Advocates for the Latino community of East Los Angeles have sent the
following letter to the Department of Managed HealthCare (DMHC) Director
Brent Barnhart, reiterating their demand for a full investigation into
HealthCare Partner's (HCP) conflict of interest scandal and their
abdication of oversight responsibility of the medical group.
STATEMENT FROM OUR SALUD COMMUNITY ADVOCATES NESTOR VALENCIA AND ELBA
"Our SALUD initially became involved in what now appears to be the Enron
of health care when they learned of the plight of Juan Carlos Jandres, a
victim of HCP's illegal hospital network scheme.
"In a meeting last fall Our SALUD met with Senate President pro Tem
Darrell Steinberg and asked him to investigate the situation. Senator
Steinberg then contacted the department directly in regard to these
"HealthCare Partners, a darling in Democratic fundraising circles and
one of the pioneer Accountable Care Organizations that the Affordable
Care Act is predicated on, has played a shell game with its financials.
The medical group bullied state officials to avoid oversight and
regulation, denied care to patients, built their company through
acquisitions to the point they could orchestrate a $4.4 billion merger
with DaVita, an out of state corporation, thereby creating the largest
healthcare company in the country. Put simply, DaVita bought a shell
company with no real business or employees.
"HCP and DaVita together concealed the actual revenue streams and in the
end DaVita purchased an empty shell for $4.4 billion, of which 75
percent of the price was debt, while HCP's largest shareholders cashed
out. Shareholders were not informed of the lawsuit during the HCP and
DaVita merger, nor were they told DaVita was purchasing an empty shell.
That was a material event and should have been disclosed. Recent
documents show the manipulation of financial data and that DaVita knew
it was purchasing an unlicensed, illegally operating health plan, but
failed to notify its shareholders of these material facts. A new member
to a current class action lawsuit against HCP is an employee in the
billing department of HealthCare Partners and has firsthand knowledge of
the unlicensed payment of hospital claims and delays in care."
Nestor Valencia and Elba Romo, Our SALUD community advocates, are
available before and after the FSSB meeting for interviews.
Our SALUD letter to DMHC Director Brent
February 8, 2013
Re: FSSB conflict of interest agenda item
Dear Director Barnhart:
We are writing to you to express our concern and indignation for recent
actions taken by your agency.
Exactly three months ago Our SALUD attended a Financial Solvency
Standards Board (FSSB) meeting and raised an issue concerning its
current Chair Dr. Keith Wilson. During that meeting Our SALUD argued Dr.
Wilson's title as Regional Medical Director for HealthCare Partners
(HCP) is a direct conflict of interest to the work he is held
responsible for on the FSSB. Specifically, we suggested that permitting
an executive employed by what is alleged to be a medical group currently
operating as an unlicensed health plan, to chair a Board for the DMHC is
dishonorable. This disgrace is most evident in that Dr. Wilson has a
hand in making recommendations to the Director on what licensure should
be required of Accountable Care Organizations. Our SALUD argued that
this affiliation and apparent conflict should have been at least
disclosed, if not prevented by Dr. Wilson's removal from the FSSB.
During the November 8th meeting Dr. Wilson minimized his
relationship with HealthCare Partners, notwithstanding the obvious
facts. The Department of Managed Health Care's (DMHC) Chief Deputy
Director Shelley Rouillard specifically blocked the Board from
considering Our SALUD's objection, citing the Brown Act and stating that
the matter could not be discussed because it was not on the official
meeting agenda. Perhaps Ms. Roulliard was correct as a matter of
procedure. To his credit Dr. Wilson recused himself from consideration
of his appearance of a conflict. It is what followed this meeting that
is deeply concerning.
Just more than a month later, on December 20, 2012, Our SALUD met with
the DMHC and again expressed its concerns over HCP's unlicensed
operation and Dr. Wilson's position as an advisor to you. These
concerns, we are aware, were echoed by Senate President pro Tem Darrell
Steinberg in a letter sent to the DMHC on November 20, 2012.
Senator Steinberg received a letter back from you on December 19, 2012
ensuring a commitment from HCP to pursue licensure after a decade of
operating illegally. In that letter there was no acknowledgement or
foresight into any penalties to be enforced for HCP's wrong doing, nor
any discussion of ordering HCP to cease and desist until it first
obtains a license.
The issue of HCP's licensure and Dr. Wilson's apparent conflict of
interest was raised by Our SALUD at the last FSSB meeting in which Chief
Deputy Director Rouillard participated. Director Barnhart, you
personally were aware of these issues because you met with Our SALUD and
you responded to Senate President pro Tem Steinberg.
Yet for some reason, your agency through FSSB sent out an announcement
of next week's FSSB meeting, without notifying Our SALUD or, we presume,
Senator Steinberg. More accurately, FSSB is holding a meeting two days
from now in which the subject of Dr. Wilson's conflict has been
agendized. We note that the agenda refers to this issue in the most
generic of terms, precluding interested parties from actually noticing
that the issue had been put on the agenda, buried in the middle as item
four. Further, the announcement of the February 11, 2013 meeting
contained not one reference to the issue of Dr. Wilson's conflict being
addressed. Lastly, we note that the DMHC website still publicly
identifies Dr. Wilson as affiliated with Talbert Medical Group, not HCP.
These may be procedural or other mistakes, but they appear to be more.
The facts then appear to be that your agency intends to whitewash the
issue of a possible conflict of interest by a Board official in
violation of the Government Code. The Department is portraying this
appearance by secretly agendizing the issues for discussion without any
notice to parties DMHC knew were interested in the subject. Indeed,
parties such as Our SALUD and Senator Steinberg who have specifically
brought this issue to your attention.
Juan Carlos Jandres was a health plan enrollee in Los Angeles. He did
everything right. As a young man, he obtained employment, he had health
insurance. Mr. Jandres followed the appropriate procedures in accessing
care - he went to his HCP Primary Care Physician, and to the specialists
in HCP's network to which he was directed by HCP. He was treated by HCP
in an outpatient facility which failed to adequately treat his cancer.
As a consequence he lost half his face in a then necessary surgery, and
only after leaving HCP's network. HCP directed Mr. Jandres' care away
from hospitals which might have timely caught his cancer, and away from
specialists who might've admitted him to such institutions. Can you
assure Mr. Jandres and the hundreds of thousands of Los Angeles
residents currently assigned to HCP, that their care isn't being
subordinated to HCP's desire to avoid paying hospital claims which it
has unlawfully contracted to assume HealthCare Partners failed Mr.
Jandres and those like him, Director Barnhart. DMHC was established to
protect health plan consumers. DMHC failed in not subjecting HCP to the
appropriate laws and in not regulating their practices.
Can you assure Mr. Jandres and the hundreds of thousands of Los Angeles
residents currently assigned to HCP, that their hospital needs will not
be directed by HCP to inferior institutions comprising HCP's network, at
the expense of their care DMHC is failing again. DMHC has deliberately
it seemed, refused to assert jurisdiction upon an unlicensed health plan
that required regulation, enforcement, and sanctions. One wonders if Dr.
Wilson's influence hasn't dictated the outcome of this issue.
We don't know why HCP was permitted to operate illegally for so many
years, and we do not hold you responsible for the acts of your
predecessors. However, Director Barnhart, you took a public oath to
ensure enforcement of the Knox-Keene Act, and as a public official we
would hope you would feel an obligation not to conceal issues as
important as those raised by Our SALUD.
As the primary government watchdog overseeing managed health care in
California we expect full transparency and justice for the people you
serve. We look forward to hearing the update set to be discussed on
Monday and hope that the department will engage in future notifications
for such important matters that are brought to your notice. We request,
once again, that you respond to our inquiries, and that you keep us
informed so as to not produce an appearance of impropriety. We also hope
we can work with you to resolve the issues we have raised which are of
grave concern to all Californians.
About Our SALUD
Our SALUD (Somos Aliados Latinos Unidos por la Dignidad - Latino Allies
United for Dignity), is a grassroots coalition and healthcare watchdog
representing civic, community and business leaders from the Southern
California Latino communities. We believe that our low-income, minority
communities deserve quality healthcare access equal to other
communities. We believe our communities are not unlike other communities
in California which are yearning for best practices and quality health
care. With the new Affordable Care Act, we believe the legislators shall
bring transparency and good government practices in implementing new
health care delivery models, which should include exceptional, free of
conflict-of-interest, community-patient focused decision makers at every
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