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County seeking documents from former contractor

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March 28, 2022 — The Board of Supervisors and County Counsel cross-examined two principals of a former mental healthcare contractor last week in hopes of learning how to lay hands on documents the county needs to satisfy a state audit. The county is obliged to provide specialty mental healthcare to Medi-Cal patients, which it does using state realignment money as a 40% match for federal Medi-Cal funds that are distributed by the state. Last year, the county received about $9.5 million in realignment money, approximately three million of which was used for conservatorships.

It’s possible the state could withhold realignment money if the county can’t produce records to show that mental healthcare rendered almost ten years ago was billable according to state specifications, which could deprive the county of some of the match it needs to get Medi-Cal money. But the records were shredded two years ago, and the deadline to file legal action against the contractor is fast approaching. Last week’s cross-examination was conducted under a legislative subpoena, which compelled testimony about who else might have copies of those records, including subcontractors and the county itself.

From 2013-2016, a contractor called Ortner Management Group provided oversight of contracts for mental healthcare for the county’s adult Medi-Cal patients. The mental health director at the time, Tom Pinizzotto, had previously been a member of Ortner. Pinizzotto’s connection to the group led to a 2014 Grand Jury report into the appearance of a conflict of interest, but stopped short at asserting that he had actually used insider information for his own benefit. Ortner and Pinizzotto both stepped down from working with the county in 2016.

Ortner Management Group, or OMG, has since dissolved. However, at last week’s hearing, former CEO Tom Ortner and former CFO Melissa Lance, who used the name Melissa Callicott during the group’s years with the county, were represented by the same attorney, Dominic Signorotti of Walnut Creek.

Ortner and Lance testified that records were kept in Quickbooks and on computers they no longer have, then printed out and shredded. Contracts with providers, according to Ortner, were documented on paper and kept in three-ring binders, which he shared with the county. Ortner had a suggestion for County Counsel Christian Curtis when asked where he would look if he were to attempt to reconstruct the general ledger, or the master accounting documents. “If I were to do something like that, I’d ask the county for their information,” he said.

Former CFO Lance testified about how the company kept track of other aspects of the business during the three years it worked with the county, saying she recalled preparing cost reports for subcontractors but not for OMG itself. Asked if anyone at OMG prepared financial records for the purposes of Medi-Cal compliance, she said “No,” and added that OMG also did not have a contractor who performed that work. “We were provided Gary Ernst from the county to assist with the preparation of the cost reports,” she testified.

After the testimony, Curtis told kzyx that Medi-Cal requires that records be maintained for ten years after the audit is completed. Since the state has not yet commenced its 2013 audit of the county’s mental healthcare billing, the clock hasn’t even started. There is a point of debate if Ortner was obliged to maintain records after the company dissolved. Curtis did advise the board that the period of time within which the county can take legal action against the company expires in June, but it’s unclear exactly what the legal remedy would be. It’s also unclear exactly what consequences the county would face if it fails to provide the documents, in terms of financial losses or its ability to provide mental healthcare using state and federal money.

Supervisor Dan Gjerde, who was the only supervisor on the board at the time Ortner was hired, questioned Lance about her testimony regarding the company’s lack of expertise in billing for Medi-Cal. He said that the main reason the county hired Ortner to provide contract oversight was that in previous years, the state had found millions of dollars in audit exceptions due to improper documentation. “So I was really surprised to hear earlier in your testimony that you as the Chief Financial Officer of the company did not have expertise in Medi-Cal billing but were relying on one or two county employees,” he said. “Were there other people working for Ortner that were in fact guaranteeing that the billing provided to the state was not going to be subject to a negative audit exception?” Signorotti interjected to say that the question was argumentative and that it misstated Lance’s testimony.

“What I understood is that I was to report all of the billing to the county fiscal clerks,” Lance clarified. “And I did that in the format that they requested, accurate and complete, and then they took that information and they billed Medi-Cal directly. The county fiscal people, not OMG. We provided all the details in the billing format that they requested, and they billed Medi-Cal. So we had no control over what they billed.”

Curtis said he did think some of the information obtained in the subpoena was useful, and declined to comment on the county’s intentions regarding further legal action.