Health Care Watchdog Coalition Our SALUD Urges Legislative Action in Oversight Failure

Calls on state officials to further investigate alleged fraudulent activity affecting California patients

SACRAMENTO, Calif.--()--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.


“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 allegations.

“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 Barnhart:

February 8, 2013

Brent Barnhart, Director
Department of Managed Health Care
980 9th St., Suite 500
Sacramento, CA 95814

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.

Nestor Valencia Elba Romo




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 level.


Perry Communications Group
Yessenia Anderson, 916-658-0144

Release Summary

Advocates for the Latino community of East Los Angeles sent a letter, Friday to the DMHC Director reiterating their demand for a full investigation into HealthCare Partners unlawful operation.


Perry Communications Group
Yessenia Anderson, 916-658-0144