KINGSBURG – The Kingsburg Tri-County Health Care District has responded to an investigation by the Fresno County grand jury by disagreeing with most of the findings, acknowledging or explaining others and saying others would not be fiscally responsible to follow.
Moses Diaz, a lawyer with Visalia’s Farley Law Firm which contracts with the Health Care District, filed a letter dated Sept. 15 with Judge Kimberly Gaab in Fresno County Superior Court’s Department 54.
The report characterized the investigation into the Health Care District as the result of a “primarily political complaint” from a member of the Kingsburg Citizens Committee. The committee was “upset” with the District’s approval of a lease with Crestwood Behavioral Health to use the facility locked mental health treatment center.
“KCC repeatedly asked the District to not approve the lease, in part, because allegedly Crestwood had forcefully medicated some of its patients and continued to do so,” the letter reads.
The lawyer said since Committee members did not approve of Crestwood’s medical practices, they filed a lawsuit against the District and city of Kingsburg. That lawsuit was dismissed in 2015, and the grand jury investigation was started in 2016.
Betsy Tunnell was a part of that citizens’ committee and said the initial response is “filled with justifications made to cover up and divert attention away from the findings.”
Tunnell said taxpayers’ voices were being ignored and if it weren’t for observations and intervention by the grand jury little would change.
“We would not have a full disclosure of the $2 million on account and the board would continue to rely on long entrenched advisers that have become accustomed to reliable annual income of taxpayer dollars.”
Tunnell said although she’s thankful the grand jury investigated, she’s concerned now that residents are so frustrated they won’t investigate to give continued input on health-related programs and services the board should provide through the ongoing tax revenues.
“Many thanks to the grand jury, there are observable changes that are being implemented by the board because of the attention brought to their previous ways of doing business.”
In its report, the grand jury asserted the District lacked sound financial management in its handling of revenues generated from taxes on the properties within its boundaries in Fresno, Kings and Tulare counties.
According to financial statements for the year ending June 2016, the District received $715,414 in property taxes and $90,880 in rental income from tenants. Its expenses in 2016 were $335,712.
The District owns the facility at 1200 Smith St. where Kingsburg Hospital previously operated. The district filed for bankruptcy in 1999 with a final decree issued in 2006 and closed the hospital in 2010. Its acute-care license expired in November 2013. This was also when the last principal and interest payments were made to pay for outstanding bonds.
The buildings were vacant until they were leased to Kingsmith Investments in 2015. Kingsmith subleases the buildings to Crestwood Behavioral Health Inc., which runs a mental health rehabilitation center there now.
The grand jury said that the District didn’t supply financial information to substantiate their audited statements, had two different 2015 audit reports, wrote off 2011 and earlier debt when they had sufficient cash flow to pay it, could not get documents regarding the district’s financial condition, relied too heavily on outside contractors and displayed a lack of sound financial management.
The jury also recommended having the Fresno County Auditor hire a certified public accountant to audit their accounts from when the hospital closed and for the board to evaluate and hire new professional advisers and contractors every three years.
The District does not have employees but instead hires independent contractors to handle recordkeeping of its financial affairs and provide accounting, auditing and legal services.
The grand jury included in its report that the District’s 2016 financial statement showed that $142,097 was paid in professional fees in 2016 and $171,653 was paid in 2015. This represents 42 percent and 50 percent of total operating expenses in 2016 and 2015, and 20 percent and 25 percent of total district revenue.
In order to find out the district’s accounts payable balance, the jury requested a detailed list of vendors and their account balances in November 2016, January 2017 and May 2017. The district at first said it had no such list and had no plans to create one.
“These responses led the grand jury to question the validity of the audit report issued by the District’s auditor,” the report reads.
The jury questioned how the auditor obtained assurance that the accounts payable balance was free from material misstatement if the accounts payable information was in such disarray.
“The accounts payable balance is significant because, according to the audited financial statement for [Fiscal Year ending] June 30, 2015, it represented 79.4 percent of the District’s total assets.”