In a strongly worded report, the Tulare County grand jury said Tulare Local Health Care District should release “without delay” a full accounting of how $85 million in general obligation bond money was spent on a still-unfinished hospital project.
The district failed to inform the public how the funds were spent, and a bond oversight committee could not function because it was never given sufficient information, the report said.
Millions of dollars were spent on unplanned construction costs or matters not directly related to construction, the report said.
The district’s board of directors has three months to respond in writing.
In a statement, the board said it “takes seriously” the grand jury report and “will conduct a thorough investigation” before writing a response.
The grand jury’s report is welcome, but it contains errors that create a negative perception of the health care district and Tulare Regional Medical Center, board member Laura Gadke said.
“There were some substantial inaccuracies, and we will go into them” when the board issues its response, she said.
(The health care district) routinely withheld pertinent information and financial data from the bond oversight committee, thus rendering the committee incapable of performing its oversight function.
Tulare County grand jury report
Released last month with the title “Tower of Shame,” the grand jury report comes out as the community decides what to do about the unfinished hospital addition.
The building is up and has walls, but it is not being used.
To finish the interior, the health care district board of directors last year authorized putting a $55 million bond measure on the ballot, but so far no date for an election has been set.
Meanwhile, in an unrelated matter, a group of doctors at Tulare Regional Medical Center is suing the board of directors after being stripped of its role governing the medical staff.
The doctors had been in charge of the hospital’s medical executive committee, which oversees physician credentialing and patient care issues.
But the board replaced it with a new group after the federal Centers for Medicare & Medicaid Services said the old one was not performing its duties and that it might decertify the hospital, which would stop it from receiving payments, according to Dr. Benny Benzeevi, chief executive of HealthCare Conglomerate Associates, the company that operates the hospital for the district.
The lawsuit is in its early stages, but a judge last month refused to reinstate the old committee and said the doctors were not likely to prevail based on what has been shown so far.
There were some substantial inaccuracies and we will go into them.
Laura Gadke, Tulare Local Health Care District board member
The grand jury investigated the stalled hospital tower project after getting a complaint about “willful failure” to disclose how the bond money was spent, and allegations of “gross malfeasance” in construction management.
The saga of the unfinished tower began in 2005 when voters approved the $85 million bond.
The tower went up but was never finished after concrete on two floors started delaminating and the money ran out.
The bond oversight committee “repeatedly requested” information about expenditures but did not get it, the grand jury report said.
Instead, the district “routinely withheld pertinent information and financial data from the bond oversight committee, thus rendering the committee incapable of performing its oversight function,” the report states.
Minutes of the health care district board meetings not only had little information but the information it did have was incorrect, the report said.
Before construction began, the hospital project was estimated at $120 million, the grand jury report said.
“It appears that (the district) either intentionally or unintentionally failed to comprehend the issue of the cost differential between the $85 million in bond authorization and the total project cost estimated to be well in excess of $100 million,” the report states.
It appears the board of directors relied on “unsupported estimates of reserves and projection of future revenues,” the report states.
It also appears that money went for costs not directly related to construction, the report said.
The board twice hired and fired a chief executive officer and had to pay severance costing hundreds of thousands of dollars, the report said.
Litigation related to the delamination was settled out of court “at an expense of $7.9 million to TLHCD taxpayers” instead of being used for construction, the report said.
More than 700 change orders and 5,000 requests for information resulted in additional costs of $17.5 million, the report said.
Additionally, no independent construction manager was hired until well after construction began, the report said.
The grand jury said the board should get training in governmental transparency and disclosure, and the bond oversight committee should be disbanded and a new committee formed.