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The Corruption Behind the Ortner Deposition

A few months before Ortner’s three year contract ended by simple non-renewal of their contract options in June of 2016, the County hired well-respected Mental Health Services consultant Lee Kemper to review the County’s privatization deal. Ortner’s contract was not terminated because of any allegation of breach of contract. To most of the public the contract was allowed to expire because cops and emergency room doctors were unhappy with Ortner’s services, chiefly long response times.

After watching the sad zoom deposition of the two Ortner executives last month, we revisited Kemper’s Feb. 2016 “Review of Mendocino County’s Administrative Service Organization Model for the Delivery of Mental Health Services” — more than six years old in light of the pending audit exceptions that the County now faces which could translate into millions of dollars of mental health services reimbursements being taken from the County’s general fund for unsubstantiated claims filed since Ortner first got the privatized services contract in 2013.

Hindsight lends a new perspective on what Kemper said about how Ortner got the contract and how they were administered by county staff — especially one Mr. Tom Pinizotto, a former Ortner executive who was Mental Health Director for most of that time.

Here are a few [annotated] observations consultant Lee Kemper made in his February 2016 review:

“Insufficient attention was given by other County leadership, including the HHSA Director, County Counsel, County Executive and the Board of Supervisors, to the significance of the ASO Contract ‘gaps,’ most specifically the following:

• Lack of clearly defined ASO Contract deliverables, notably the lack of a formal ‘Program Implementation Plan’ from each ASO to be approved by BHRS/BH. 

• Lack of specified ASO service delivery goals, objectives, timelines, and performance metrics. 

• Unclear structure for receipt of defined data and other reporting by ASOs.

• Lack of specified fiscal, programmatic or other penalties for subpar ASO performance.”

* * *

The idea of privatizing mental health services was novel and unique at the time Mendo took the plunge, primarily at the direction of then-CEO Carmel Angelo was had been on record being upset about previous “audit exceptions” imposed by the state because Mendo’s billing practices and supporting documentation was declared inadequate. So you’d expect that Mendo would take extra care to oversee this particularly privatization experiment.

Kemper: “Because of the weaknesses in the ASO Contract we have identified above, both ASOs have substantial authority to make decisions about mental health service delivery to children and adults in Mendocino County but their accountability to BHRS/MH [the Mental Health department], and thus to Mendocino County, for the outcomes of their performance or lack of performance is limited.” 

“From our Key Informant interviews, we learned that that were different perspectives among county staff and management about the County’s role in a ASO contracting model. One view, held by the former BHRS/MH Director [Former Ortner executive Tom Pinizotto], focused on maximum delegation to the ASOs. A second view, held primarily by HHSA fiscal staff, focused on establishing defined parameters for ASO Contract monitoring to prevent the potential for future Medi-Cal and other audit exceptions [our emphasis] and to hold the ASOs accountable for defined service delivery standards. Of the two approaches, the requirements set forth in the ASO Contract lean toward maximum delegation to the ASOs

So despite Mendo’s stated intention to minimize audit exceptions, the contract “leaned toward” turning everything over to Ortner and RQMC.

* * *

Kemper: “It is important to note that the ASO Contracts do require the ASOs to assume financial responsibility for any federal financial audit exceptions with their management of the care delivered, and the ASOs have in turn passed on this liability to their contracting service providers. [Our emphasis.] However, the relative ability of BHRS/MH to enforce these provisions is unknown. [I.e., non -existent.] The practical reality is that both ASOs are legally constructed entities, each with for-profit and not-for profit components. Whether or not either ASO would assume responsibility for and repay a federal financial disallowance will ultimately depend on the audit findings [now more than six years later]; each ASO’s overall financial strength [Ortner folded in 2018, not long after Mendo’s contract with them ended.]; the ASO’s levels of applicable professional liability insurance and errors and omissions insurance [not applicable to a company that no longer exists]; and, the ASO’s willingness to make payment without legal dispute.”

Translation: Even if the County had tried to make the contractor(s) — Ortner Management Group or Redwood Quality Management Company — liable for audit exceptions which Mendo was clearly worried about, the likelihood of ever collecting from the contractors was nil and Mendo would be on the hook. 

Kemper: “In our opinion, the Board of Supervisors should not have approved [our emphasis] the ASO Contracts in the form brought to the Board because of the lack of a clear BHRS/MH approval and oversight role and ASO accountability mechanism in the Scope of Work contained in the contracts. 

“Accountability”? We’re all friends here; we don’t do accountability in cozy Mendocino County. In fact, as we will see below, Mendo doesn’t even like being asked for accountability.

Kemper: “Further, we believe other county officials, including the former BHRS/MH Director [Tom Pinizotto], HHSA Director [Tammy Moss Chandler], County Counsel [Tom Parker], and County Executive [Carmel Angelo] should have assured the ASO Contracts included these key provisions prior to submission to the Board for approval.” 

“A key problem during implementation was the lack of a clearly defined county staffing structure to oversee and manage the ASO Contracts. For example, below the Mental Health Director [Tom Pinizotto] there was no clearly identified ‘Contract Manager’ or ‘Contract Implementation Manager’ to oversee ASO Contract implementation. [Despite the fact that the contract was experimental and had never been tried anywhere else in California.] While HHSA fiscal staff had oversight responsibility for other contracts (i.e., tracking to assure deliverables are submitted on time and appropriate fiscal claiming) and the BHRS/MH Program Division [Tom Pinizotto] was charged with overseeing clinical program requirements associated with the ASO Contracts, the fiscal staff’s role with the ASO Contract management was less clearly defined. [I.e., not defined.] As a consequence, when these staff tried to carry out contract oversight, such as setting requirements for opening paperwork for a case, Treatment Authorizations, or data reporting, the ASOs [Ortner and RQMC] would appeal directly to the former Director [former Ortner Exec Tom Pinizotto], who would then make decisions on a case-by-case basis he determined were necessary at the time to facilitate implementation of each ASO system. Ultimately, the former Director [Tom Pinizotto] became the de-facto ASO Contract Manager, managing day-to-day contract issues [with his former employer] that should have been managed at a lower staff level with a designated Contract Manager.” 

The AVA was the only place in the entire County complaining about the untoward arrangement with Mr. Pinizotto at the time, both when he was first hired as a suspicious consultant with a clear intent to privatize and later with his clear bias in favor of Ortner, even though Ortner had no qualifications or experience managing or administering such a large and important program.

Kemper: “In addition, in our review and discussions with the former Director [Tom Pinizotto], we found little documentation of his [Pinizotto’s] decisions as de-facto ASO Contract Manager. County staff reported that the former Director [Pinizotto] was regularly pressured by both ASOs to overturn or relax requirements county staff had sought to impose on the ASOs, although the dynamic was reported to be more frequent with OMG [Pinizotto’s former employer]. 

“…the former Director [Tom Pinizotto] served on the review panel selecting the ASOs [Ortner and RQMC] to serve Mendocino County. While his background and knowledge of OMG could potentially be considered an asset, it could also be a potential detriment because of the appearance [sic] of bias based on the Director’s [Pinizotto’s] prior working relationship with OMG. In our opinion, the Director [Pinizotto] should never have served on the selection panel and the HHSA Director [Moss Chandler], County Executive [Angelo], and County Counsel [Parker] erred in permitting his involvement, specifically because of the importance of avoiding the appearance of any conflict.”

This is the mildest form this criticism of Mendo’s/CEO Angelo’s obviously corrupt structure could possibly take. Yet, when told of the “appearance of a conflict of interest” problem by the Grand Jury, the Board of Supervisors angrily dismissed the GJ’s report, complained that the GJ was outtaline, and insisted that nothing overtly illegal had occurred. 

Replying to the Grand Jury’s 2014 report entitled “An Appearance of a Conflict of Interest,” the Supervisors grumbled:

“The Board of Supervisors believes this Grand Jury report was written in a way that unfairly impugns the integrity of an individual [Pinizotto] and the [CEO Angelo’s] process for awarding contracts for mental health services. The report found no evidence that any individual had an actual conflict of interest, profited personally, committed any illegal actions, or exercised undue influence concerning the process for awarding the contracts in question.”

Supervisor Dan Hamburg, commented, “It’s pretty obvious that there’s a huge disconnect between the Grand Jury and this board. What is the Grand Jury really up to? I really have to shake my head?”

“I agree,” chipped in Supervisor John McCowen who drafted the memo denouncing the Grand Jury. “The memo is intended to ask the Grand Jury to take a look at what they are doing and why.”

As Ortner’s attorney Mr. Signorotti said at one point during last Monday’s deposition, the Supervisors’ response “Misstates the testimony” of the Grand Jury.

The Supervisors felt fine complaining about the Grand Jury in 2014 instead of dealing with the problem the Grand Jury was trying to point out. But even after Kemper confirmed and expanded the Grand Jury’s findings just over a year later, Mendo did nothing about it.

Kemper: the lack of county organizational infrastructure for ASO Contract management and the former Director’s [Pinizotto’s] assumed role as de-facto ASO Contract Manager – in combination with a lack of documentation of the former Director’s decision process concerning ASO implementation – resulted in a lack of transparency about the BHRS/MH decision process that left the former Director [Pinizotto] open to the charge of playing favorites and being biased in favor of OMG.”

“Open to the charge”? We made the charge at the time to no avail. Of course Pinizotto played favorites with Ortner and as obvious as this was to Kemper and everybody else involved, nobody in County officialdom cared. 

Kemper: “Several Key Informants reported that the former Director [Pinizotto] lacked the ability to clearly and effectively communicate his reasoning and decision-making to county staff, other county officials, including the courts, and the larger community on various matters pertaining to the ASO arrangement and specifically with regard to his decisions associated with [his former employer] OMG. As a consequence, the former Director’s [Pinizotto’s] communications were widely viewed by community members as vague, lacking transparency, and biased in favor of OMG.” 

In other words Pinizotto let OMG do whatever they wanted and despite everyone involved complaining about it, Angelo and her captive Board (none of whom are current supervisors) didn’t care.

Kemper: “Several Key Informants reported that the advent of the ASO concept, which called for contracting out the delivery of mental health services, brought a certain degree of animosity to the former Director [Pinizotto] from some county staff and community members because of his prior role in laying-off county mental health staff [with the approval if not urging of CEO Angelo and with his pre-existing bias in favor of Ortner]. This residual animosity may have played into an argument that the former Director [Pinizotto] had underlying intentions regarding OMG, his former employer, and their selection as the ASO for the adult system.”

“Underlying intentions”? What could they have been? The implication is that he “intended” to see that Ortner didn’t have to spend any more money on services than the bare minimum.

“OMG [Ortner] committed to using local service providers wherever possible, of which there were relatively few, and those that existed were not Medi-Cal certified and needed to be trained to provide appropriate and allowable services; document the services in accordance with Medi-Cal rules; and, submit billings to OMG for submission to the County for billing. There was a learning curve for these contracted providers, which was actively supported through continued OMG training.”

But last Monday, Ortner said they didn’t do billing so they probably couldn’t do much training. They just submitted hard-copy paperwork from their local subcontractors and let Mendo staffers figure out the billing. And if a Mendo staffer didn’t like what they got from Ortner, Pinizotto was going to make sure Ortner was not pressured into providing more paper. Nobody trained anybody on anything, despite the fact that the stated “principle” purpose of privatizing mental health services was to minimize audit exceptions.

To make matters worse, Ortner got off to a bad start because Mendo didn’t provide them with much to begin with.

Kemper: “OMG representatives reported that 386 clients were initially identified by BHRS/MH for transfer to OMG, of which roughly 200 clients were further identified as bona-fide active clients (i.e., open and active cases, not just a case that was never closed). However, BHRS/MH provided few complete records for these 200 clients to OMG, which meant that OMG started with little base-line information on the existing adult client population. With insufficient records, OMG had to ‘play catch-up’ and build out client records before it could begin to conduct client service delivery. This added unanticipated time and duties at the front-end of OMG’s system development. County officials acknowledged their shortcomings in the hand-off of clients and client records to OMG.”

“County officials acknowledged their shortcomings”? Not that we or anybody else outside those “county officials” ever saw. 

Maybe a few of them privately confessed to Mr. Kemper. But nobody did anything to help. We recall that one of those “shortcomings” was the partial flood in the Mental Health offices caused by a leaky pipe which damaged a significant amount of County records in the mental health department pre-Ortner. Instead of helping to rebuild the records or deferring the contract until that problem could be mitigated, County management handed it over to Pinizotto and his pals at Ortner.

As one former HHSA staffer told us at the time, the whole Ortner arrangement was cooked up by the long-time cozy relationship between Camille Schraeder and CEO Carmel Angelo.

“The real conflict was in favor of Redwood Children’s Services (RCS) who has successfully contracted for children’s mental health services for at least a dozen years. RCS is run by Camille Schraeder who went through the foster child system herself. Despite her success with RCS she was reluctant to bid on the adult mental health services so she [Schraeder] brought in Ortner to make a joint bid. The way the bid was structured it wasn’t a choice between Ortner and Optum [the other bidder for adult services], but between Ortner+RCS and Optum. There was no way to pick RCS without picking Ortner. And there was no way all the caring professionals, most of them fastened to the children like leeches, were going to stand by and let RCS go down the tubes.”

And now with all the top players in this smarmy affair gone, the County is left trying to pick up the pieces with state and federal auditors demanding substantiation for millions of dollars worth of “services” — substantiation that not only doesn’t exist but wasn’t required to be provided.


  1. John Sakowicz May 2, 2022

    Excellent article. Every word is accurate. The truth is actually worse than people know. I was on that 2014 Grand Jury.

    • Lazarus May 2, 2022

      Was the GJ all in alignment on the Ortner issues? I have heard different analyses of that era…
      Be Well,

      • Marmon May 2, 2022

        They, the grand jury, ignored RQMC. Was Kathy Wylie the Grand Jury foreman? Camille Schraeder was the one who cooked all this ASO crap up. She needed Ortner to come in and do the heavy lifting while her minions trashed OMG. OMG was doomed from the begining.


        • Marmon May 2, 2022

          I would like to know how RQMC fared in this audit. The Ortner depo was most likely a red harring. Like always, the AVA are nothing more than useful idiots when it comes to this who did what issue.



          • Marmon May 2, 2022

            Just because RQMC had a computer program doesn’t mean their sub-contractors billed right, RQMC’s biggest sub-contractor was and is RCS, another Schraeder company.

            Camille! Camille! Camille!


            • Marmon May 2, 2022

              OMG’s contract for Adults was for about one third of that for Camilles Children’s system of care contract. Where Ortner had about 300 clients, the Shraeders had thousands. Most of them referred through CPS and the school system. The likelyhood of the majority of overbilling can easily be contributed to RQMC, but will we ever know?

              Who was worse, OMG or RQMC?


  2. John Redding May 2, 2022

    Seems there are unexploded bombs all over the County’s landscape. Sigh.

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