Borrego Sun - Since 1949

One Last Shot at Survival


Last updated 10/12/2022 at 12:50pm

From its meteoric rise to the “fastest growing, largest, and most expensive federally qualified Health Center (FQHC)” in only a few years; and after three years continuous reporting of alleged fraud and corruption, culminating in an ongoing FBI/ DOJ investigation, the Borrego Community Health Foundation (BCHF) has filed for Chapter 11 bankruptcy protection in the Federal Bankruptcy Court Southern District of California

The action was taken nearly a month after the state Department of Health Care Services (DHCS) notified the Foundation it was suspending 100% of Medi-Cal funding, on Sept. 29. Additionally, Borrego Health had been notified by the state Department of Public Health to prepare to transition 92,000 patients to other care providers in 90 days.

The Chapter 11 bankruptcy, according to the Board of Trustees, was undertaken to prevent the DHCS suspension of Medi-Cal, which is around 44 % of Borrego Health’s funding. “This money is critical to keeping the clinics open, while the organization restructures the approximately $100 million debt,” Trustees explained in a press notice. The filing, pending Court approval, would also ensure retention of the 700 full-time employees and their benefits. It’s assumed, it will also stop state plans to find and transfer 92,000 of Borrego Health’s patients to other providers.

“Chapter 11 means creditors are going to take a bath and a haircut, it’s about reducing or eliminating debt,” explained Bob Kelly, formerly with Scripps Hospital, CEO and Founder of the San Diego Foundation and member of the Borrego Valley Endowment Fund. “Borrego’s future and fate now lies in the hands of the bankruptcy judge. Trustees no longer have control. The future is a toss-up at this point.”

In an emergency filing, Borrego Health attorneys asked the court to grant a temporary motion to keep creditors from closing down the necessary services needed to keep the clinics open for patients. These included money lenders, banks, utilities, insurance and funding to retain employees. Judge Laura Taylor, granted the temporary emergency motion on an interim basis with a hearing scheduled on Sept 27.

In addition, the “First Filings” asked for court approval of Borrego Health’s list of attorneys; Chief Restructuring Office (CRO), Isaac Lee, managing director of Ankura financial advisors; and other consultants, that will be representing the Board of Trustees in the bankruptcy proceedings and receiving compensation paid by Borrego Health.

Borrego Health placed the blame on this latest crisis on DHCS’ decision to withdraw Medicaid (Medi-Cal) funding, Explaining the choice to move for bankruptcy filing, Acting Chief Executive Officer stated, “Unfortunately, the misguided action by DHCS jeopardizes patients and has led us to make a difficult decision to protect our patients and their access to care.”

“Our mission is to provide high-quality local access to those most in need drives us forward and this filing with the court will allow us to continue to provide care as we do today, while we secure the future of healthcare for our patients,” she added.

Kelly stated, “Actually, everything was such a bizarre mess. What else could they do, but turn the future of the clinics over to bankruptcy court and hope the Judge can untangle things?”

The October 2020 FBI-raid included removing documents from Borrego Health administrative offices and offices of Premier Healthcare Management, a contract dental services manager, employed by Borrego Health for approximately 5 years. The offices of a private dental contractor, Husam Aldiari, who reported income of $8 million in 2020, were also visited.

The following investigation focused on dental fraud in the tens of millions by at least 15 dentists and Premier as the complicit contractor. As a result, DHCS pulled 100% of Borrego Health’s state dental insurance and temporarily suspended Medi-Cal. The combined hit to the Foundation’s budget was approximately 88% of its previous income.

DHCS and Borrego Health made an agreement that would lift the suspension of Medi-Cal funding, which required a Corrective Action Plan (CAP) to be followed by Borrego Health. A monitor, Isaac Lee, was appointed by the state to oversee the Foundation’s compliance with the plan. However, the state never returned dental insurance to the non-profit.

Rumor was, Borrego Trustees blamed their CAP monitor, Isaac Lee, managing director of Ankura Consulting Group LLC, for forwarding inaccurate reports on their lack of success in meeting the strategic goals of the CAP. The same Isaac Lee, the Trustees have named as the Chief Restructuring Officer (CRO), and have asked for court approval of his appointment.

When asked by the Borrego Sun, spokesperson for DCHC, Anthony Cava, explained the state’s position and reasons for suspending Medi-Cal.

“After 17 months of working with Borrego Health to attempt to correct its ongoing deficiencies, the Department of Health Care Services (DHCS) has determined that it is in the best interest of Medi-Cal beneficiaries and the Medi-Cal program to reimpose a full payment suspension on all Borrego Medi-Cal services and to prepare for the transition of care for Medi-Cal members.”

Specifically, DHCS is re-imposing the full payment suspension as a result of quality and access to care issues identified by the Independent Monitor (IM), as well as Borrego’s lack of compliance with the following terms of the February 26, 2021, stipulated agreement between Borrego and DHCS:

- Continual improper billings to the Medi-Cal program after the date of the agreement.

- Failure to retain all patient billing records.

- Failure to institute a robust corporate integrity and compliance program to ensure compliance with all Medi-Cal laws.

- Failure to promptly and fully implement all corrective actions prescribed by the IM and/or DHCS upon notice from DHCS.

- Failure to conduct a retrospective review of claims billed to the Medi-Cal program, including, but not limited to, overpaid claims, including wrap around (Code 18) payments, beginning from January 1, 2016, to present, which would be overseen by the IM and DHCS, and/or by any other entity contracted by DHCS or the independent monitor.

“DHCS’ priority is to ensure the health and well-being of affected Medi-Cal beneficiaries. This includes working to ensure that if Medi-Cal managed care plans (MCPs) terminate their contracts with Borrego, and Borrego ceases operations, there will be a safe transition for all beneficiaries receiving Medi-Cal services through Borrego.”

“DHCS will partner with the MCPs to assist Medi-Cal managed care members who transition to other providers. This will include providing access to quality and medically necessary care, and reaching out directly to the affected fee-for-service beneficiaries through a letter informing them of their medical care options and directing them to call DHCS’ 1-800 beneficiary call-line if assistance is needed.”

Borrego Health’s new, acting CEO, Maclsaac was quoted in a Desert Sun interview saying, “She was shocked by the move, especially since everything was going so well with Borrego meeting its obligations per the CAP and the monitor.”

Another stressor on the organization was the notice by the state Department of Public Health that the state would like 92,000 of Borrego Health’s patients transferred to other providers within 90 days. Another action the Chapter 11 filing can stop.

MacIsaac’s response to the notice was “incredulous,” stating that “This would be impossible within such a short time.”

Three Riverside clinics were previously sold to Neighborhood Health, also a FQHC. Borrego Health agreed to pick up the tab for the debts. Two other clinics in Barstow and San Bernardino were closed due to the legal duel between landlord Daryl Priest, accused of heavily inflating the rental rates and a DHCS prohibition against Borrego Health paying any further rent.

According to documents filed with the court, Borrego Health, currently operates 24 brick and mortar clinics, two pharmacies and six mobile units in San Diego and Riverside Counties.

Prior to the FBI raid, and continuing until Borrego Health filed a lawsuit charging its own officers, trustees, and others for Racketeering and violation of other Health Care Laws in August, 2022, Trustees constantly downplayed accusations of criminal activities, and professed innocence on all counts.

An angry, former longtime manager at Borrego Health, shared her response to the Board of Trustee’s Chapter 11 announcement with the Borrego Sun.

“I wouldn’t trust these people to tie their own shoes. I wish they would just go away and let the clinics transfer to other health centers that are truly invested in caring for people, rather than buying mansions and driving corvettes. The collective failure of this, and all the other of Borrego Health’s boards of trustees is responsible for so much pain.”

“Now they are using the patients and employees as pawns to avoid paying their debts and screwing some more people.”

“They didn’t do their duty to financially protect the foundation, and some even took personal advantage of the government funding, which showed they didn’t care much about the organization or the patients. Now, they want to hurt more people, in addition to the patients that have suffered due to Borrego’s inability to provide real primary services to rural communities, like Borrego Springs, which need it the most.

“While the leadership was ripping off millions of dollars, how many people got sick, and even died for lack of medical treatment? How many people lost jobs when the foundation had to downsize from the illegally generated funding.

“Now they are planning on punishing people who sold them goods and services in good faith. All of their actions have a serious trickle-down effect; failure to prevent and manage serious illnesses; laying off employees; and not paying bills means higher social and economic costs to the communities that they NOW claim is so dang important to them,” she opined.

The list of creditors filed by Borrego Health, along with the Foundation’s Resolutions spread across 700 pages and cover only 1,700 possible creditors. “Others,” according to Dan Kramer, publicist for Borrego Health, “will be identified as time goes on.

The top creditors included Premier Healthcare Management and Daryl Priest, owed $3.2 million. His claim is disputed due to the legal disputes and charges of inflated rents and operating a contract dental management scam.

One million is owed to the IRS, with $192,000 to American Express. The amount owed to DHCS is not known, but repayment of money illegally received from both the federal and state governments could be staggering. Other creditors include dentists charged by Borrego Health with fraud in the August, 2022 Racketeering suit. Evidently, the court will decide if the Foundation must pay back money to the alleged criminal perpetrators of the Foundation’s demise? These include officers, trustees, and others.

Other creditors ranged from high class restaurants and hotels, like Disney’s Orlando, Florida Resort and Washington, D.C.’s Willard Hotel. This is the well-known place where people in power meet to make deals with people who want something from the Federal Government and vice versa. Utilities, municipalities, taxing entities, banks, insurance companies are on the list, as well as a number of creditors in Borrego Springs.

It’s hard to imagine that the Borrego Springs Chamber of Commerce, and other non-profits listed are actually owed money by Borrego Health. The full document can be retrieved at:

Curious creditors were a couple of Las Vegas Casinos. Charges could have been for conferences or meetings. However, a former employee reports that Dianna Thompson, the fired chief financial officer, owned an apartment in Las Vegas. And, according to the source, “It was not uncommon for a group of her friends to head out to Vegas on Friday afternoons.” Could officers have used the company credit card for personal entertainment?

Proof of claims is required to be filed with the court no later than Nov. 21, and the deadline for complaints was set at Dec. 19, bankruptcy court records show.

The story began in Borrego Springs in 2019, when Borrego Health fired two longtime, health care professionals of four, serving the local clinic. COVID was just beginning its deadly reign, and the clinic doctor was on an extended leave of absence, leaving the staff with no one able to write prescriptions. This, along with a continual loss of visits by specialty doctors, and the aged and non-functioning medical equipment, was raising concerns about the quality of health care within the community.

The Question: Why couldn’t a health care center with an income of $300 plus million, not afford onsite, appropriate professional medical staff as the primary, and only healthcare provider in Borrego Springs?

The Answer: Has been a long time in coming, unraveling in small pieces of violations of the federal and state Medicaid and Medicare rules and regulations, inflated salaries for officers and family, same for rental leases for friends, shady contracts, money laundering management, and dentists, who had a financial field day, using every illegal scam imaginable to steal tens of millions of dollars.

Illegal gifts, including $1.9 million to the founding CEO and architect of the schemes; and using taxpayer funded health care money to benefit family and friends. CEO Bruce Hebets, the recipient of the rather large gift, was retiring due to an illness and passed away six months later. Afraid to report the money as a gift, Borrego Health lied to the IRS on the 990-non-profit tax form, reporting the nearly $2 million gift to the retiring executive as salary for working 40-hour weeks, when he had been deceased six months of that working year.

Add the incompetence and lack of experience or credentials of Borrego Health leadership and officers, due to a policy of hiring families and friends, regardless of the position, to run a $300 million network of clinics, and it’s a recipe for disaster.

How to explain how the Board could ignore one of the simplest rules of a FQHC, “that salaries must be commensurate with averages for equal positions?” Every time they signed checks, held salary reviews or filed officers’ income with the IRS, it never dawned on the Board of Trustees that their salary scale was not just illegally inflated, but ridiculously so. And that isn’t even adding in the cushy benefits that included leased cars, and a tax-sheltered insurance scam.

But there were others that also had responsibility for safeguarding the tax-payer-funded, government health programs that failed so spectacularly. All of the combined California and federal health care agencies and departments, also, managed to turn a blind eye to red flags that were screaming “fraud alert” until October 2020, when the mountains of facts, alleging illegal and criminal activities could no longer be ignored.

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