News
SEABHS scrutiny now includes CPSA
Thelma Grimes/San Pedro Valley News-Sun
The Arizona Attorney General's office is not the only agency investigating Southeastern Arizona Behavioral Health Services, Inc.'s (SEABHS) business practices.
Neal Cash, president of the Community Partnership of Southern Arizona Regional Behavioral Health Authority (CPSA), said if service changes are not implemented, SEABHS could lose public funding.
CPSA has not yet sent a "Letter of Cure" to SEABHS, but they have many concerns. Cash explained that a "Letter of Cure" would outline corrective measures SEABHS must take to continue receiving CPSA funding.
In the 2008-09 fiscal year, Cash said SEABHS received $35 million from CPSA.
If management of SEABHS operations does not improve, and in a worst-case scenario, the contract was not renewed, Cash said patients would have an alternative. Pantano Behavioral Health Services in Tucson is expanding, and Cash said CPSA is interested in bringing more of those services into communities such as Benson, Willcox, Nogales, Clifton, Safford and Sierra Vista.
If Pantano expands services, Cash said it would create competition for funding with SEABHS.
"SEABHS does receive a significant amount of money each year," Cash said. "We are concerned about the operations and services. We want to be assured that proper care is being provided."
Cash said CPSA has a say in how SEABHS handles the services and delivery of care, but despite concerns, does not have authority over decisions by the non-profit's governing board.
CPSA doesn't feel patients are at risk, Cash said, but has questioned staffing levels at the eight different facilities throughout Cochise, Graham, Greenlee and Santa Cruz counties. CPSA is also concerned about business operations, which has become the focus of an Attorney General's investigation.
Last month, the SEABHS board fired 14-year CEO Dana Johnson, who along with other employees has been named a suspect in the state's ongoing investigation.
The state authority has already indicted one SEABHS employee for allegedly embezzling $30,665 over a four-year period.
Johnson is being investigated for borrowing $150,000 and never repaying it.
Documents obtained by Wick Communications show that Johnson asked an executive committee for the loan in 2004.
Current board members Dick Hamilton and Bill Inman were on the executive committee that approved the original loan in April 2004. Other members of the committee included Walter Mares and Fren Lawson.
In an April 29, 2004 memorandum to the board, Johnson said she was requesting the board's approval for a short-term, fully secured loan for an "investment opportunity that is mutually beneficial."
"For me, I have a minimal risk opportunity that will supplement my income and eventual retirement," Johnson said. "For SEABHS, this is a fully-secured loan; contingency covered by life insurance, and at a significantly higher interest than the funds are currently earning."
A copy of the 2004 promissory note shows that Johnson agreed to make 36 monthly payments of $750, starting June 15, 2004.
The former CEO even agreed to pay a 5 percent fee if the payment was more than 10 days late.
The committee voted unanimously to approve the loan, but with little oversight from the governing board, third-party auditors found three years later that Johnson had made no payments.
It was at that point that Johnson asked the committee for an extension. Records showed that the committee approved the extension on Sept. 25, 2005. Hamilton, along with current board members Kathleen Kruger and Ann Morrison voted for the extension.
Morrison is Inman's wife. The couple represents the Clifton area.
In a Sept. 24, 2008, memorandum, Johnson said, "In April 2004, the board's executive committee approved a secured loan to me in the amount of $150,000. I am requesting that the term of this loan be extended through 2010, although it is my intention to pay down the principle balance, if not fully pay off this obligation well before that."
Similar to the 2004 promissory note, the September, 2008, agreement has Johnson promising to make monthly payments at a 6 percent interest, and a 990 form filed with the IRS in 2007 said she would put up her life insurance policy and pension as collateral.
However, documents show Johnson never followed through with her promise. The beneficiary named on her 401K plan is spouse Lee Dapper, and not SEABHS. Dapper is also listed as the beneficiary to the life insurance policy signed by Johnson on June 20, 2008.
Marcelino Varona Jr., a new board member, has been pushing for changes, and at the Dec. 9 board meeting called for the board to take action to protect the company if Johnson does not repay the full $150,000 with interest.
The board approved a measure for Legal Director Rose Weston to take the necessary steps to go to court if necessary.
CPSA has also raised concerns over the company's loaning Johnson money.
In Nov. 25, 2008 letter, Cash told Johnson the Arizona Department of Health Services (ADHS), Division of Behavioral Health Services, Office of Integrity had been alerted about the loan, and CPSA requested information on their behalf.
However, Cash said CPSA did not have the authority to require SEABHS to disclose the documents being requested.
ADHS asked that SEABHS provide all documentation regarding Johnson's loan from meeting minutes and promissory notes to the employee's background.
Roberto Rivera, of the ADHS Office of Program Integrity, said in November 2008, that they have concerns about the loan and with how it was reported to the IRS in the 2005 and 2006 990 forms.
An email sent to a SEABHS auditing board on Nov. 25, 2008, shows Johnson was not surprised by the ADHS inquiry.
"Hey folks. Well, here is 'the other shoe.' I have been expecting this for awhile," she said. "I am going to have a conversation with our attorney just to make sure we are indeed OK with this, as I expect we will have to be responding in some way so CPSA is Ok with this BHS. Goodness . . ."
With SEABHS expenditures coming under scrutiny from ADHS and the Attorney General's office, auditing costs for the agency are skyrocketing.
In an Oct. 29 report, SEABHS Controller of Finance Heriberto Contreras said the board was told at one point that auditing costs were around $300,000 in 2008-09. But after checking, Contreras found that the non-profit had paid the KLK accounting firm $499,343.29 between July 2008 and June 2009.
Contreras said there was some confusion as to how much SEABHS actually spent because KLK was listed in the accounts under two different names.
Last year, besides half a million in auditing fees, SEABHS spent $650,000 managing a 119-car vehicle fleet.
With a $17.9 million budget, the City of Benson spent $18,000 last year on a third-party audit that is required annually by law.
As the SEABHS board tries to move forward, hire a new CEO and get the company finances under control, there are still questions about how things got so out of control.
Varona, the former mayor of Nogales, and others involved with the investigation have said the problem has been a complete "lack of oversight" from the governing board on how Johnson was managing the non-profit that has grown into a 400-employee corporation.
Long-time board members such as Inman and Hamilton argue that the board should not micromanage, while Varona argues that it is the lack of management that has led to employees being named as suspects in criminal investigations, loans not being repaid and funding providers questioning SEABHS' ability to care for the mentally ill.
Besides Johnson's being named a suspect by the Attorney General and a former SEABHS employee being indicted for embezzlement, another employee is being investigated for vehicle fraud.
Benson Police Chief Paul Moncada confirmed last week that his department and the Nogales Police Department have assisted the Attorney General in investigating numerous employees.
The Arizona Attorney General's office is not the only agency investigating Southeastern Arizona Behavioral Health Services, Inc.'s (SEABHS) business practices.
Neal Cash, president of the Community Partnership of Southern Arizona Regional Behavioral Health Authority (CPSA), said if service changes are not implemented, SEABHS could lose public funding.
CPSA has not yet sent a "Letter of Cure" to SEABHS, but they have many concerns. Cash explained that a "Letter of Cure" would outline corrective measures SEABHS must take to continue receiving CPSA funding.
In the 2008-09 fiscal year, Cash said SEABHS received $35 million from CPSA.
If management of SEABHS operations does not improve, and in a worst-case scenario, the contract was not renewed, Cash said patients would have an alternative. Pantano Behavioral Health Services in Tucson is expanding, and Cash said CPSA is interested in bringing more of those services into communities such as Benson, Willcox, Nogales, Clifton, Safford and Sierra Vista.
If Pantano expands services, Cash said it would create competition for funding with SEABHS.
"SEABHS does receive a significant amount of money each year," Cash said. "We are concerned about the operations and services. We want to be assured that proper care is being provided."
Cash said CPSA has a say in how SEABHS handles the services and delivery of care, but despite concerns, does not have authority over decisions by the non-profit's governing board.
CPSA doesn't feel patients are at risk, Cash said, but has questioned staffing levels at the eight different facilities throughout Cochise, Graham, Greenlee and Santa Cruz counties. CPSA is also concerned about business operations, which has become the focus of an Attorney General's investigation.
Last month, the SEABHS board fired 14-year CEO Dana Johnson, who along with other employees has been named a suspect in the state's ongoing investigation.
The state authority has already indicted one SEABHS employee for allegedly embezzling $30,665 over a four-year period.
Johnson is being investigated for borrowing $150,000 and never repaying it.
Documents obtained by Wick Communications show that Johnson asked an executive committee for the loan in 2004.
Current board members Dick Hamilton and Bill Inman were on the executive committee that approved the original loan in April 2004. Other members of the committee included Walter Mares and Fren Lawson.
In an April 29, 2004 memorandum to the board, Johnson said she was requesting the board's approval for a short-term, fully secured loan for an "investment opportunity that is mutually beneficial."
"For me, I have a minimal risk opportunity that will supplement my income and eventual retirement," Johnson said. "For SEABHS, this is a fully-secured loan; contingency covered by life insurance, and at a significantly higher interest than the funds are currently earning."
A copy of the 2004 promissory note shows that Johnson agreed to make 36 monthly payments of $750, starting June 15, 2004.
The former CEO even agreed to pay a 5 percent fee if the payment was more than 10 days late.
The committee voted unanimously to approve the loan, but with little oversight from the governing board, third-party auditors found three years later that Johnson had made no payments.
It was at that point that Johnson asked the committee for an extension. Records showed that the committee approved the extension on Sept. 25, 2005. Hamilton, along with current board members Kathleen Kruger and Ann Morrison voted for the extension.
Morrison is Inman's wife. The couple represents the Clifton area.
In a Sept. 24, 2008, memorandum, Johnson said, "In April 2004, the board's executive committee approved a secured loan to me in the amount of $150,000. I am requesting that the term of this loan be extended through 2010, although it is my intention to pay down the principle balance, if not fully pay off this obligation well before that."
Similar to the 2004 promissory note, the September, 2008, agreement has Johnson promising to make monthly payments at a 6 percent interest, and a 990 form filed with the IRS in 2007 said she would put up her life insurance policy and pension as collateral.
However, documents show Johnson never followed through with her promise. The beneficiary named on her 401K plan is spouse Lee Dapper, and not SEABHS. Dapper is also listed as the beneficiary to the life insurance policy signed by Johnson on June 20, 2008.
Marcelino Varona Jr., a new board member, has been pushing for changes, and at the Dec. 9 board meeting called for the board to take action to protect the company if Johnson does not repay the full $150,000 with interest.
The board approved a measure for Legal Director Rose Weston to take the necessary steps to go to court if necessary.
CPSA has also raised concerns over the company's loaning Johnson money.
In Nov. 25, 2008 letter, Cash told Johnson the Arizona Department of Health Services (ADHS), Division of Behavioral Health Services, Office of Integrity had been alerted about the loan, and CPSA requested information on their behalf.
However, Cash said CPSA did not have the authority to require SEABHS to disclose the documents being requested.
ADHS asked that SEABHS provide all documentation regarding Johnson's loan from meeting minutes and promissory notes to the employee's background.
Roberto Rivera, of the ADHS Office of Program Integrity, said in November 2008, that they have concerns about the loan and with how it was reported to the IRS in the 2005 and 2006 990 forms.
An email sent to a SEABHS auditing board on Nov. 25, 2008, shows Johnson was not surprised by the ADHS inquiry.
"Hey folks. Well, here is 'the other shoe.' I have been expecting this for awhile," she said. "I am going to have a conversation with our attorney just to make sure we are indeed OK with this, as I expect we will have to be responding in some way so CPSA is Ok with this BHS. Goodness . . ."
With SEABHS expenditures coming under scrutiny from ADHS and the Attorney General's office, auditing costs for the agency are skyrocketing.
In an Oct. 29 report, SEABHS Controller of Finance Heriberto Contreras said the board was told at one point that auditing costs were around $300,000 in 2008-09. But after checking, Contreras found that the non-profit had paid the KLK accounting firm $499,343.29 between July 2008 and June 2009.
Contreras said there was some confusion as to how much SEABHS actually spent because KLK was listed in the accounts under two different names.
Last year, besides half a million in auditing fees, SEABHS spent $650,000 managing a 119-car vehicle fleet.
With a $17.9 million budget, the City of Benson spent $18,000 last year on a third-party audit that is required annually by law.
As the SEABHS board tries to move forward, hire a new CEO and get the company finances under control, there are still questions about how things got so out of control.
Varona, the former mayor of Nogales, and others involved with the investigation have said the problem has been a complete "lack of oversight" from the governing board on how Johnson was managing the non-profit that has grown into a 400-employee corporation.
Long-time board members such as Inman and Hamilton argue that the board should not micromanage, while Varona argues that it is the lack of management that has led to employees being named as suspects in criminal investigations, loans not being repaid and funding providers questioning SEABHS' ability to care for the mentally ill.
Besides Johnson's being named a suspect by the Attorney General and a former SEABHS employee being indicted for embezzlement, another employee is being investigated for vehicle fraud.
Benson Police Chief Paul Moncada confirmed last week that his department and the Nogales Police Department have assisted the Attorney General in investigating numerous employees.
Copyright © 2012 - San Pedro Valley News-Sun