Records revealed detailing financial investigation of Medi-Cal plan

May 21--CAMARILLO, Calif. -- A 1,090-page investigative document concludes leaders of the Gold Coast Health Plan did not willfully hide revenue information from its government board or maliciously manipulate other financial data.

But the report points out an $8.1 million accounting error that was later caught, the need for improved account monitoring and reimbursements labeled as "possibly questionable," including more than $14,000 to employees for outside health insurance.

Gold Coast is a publicly-funded system that provides government Medi-Cal insurance to more than 180,000 Ventura County residents. Investigators at the League of United Latin American Citizens accused the plan a year ago of workplace discrimination, retaliatory discipline and manipulation of financial data.

Investigations ordered by the Ventura County Medi-Cal Managed Care Commission, which governs Gold Coast, focused on the treatment of employees and financial practices.

The efforts cost more than $1.1 million.

In a statement released Tuesday, commissioners said investigations showed the most serious allegations -- racism, intentional financial misconduct and harassment -- were unfounded.

A Gold Coast lawyer said the investigation on employee treatment will not be released because it deals with protected personnel issues. But a CD of the financial report conducted by Vicenti, Lloyd & Stutzman accounting firm was released on Wednesday.

The document includes a 178-page report and more than 1,000 pages of records and other exhibits. Financial investigators interviewed current and former Gold Coast employees. They explored employee emails and computer hard drives.

The firm was paid $340,655.

Parts of the report focus on allegations about Gold Coast's finances made by the plan's current controller Atul "Allen" Maithel and former controller Sonia DeMarta.

LULAC officials said in their report last summer both controllers were retaliated against for their complaints. Gold Coast commissioners said in their joint statement that employment practice investigators found no evidence of retaliation.

In the 1,090-page financial document, investigators rejected an allegation made by Maithel that Gold Coast managers used accounting numbers to intentionally conjure up a false picture of the plan's financial performance.

"VLS has not seen evidence of a malicious intent to manipulate the IBNR estimates," investigators said, referring to the accounting of losses not yet been reported.

But an accounting error in early 2014 was made involving an $8.1 million payment from the state of California, investigators said. Former Gold Coast Chief Financial Officer Michelle Raleigh also asked the state for a $2 million payment when it already had been paid.

Both errors were corrected, investigators said. They concluded staff did not intentionally hide the $8.1 million mistake or revenue information from the governing commission.

"The occurrence of these errors indicates steps should be taken to improve accounts receivable monitoring," investigators said.

Investigators also reviewed reimbursement policies, listing several "possibly questionable" employee expenses. They cited $14,460 in reimbursement for outside health insurance payments, including a government insurance program called COBRA.

Former CEO Michael Engelhard received more than $9,000 in COBRA reimbursements, investigators said, noting his contract called for him to participate in insurance provided by Gold Coast.

Investigators reviewed more than $285,000 in credit card charges made from January 2012 to June 2014. No supporting documents were provided for $37,066 of the charges; no business purpose was provided for $13,085.

Purchases included $603 for a plasma HD TV and $531 for a wall map.

"These transactions do not appear egregious; however, a clear business purpose is not evident," investigators said, noting the TV may have been purchased for the Gold Coast office.

Investigators also looked at vacation policies, salary ranges and inconsistencies between Gold Coast's policies and ADP, the payroll processing company used by the plan.

"There is a critical need to bring job titles, salaries and vacation rules in ADP and commission-approved schedules in line with each other," investigators said.

Gold Coast policies call for the governing commission to approve payments to outside companies of more than $100,000 a year. Investigators said CIO Solutions and Contract Workspace both received more than that amount but agreements with the companies were not approved by the commission.

CIO Solutions, an informational technology company, received $717,757 over three fiscal years, investigators said. Contract Workspace, a furniture service company, was paid $249,288 in one fiscal year.

Investigators also cited two instances where the plan's bidding process wasn't followed.

In their statement released Tuesday, commissioners said the investigation showed that while mistakes were made, they were not made willfully to manipulate or hide information.

"I think for everything they looked at there were some good and some not so good things," said Barry Fisher, who chaired the commission committee that oversaw the investigations. "It certainly doesn't excuse us from the errors that were made."

Fisher said there is a need to examine policies and procedures including credit card use, travel and the role of the CEO. He said commissioners will work on the issues with new CEO Dale Villani, who comes on board later this summer.

Dave Rodriguez, state LULAC chairman, cited the investigative report's data on credit card use, the contract bidding process and travel expenses among other issues.

"All these things, if put together, clearly substantiate LULAC's concerns about how taxpayers money was used in a public agency," he said.

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