Doug Losak: Master Of Evasion

What follows may seem tedious and perhaps difficult for readers to follow. Essentially, though, we think it confirms the smelly fact that the County of Mendocino, via a well-connected former employee acting on behalf of a private, for profit business, awarded millions of tax dollars to that private entity to perform an essential public task — the provision of mental health services.

According to Wikipedia, “A conflict of interest is a SITUATION occurring when an individual or organization is involved in multiple interests, one of which could possibly corrupt the motivation. The presence of a conflict of interest is INDEPENDENT OF THE OCCURRENCE OF IMPROPRIETY. Therefore, a conflict of interest can be discovered and voluntarily defused before any corruption occurs.

• “The appearance of a conflict of interest is present if there is a potential for the personal interests of an individual to clash with fiduciary duties."

• The US Office of Government Ethics says, “An appearance of a conflict is present if a reasonable member of the public WOULD BELIEVE [our emphasis] that the employee benefitted from access to official information or otherwise from his official position.”

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On June 9, 2014 the Mendocino County Grand Jury issued a report titled “An Appearance Of A Conflict Of Interest In The Adoption Of The Mental Health Privatization Contract.”

The Grand Jury concluded, “The complainants alleged that Ortner Management Group was given unfair advantage by the active presence of the consultant and the Mental Health Director during the preparation and scoring of the Request for Proposal. The complainants also alleged that the release of the Request for Proposal was delayed until Ortner Management Group had completed drafting its response.

“The Director of H&HS [Stacy Cryer] contracted an employee of Ortner Management Group (Ortner) [Tom Pinizzotto] as a consultant in February 2011. The consultant [Pinizzotto] monitored patient records for quality assurance and compliance with State requirements. The consultant [Pinizzotto] worked approximately 27 hours between Dec 2011 and March 2012.

“Complainants stated concerns about the presence of an Ortner employee [Pinizzotto] as a consultant and a former Ortner employee [Pinizzotto] in a management position at H&HS. These concerns are:

• “This resulted in the postponement of the privatization bid offering.

• “The perception Ortner had an unfair advantage in the bid process. North Valley Behavioral Health, LLC, (NVBH) is a wholly owned and operated subsidiary of Ortner and/or its officers and management, providing psychiatric facilities and associated services. Two individuals, one employed by Ortner, one acting as an administrator of a NVBH facility [Pinizzotto], specifically North Valley Behavioral Health-Fairfield (NVBH-Fairfield), were hired separately as consultants to H&HS between 2010 through 2012. This was the time period for the writing of the RFP requesting bids for mental health services. The administrator for the NVBH-Fairfield facilities [Pinizzotto] later became the Director of Behavioral Health and Recovery Services (BHRS)."

The Grand Jury concluded, “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.”

The Grand Jury also made a series of “findings” (itemized below).

On Friday the County posted a draft response to the Grand Jury report prepared by Interim County Counsel Doug Losak. The most interesting aspect of Losak’s draft response is how he carefully avoids the Grand Jury’s summary and their conclusion that there was “an appearance of impropriety,” and “an appearance of a conflict of interest,” choosing instead to narrowly parse the Grand Jury’s wording in the individual findings — effectively avoiding the core complaint that Tom Pinizzotto had an obvious conflict of interest stemming from his former employment at the company that ended up with the contract, because, as the federal Health and Human Services Agency — after which the County’s Health and Human Services Agency is loosely modeled — says, “the conflict lies in the SITUATION, not in any behavior or lack of behavior of the individual.”

Since the conflict is obvious to any ordinary person looking at the “situation,” Losak simply avoided the question by answering the individual findings:

Grand Jury: “F1. NVBH and Ortner are clearly linked in both business and professional matters.”

Losak: “The Board of Supervisors disagrees in part with this finding with clarification. Ortner Management Group (OMG) is the Administrative Services Organization for Mendocino County for Mental Health Services. North Valley Behavioral Health Services (NVBH) is a subcontractor of OMG.”

Grand Jury: “F2. As administrator of NVBH-Fairfield, the BHRS Director [Pinizzotto] had a business and financial relationship with Ortner through NVBH-Fairfield immediately prior to coming to work for the County.

Losak: “The Board of Supervisors disagrees in part with this finding with clarification. The Behavioral Health and Recovery Services director worked for OMG between 2008 and 2010. In September 2010 he was hired by Mendocino County as a consultant for Mental Health Services on an independent contractor basis. He was hired as the BHRS Director on April 16, 2012.”

Grand Jury: “F3. The Grand Jury perceived a possible conflict of interest in the selection of Ortner for the privatization contract for adult mental health services.”

Losak: “The Board of Supervisors disagrees wholly with his finding. The Grand Jury's 'perception' is not a finding. If this finding was meant to assert that there was a conflict of interest in the selection of OMG to provide mental health services for the county, the Board of Supervisors wholly disagrees. There has been no evidence brought forward that establishes that there was any conflict of interest by anyone involved in awarding the contract to OMG.”

Grand Jury: “F4. There was a lack of transparency to the public regarding the timelines and the changing work relationships between the consultants and the management of H&HS.”

Losak: “The Board of Supervisors disagrees wholly with this finding. To begin with, it is unclear what the Grand Jury means by ‘regarding the timelines and the changing work relationships between the consultants and management of H&HS.’ However, whether the comment refers to the employment history of the current BHRS Director, his relationship with H&HS management, or the process for obtaining and awarding proposals for mental health services, in every instance, contracts were awarded and relationships established based on an open process available for anybody to review.”

In fact, the proposal review group which evaluated the three bids — from Ortner, Redwood Children Services and Optum Health — were made up of people carefully selected by Pinizzotto and his boss Stacy Cryer, and their meetings were NOT open to anybody to participate in or review, nor was the process which prepared the award criteria open to the public.

Grand Jury: “F5. 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.”

Losak: “The Board of Supervisors disagrees wholly with this finding. It is unclear what the Grand Jury means ‘as to the legal relationship and responsibilities of the concerned parties during the changing work relationships.’ However, whether the comment refers to the relationships and responsibilities of the current BHRS Director, H&HS management, or the contractor for adult mental health services, the specific duties and responsibilities are a matter of public record with substantial information available online including the contract for adult mental health services.”

Ortner’s contract is available on line, true. It’s the one which calls for Ortner to bill and be paid by the minute for services allegedly rendered. Trouble is, the contract didn’t exist until AFTER the conflict of interest had clearly occurred which resulted in Ortner getting the “contract.”

Grand Jury: “F6. 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.”

Losak: (No response)

Grand Jury: “F7. 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.”

Losak: “The Board of Supervisors disagrees wholly with this finding. Addendum No 1, referenced above, simply requires county employees to disclose their names if they were part of an organization/group meeting on the contract in question. The guidelines are clear that county employees must fully disclose their employment with the county when bidding on a contract.”

Nobody alleged that Pinizzotto was employed by Ortner WHILE Ortner was bidding for the contract.

Grand Jury: “F8. It is not entirely clear to the Grand Jury whether or not there was undue influence in the selection process.”

Losak: "The Board of Supervisors wholly disagrees with his finding. To begin with, the lack of clarity on the part of the Grand Jury is not a finding. In addition, the Board of Supervisors believes there was no undue influence in the process for awarding the mental health contract in question. The County took all reasonable measures to ensure the selection process was transparent and void of undue influences. The Grand Jury has provided no documentation to the contrary.”

If there is anyone guilty of “lack of clarity” it is Losak who seems unable to address the Grand Jury’s basic complaint, but then he is merely representing the wishes of the Board of Supervisors to disencumber itself of mental health contracting obligations.

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Was there “an appearance of a conflict of interest” as the Grand Jury title says? Of course. The Grand Jury makes a slam-dunk case that there was. And Losak makes no attempt to deny it. Was there an actual conflict of interest? Yes, according to the definition of the federal HHS that the SITUATION is what created the conflict. Was there “an appearance of impropriety in the process of bidding and awarding the contract to Ortner Management Group”? Again, of course there was an appearance of impropriety and again, Losak makes no attempt to deny it.

The Grand Jury was unable to uncover a smoking gun document that proved Pinizzotto overtly steered the contract to his former employer. Even Pinizzotto’s most vocal critics have never accused him of being stupid enough to leave a paper trail showing that he was doing a favor for his old boss or that he profited by it in some way. But Pinizzotto’s connections to Ortner are not disputed and Ortner ended up with the lucrative contract. Would a reasonable person conclude that Ortner’s award was pure coincidence?

If the Board of Supervisors accepts County Counsel Losak’s evasive draft response as their own, they’ll be officially sanctioning conflicts of interest in Mendocino County contracting.

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