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Hospital suit claims firms concealed fraud
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More from Local NewsCommunity Memorial Hospital has sued its former legal counsel and accounting firm, claiming they committed malpractice, fraud and conspiracy in concealing the alleged misconduct of former administrator Michael Bakst.
In an 86-page document filed last week in Ventura County Superior Court, the Ventura hospital alleges the defendants colluded to protect the longtime administrator.
"It alleges that the accounting firm and then-general counsel basically agreed they would issue a whitewashed report and not reveal true deficiencies and outright fraud by Bakst," said attorney George B. Newhouse Jr., who is representing Community Memorial. "As a result, CMH didn't know what was going on."
The suit was filed against the Ventura law firm of Goldenring & Prosser; attorney Peter Goldenring; the Santa Barbara accounting firm of Bartlett, Pringle & Wolf; and a former partner in that firm, Ron Camp. All said the lawsuit is baseless.
"The allegations are just not true," said James Prosser, a principal in the law firm. "We did nothing wrong."
The lawsuit said if the hospital board had known the true picture, it would have dismissed Bakst before his termination in fall 2003 and would have reduced his multimillion-dollar severance package.
The 24-year administrator was ousted after a long-running power struggle with physicians, who sued the hospital five years ago over management issues.
The current lawsuit, filed Wednesday, does not stipulate damages the nonprofit 242-bed hospital is seeking, but CEO Gary Wilde said Monday it is in the seven-figure range.
Complaints against Bakst
At issue is an audit the board commissioned the year before Bakst's dismissal.
In 2002, the hospital board heard rumors that Bakst was allegedly defrauding the institution, the lawsuit says. The complaints centered on whether he was submitting false claims for personal expenses, receiving reimbursements for hundreds of thousands of dollars of expenses with little or no documentation and making significant payments to doctors.
The hospital commissioned an investigation by its longtime accounting firm, Bartlett, Pringle & Wolf. But instead of fully sharing its findings with the hospital board, the lawsuit alleges the firm "concealed and obscured" its findings of Bakst's purported financial misconduct.
"By agreeing with Goldenring to conceal and cover up evidence of Bakst's financial chicanery, Bartlett Pringle committed gross and inexcusable professional malpractice and misconduct," the lawsuit says.
Late last year, Community Memorial agreed to pay the federal government $1.52 million to settle allegations of improper payments, gifts and loans to physicians over a period of nearly 10 years. Wilde has said they were all initiated under the administration of Bakst, who denies any wrongdoing.
Attorney Randall Dean, who represents the accounting firm and Camp, said his clients acted properly.
"There was no information withheld," he said, adding the hospital's governing board is trying to cast the accountants as "scapegoats for the board's own mismanagement of hospital affairs."
Goldenring referred questions to Prosser, who said the suit was "pretty outrageous."
The lawsuit is coming more than five years after the defendants issued an allegedly sanitized report in January 2003.
Collusion is alleged
Prosser said there were "tremendous problems" with the statute of limitations. But Newhouse said the actions are within time limits because the board did not get a full report from the accountants until February 2007.
"They colluded with Mr. Goldenring to protect Mr. Bakst," Newhouse said.
In the lawsuit, CMH officials for the first time characterized Bakst's actions as fraud.
Bakst's attorney, Michael Amir, said he was shocked by the allegation.
Amir said that all of his client's transactions were approved by the hospital board. Nothing was hidden, he said.
"It's an ongoing campaign to smear this gentleman's name," he said.
Prosser said he believed the suit was "a vendetta" perpetrated by doctors who sought Bakst's dismissal. He cast it as a "continuing attempt" by the physicians to gain greater control of the hospital and its board of trustees.
Wilde denied that. "I don't think it's personal," he said.
Posted by gstbauer on May 20, 2008 at 9:21 a.m. (Suggest removal)
Well here we go again - seems like the community is still suffering from the actions of this gentleman. Obviously the hospital is trying to recoup the cost of the fine and starting with those that were supposed to be watching the hen house. However, remember that these firms were retained by recommendation of the administrator to the Board. The Board, for the many years Mr Bakst was there, was merely a rubber stamp for the aspirations of this one individual. These firms rely on hospital personnel to supply information - now the question becomes how much was shared and what information was hidden in accounts or via accounting methods to obscure the picture. Who might be directing the staff to withhold or modify statements? Usually someone in authority that controls your employment, etc. Hmmm......
Mr Amirs' statement that he is shocked by the allegations reminds me of the scene in Casablanca where the police chief is asked to clear the club because "he was shocked to find out that gambling was going on.." just as the casino hands him his winnings - I am sure that it is the same sort of shock.
I am sure the current Board wants to recoup the fine amount - so indeed - it is nothing personal - just business. Well I hope the case goes to trial and the truth is found. Thanks for keeping us posted
Posted by hmccarth on May 20, 2008 at 10:16 a.m.
(This thread was removed by the site staff.)
Posted by Tom_Johnston on May 20, 2008 at 5:51 p.m. (Suggest removal)
The Bakst years were marked especially by the so called "Hospital Wars" between CMH and VCMC. This feud was pointless, and I think, harmful to the community, especially the Health Care community. Two of the most expensive political campaigns in local Ventura County history. Both came out of CMH.
They harmed the medically indigent, those who could (or did) become medically indigent, and what should resonate with most, the taxpayers and Healthcare consumers of Ventura County
Bakst may have spearheaded the multi-million dollar war, but one would have to assume always with a majority vote of that CMH Board, whatever the lawyers and accountants said. That Board surely knew the damage it was causing and caused and how little it gained, at such high cost to a supposed "non-profit" institution.
Millions of dollars to fight two cooked up initiative campaigns? I'd say CMH had millions of dollars to better spend on health care, health care equipment and health care worker salaries.
The County, for its part, could have saved money in legal fees, and been able to access Federal money (that got spent elsewhere) to rebuild VCMC facilities some in excess of 70 years of age.
A majority (maybe a flexing majority) on that Board knew what, and who, they were working with...and they were fine with it at the time.
I'm especially amused by one quote in the paper: "The allegations are just not true," said James Prosser, a principal in the law firm. "We did nothing wrong."
It's really not enough to do "nothing wrong".
The question is, why is it a burden for people to just do that which is right, or more to the point, just and fair.
Or was it "just" that they thought they could get away with it?
Posted by hat on May 20, 2008 at 7:06 p.m.
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Posted by hat on May 20, 2008 at 7:12 p.m.
(This thread was removed by the site staff.)
Posted by Tom_Johnston on May 20, 2008 at 7:25 p.m. (Suggest removal)
It looks to me that "hat" may well know more of the inner circle actions at CMH than I do.
I don't think that any lay-person should assume that CMH and its connected arms are completely, at least politically, what they purport to be.
If there is a "big bad" influence in local politics, I think a good place to look would be at CMH and its Board of Directors. I'd wager that many have financial issues with CMH that are certainly worth scrutiny.
CMH (or at least it's Board in the Bakst years) has had a rapacious influence in local Healthcare politics and process.
That these issues have not died down is not a surprise, that they are not more prominent is.
Posted by jr6004 on May 21, 2008 at 12:59 p.m. (Suggest removal)
It is very unfortunate that the Bakst debacle is continuing. For the Board of Trustees to say they were duped is utterly ridiculous as they were told repeatedly over the years by the Medical Staff about all the problems with Bakst including the affairs with hospital personnel, inappropriate firings, buying loyalty with gifts and cash, telling the medical staff they could not communicate with members of the Board, etc. The Board of Trustees are either fools or idiots. At the time of the lawsuit, the Chairman of the Board was an attorney, there were several other attorneys on the board, a recent county District Attorney, accountants, past congressman, financial advisors, bankers, etc. all of whom should accept responsibility for their failures as they were warned, should have known better, but chose to look the other way. The Ventura Star should also accept responsibility as they were adequately warned by the Doctors but chose not to print their letters or do any investigative reporting(so what else is new), and used the same attorney who was Chairman of the Board at the hospital---conflict of interest? All members of the Board still serving should resign and publicly apologize. The Medical Board of California should investigate the Doctors who accepted gifts and also the hospital for unprofessional conduct and kickbacks. Ultimately, the Board of Directors has to accept responsibility for all of the problems and wasted money; they were adequately warned and that is their job.
Posted by hmccarth on May 21, 2008 at 2:23 p.m. (Suggest removal)
karma!!!!!!!!!!!!
long over due "mike"
Posted by Tom_Johnston on May 21, 2008 at 7:14 p.m. (Suggest removal)
I do believe Julius Gius, patron saint of the Star was a CMH Board member for many years....
Posted by gstbauer on May 21, 2008 at 8:04 p.m. (Suggest removal)
Yes Julius Gius was a board member as were several other high profile Venturans - Yes they did volunteer their time and most did defer decisions to Mike Bakst when it came to operational items. Some did question certain aspects of the operation but most community hospital boards are not going to have the expertise to delve into operations or the issues that face the health care industry.
Also the nomination process to get on the Board was/is tightly monitored by the administration - mainly internal recommendations and "the good old boy" network. The Board position was mainly figure head and not a lot of involvement. However I am sure the current management is making changes to be more transparent - less secrecy and cloak and dagger action. Several fingers could be pointed at various parties but it all started in the executive suite and grew from there ...
Posted by Tom_Johnston on May 21, 2008 at 11:22 p.m. (Suggest removal)
Yes, many "high profile" citizens were Board members.
They either agreed, went along, or stood by and said nothing made public....which is as good as "going along".
They volunteered their time, and enjoyed the "glow" of being "volunteers" in a great "community" effort.."Gold Dust Gala's" and all that crap...yah. Meanwhile crush the effort of the County of Ventura to better the Health Care of people that CMH would never willingly serve.
It really comes down to the quote the Star attributes to Mr. Prosser that I think typifies the excuses we might hear: "We did nothing wrong".
Again...when the time came to stand up...what did you do that was RIGHT?
We expect children to understand the concept of right or wrong. Why not this Board? Why are they exempt?
Posted by julie_mae on May 22, 2008 at 8:15 a.m. (Suggest removal)
The fact that Michael Bakst can still inflame so much hatred and animosity in a community he left years ago is a wonderful ode to what an egomaniacal jerk he was. The board let him run that place any way he wanted no matter how underhanded or shady it was, they are all liars and cheats as far as I am concerned and did a massive disservice to the name of CMH. I hope this current board can put things right.
HMCCARTH....I read your post before it was "deleted" and just want to shout out a big h*** yeah!
Posted by hmccarth on May 22, 2008 at 9:58 a.m. (Suggest removal)
the article says they dont the docs thought the issue with Bakst was personal. Good grief! Everything was personal with this guy,INCLUDING THE ETHICS CLAUSE THE DOCS WERE SUPPOSED TO SIGN. Seems like the pot calling the kettle black to me!
Posted by hat on May 22, 2008 at 4:47 p.m. (Suggest removal)
My first blog was deleted, presumably because of the specific names I mentioned. Let's try again!
Michael Bakst was certainly the captain of the CMH machine and was supported by a few very able and self serving lieutenants. These people were responsible for developing protocol and business practices...so are they exempt from criticism.
How can these people still be employed by CMH?
Can you really believe the chief accountant of CMH during the Bakst regime didn't know that the books were cooked? How about the medical director, the outpatient clinical director?
The issue is greed and then fraud. Whenever you put people in positions of power to develop policy and practice and then reward them based on the profitability of such concerns...you have the ingredients for fraud and deception. Self serving, highway robbery...and the robbers are still there!
CMH is overdue for a definitive house cleaning
Posted by etpilot57 on May 30, 2008 at 12:26 p.m. (Suggest removal)
I would like to think CMH will lose their Medicare and Joint Commission accreditations over this debacle. No one has mentioned this, interestingly enough. It would surely bring the CMH machine to its knees, and might even inspire the board to clean up its act.
Although I don't have to, I would take my Medicare dollars to VCMC where, in my experience, I would receive top-notch care.
I worked in healthcare for 20 years, and have witnessed fraud many times. I realize VCMC has had problems with this in the past, but they cleaned up their act years ago. Let's hope CMH will do the same.
Posted by Tom_Johnston on May 30, 2008 at 5:54 p.m. (Suggest removal)
I don't think that CMH should lose Medicare and/or Joint Commission accreditation at all. Whatever the issues about the former CEO, there are still a lot of very good people who work there and provide significant portion of the excellent care given by hospitals in our County.
Now...the Office of the Inspector General, the OIG, THAT might be worthwhile. A nice Federal compliance audit, and a few years of supervision by the OIG would keep them both on their toes AND ultimately lead to improved care.
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