hebets was dying of cancer and couldn’t have worked. Plus, he died five months before his work year ended.
It’s really not good to lie to the IRS, or leave required information out, like the secret Premier Management contract and earnings of $20 – $25 million annually. The Internal Revenue Service can cancel the foundation’s non-profit C3 status; something, which is still on the table.
Then, of course, there’s the unbelievable amount of dental fraud covered in the lawsuit under “Premier Management” and contract “Dentists” Schemes. It reads like, “How to Cheat as a Dentist for Dummies.” One dentist, living in Florida, submitted his invoices for his dental work from his Long Beach Dental office, even though he never left Florida.
Another billed for more consecutive visits from a patient than there were working days in the month. The details of the schemes of 15 highest earning dentists are extreme, but classic examples of the fraud in the industry.
What else is there to say, except read the lawsuit. Copies available through the Borrego Sun website: https://www.borregosun.com/