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Appearances Are Reality

Earlier this month, the Mendocino County Grand Jury  documented what they called “An Appearance of a Conflict of Interest in the adoption of the Mental Health Privatization contract.”

“The 2013-2014 Grand Jury recommends that the ethics policies for Mendocino County be corrected to include time limitations on when County employees must recuse themselves from decisions regarding previous employers. The Grand Jury also recommends that all respective ethics policies are emphasized and County employees are trained to understand and apply these policies. Enforcement of these policies must be a high priority for all County senior managers. County senior managers and senior staff must recuse themselves from any contract activities when they have or had a financial or business relationship with the contracting party within the last three years.”

Although the County routinely contracts with local businesses for large contracts and has privatized several departments in recent years, Mendocino County has no such conflict of interest policy. In particular, in 2013, “The Grand Jury received complaints regarding perceived conflicts of interest in awarding the Mendocino County contract for the administration of adult mental health services to the Ortner Management Group. Certain individuals employed by the County with current and previous associations with Ortner had the opportunity to have undue influence in the awarding of this contract.”

“Certain individuals”?

Make that one individual: Mental Health Director Tom Pinizzotto. For reasons that have always been unclear, the Grand Jury avoids the naming names even when they conclude that criminal wrongdoing has occurred, as in the appalling case of former Fourth District Supervisor Kendall Smith who the Grand Jury determined had chiseled more than $3,000 from the County/taxpayers by lying on her expense reports. In such cases, the name of the person is obvious so why not name him or her?

“During the investigation, the Grand Jury determined that no apparent illegal activity was carried out by any individual; however, there were sufficient opportunities for these individuals to have used undue influence in the selection process. An employee of Ortner Management Group [Pinizzotto] was contracted as a consultant by the Director of Health and Human Services from February 2011 through March 2012. The actual dates of work were from December 2011 through March of 2012.”

Coincidentally, that's when the County began the privatization process which ended up being awarded to Pinizzotto’s former employer, Ortner.

Ortner Management Group
Ortner Management Group

“The newly contracted consultant [Pinizotto] had access to patient records and County Medi-Cal billing information. This access was not available to other bidders. A concern of the Grand Jury is that the information would have been useful for estimating the cost of the Request for Proposal for administering the billing of adult mental health services in the County.”

In other words, Ortner knew how much to bid to get the contract by coming in just under what Pinizzotto said it cost the County for the in-house Mental Health Department, even though such estimates are highly variable and subject to state review and after-the-fact billing rejections. Nobody really knows how much it costs, but an insider is certainly in a better position to make an educated guess.

“However, there is no indication that the information was used inappropriately.”

Translation: Pinizotto wasn’t dumb enough to leave a paper trail.

“The evaluation summary for Request for Proposal 24-12 [Ortner’s bid] for mental health services was scored by seven County employees. These scorers included the County’s Mental Health Director [Pinizotto]. This Mental Health Director [Pinizotto] had previous business relationships with Ortner Management Group that terminated less than 18 months before the evaluation summary scoring took place. The [unnamed] complainants [competitors in the bid? County Mental Health staffers? We need to know!] alleged [our emphasis] that Ortner Management Group was given unfair advantage by the active presence of the consultant and the Mental Health Director [Pinizotto] during the preparation and scoring of [Ortner’s] Request for Proposal. The complainants also alleged [our emphasis] that the release of the Request for Proposal was delayed until Ortner Management Group had completed drafting its response. There is an appearance of impropriety in the process of bidding and awarding the contract to Ortner Management Group because of the previous relationship of the Mental Health Director with Ortner Management Group. There is no evidence that impropriety occurred.”…

“FINDINGS: North Valley Behavioral Health (NVBH) [of Marysville] and Ortner are clearly linked in both business and professional matters. As administrator of NVBH-Fairfield, the BHRS Director [Pinizotto] had a business and financial relationship with Ortner through NVBH-Fairfield immediately prior to coming to work for the County. The Grand Jury perceived a possible conflict of interest in the selection of Ortner for the privatization contract for adult mental health services. There was a lack of transparency to the public [and the Board of Supervisors] regarding the timelines and the changing work relationships between the consultants and the management of H&HS. There was a lack of transparency to the public as to the legal relationship and responsibilities of the concerned parties during the changing work relationships. The Grand Jury noted that when timelines and contractual relationships were reviewed, there did not appear to be any illegal activities by the individuals involved in the selection of Ortner. Given the response published by the County in the Request for Proposal Addendum No. 1, the Grand Jury finds the County guidelines are insufficient to address perceptions of undue influence. It is not entirely clear to the Grand Jury whether or not there was undue influence in the selection process.”

However, as lawyers like to say, Res ipso loquitor — the fact that Mendo ended up awarding almost $20 million per year of mental health service contracts to Mr. Pinizzotto’s former employer — speaks for itself.

As usual, the taxpayers of Mendocino County got royally screwed.

From The Ava’s Bulging ‘We Told You So’ File (AVA, September 29, 2010):

“CEO CARMEL ANGELO and Ms. Stacey Cryer [Health and Human Services Director] also said they’re working on a ‘regional approach’ to mental health services to help reduce costs, perhaps a reference confirming rumors that selective privatization of mental health services on the North Coast may be next. While it’s understandable that any government agency would consider privatization, the model that would probably make the most financial sense is to provide services only to profitable mental health patients while leaving the Sheriff with the great majority of uninsured and otherwise impoverished 5150s. In other words, the crazy people who have private or government insurance would be farmed out to for-profit treatment centers [which turned out to be Ortner] while the rest would remain where they are — the Mendocino County Jail.

“THIS CASH AND CARRY approach to the County's mentally ill appears well under way. Our Health and Human Services Department has already hired two consultants to develop a proposal for just such a thing. One of these consultants, a Mr. Tom Pinizzotto, is the Administrator of the North Valley-Solano Behavioral Center in Fairfield who just happens to also have an existing contract with Lake County for ‘mental health administrative services.’ The other consultant, Ms. Nancy M. Callahan, PhD, is an alleged expert in ‘mental health services to Medicaid recipients,’ and a specialist in computerized data processing, meaning Dr. Callahan is real good at figuring out who can be a valuable funding unit for the private ‘behavior health’ services companies. It seems appropriate about here to repeat our annual definition of a consultant: a person you lend your watch to so he can tell you what time it is.

“COMBINE THESE MERCENARY DEVELOPMENTS with a recent internal memo from Ms. Cryer to the Mental Health staff: ‘We are obviously not moving forward with any plans to fill positions — revenue generating or not.’ Which means even positions that could be funded by state and federal mental health programs (which would not cost any money from the County's general fund) will not be filled — clearly a step towards privatization. Or this: ‘I want to be truthful and tell you that we are probably facing layoffs in the Mental Health Division.’ And, ‘Tom Pinizzotto has been here working for several weeks now, usually two to three days per week and will now be serving as the Mental Health Director. He will continue as a contractor. … His colleague, Nancy Callahan, is assisting with portions of the plan.’ Mr. Pinizzotto’s ultimate objective, according to Ms. Cryer, is to “transform Mental Health” into something Ms. Cryer chooses not to describe to her staff while, we suppose, sending fully funded local mental health patients to his Fairfield facility.

“IF YOU know someone who is in need of long-term mental health services you have two choices: 1. find some way to pay for it yourself or with insurance, or 2. take your uncle directly to Sheriff Allman.”

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