The paperwork detailing the charges in the case of Hardin v. Mendocino Coast District Hospital, Bob Edwards, Wade Sturgeon, and Steve Lund is now public. Ellen Hardin was the Human Resources Chief Officer at Mendocino Coast District Hospital (MCDH) until placed on administrative leave in December, 2016 by Edwards, the hospital's Chief Executive Officer (CEO).
Sturgeon is now the former Chief Financial Officer (CFO) at MCDH and at the time Hardin was placed on leave Lund was the brand new president of the hospital's board of directors. Hardin's complaint in federal court cites violations of the labor code, the federal false claims act, violation of the 1stAmendment of the U.S. Constitution, defamation, discrimination, negligent supervision, intentional and negligent infliction of emotional distress, as well as harassment claims. The hospital itself is a defendant based on the alleged acts of Edwards, Sturgeon, and Lund, its chief administrators and chief elected official.
Hardin, who is represented by attorney Twila White of Los Angeles, lays out the chronology of events that necessitated her lawsuit. Hardin was hired at MCDH in September, 2015, at the same time Sturgeon came on board the floundering S.S. MCDH as its chief financial officer.
Hardin claims that in late August, 2016, she learned of several complaints of alleged fraudulent billing from two long-time account billers who worked in the business office. They complained to the Human Resources (HR) Chief, Hardin, about possible fraudulent billing of government insurance programs (Medicare/Medical/Medicaid), and complained of harassment and retaliation associated with reporting this to management.
On September 6, 2016, Hardin told CFO Sturgeon about the complaints from the two long time account billers as well as harassment and retaliation allegations associated with them reporting this to management through a billing office manager. Both the billing office manager and Sturgeon were advised by Hardin to cease and desist from any activity that could lead to further allegations while an investigation was conducted.
On September 26, 2016, Hardin met with CEO Edwards, noting that she continued to deal with issues involving the CFO and the investigations related to the allegations of fraud. Edwards allegedly asked Hardin if she 'had had enough yet' and if she was ready to 'give Plant Services back to Wade [Sturgeon].' As well as HR Chief Hardin had been in charge of Plant Services, which included overseeing plant maintenance, housekeeping, security, and biomedical engineering.
Hardin's lawsuit claims that from that September 26, 2016 meeting onward she was the target of discrimination, harassment and retaliation in various ways, including unwarranted discipline, criticism, stripping of her responsibilities, demotion, denying requests for time off, making false claims about her job performance, suspension, leaking confidential information to the news media, defamation, and ultimately termination.
The former HR Chief states that she had no choice but to report the fraudulent billing issues since they have serious legal implications. It would be a violation of federal and state laws for MCDH to engage in fraudulent billing, which is why she went to the CFO and CEO and reported the issues in the first place.
Hardin's lawsuit cites numerous other complaints regarding Edwards and Sturgeon's handling of hiring and billing matters including a December 2016 meeting with a patient account manager, who had found major problems in the coding and billing done by the hospital’s new emergency room provider, EmCare. These billing errors could have resulted in the loss of millions of dollars in MediCare Periodic Interim Payments (PIP) for the hospital, all of which was detailed to CFO Sturgeon in a November email authored by the patient account manager. The patient account manager apparently noted the problem concerning EmCare’s billing to Sturgeon in person, with a comment along the lines that if Medicare found out MCDH’s administration was sitting on potential billing fraud for months, they (Medicare) would come in and take over the hospital’s administration. Sturgeon did not take kindly to such a remark. He responded that if anything like that happened, then the employee and all of her co-workers would lose their jobs.
The EmCare billing issue has been discussed in a number of earlier AVA articles throughout 2017. A heretofore unknown allegation arises in Hardin's lawsuit filing. In early November, 2016, Edwards summoned Hardin to a meeting that also included Sturgeon. The topic was a Hispanic employee receiving a promotion to lead a department. A standard pay increase, dictated by contract and practices, accompanied the promotion. However, Edwards and Sturgeon did not want the employee to receive the increase in salary. According to Hardin, CFO Sturgeon even instructed a payroll specialist to manually override the salary increase.
According to Hardin's filing, in the first week of January, 2017, MCDH Board President Steve Lund informed Hardin that she would remain on paid administrative leave pending investigation into complaints. However, Hardin's complaint goes on to state that on March 13, 2017, she was notified by Steve Lund that 'MCDH is willing to offer you [Hardin] severance pay in exchange for a standard separation and general release agreement. Regardless of whether you accept MCDH’s severance pay offer, your employment with MCDH will end on March 25, 2017...'
At the end of a March 16, 2017 MCDH Board closed session meeting regarding CFO Sturgeon's job performance review, Lund stated that the board would be conducting further interviews with MCDH staff before rendering any decision on the CFO's performance. There were no further interviews with MCDH staff. In addition, much of the CFO's performance review was predicated on the charges made against the CFO by Hardin. If Hardin's allegation regarding Lund telling her three days before, on March 13th, that she was being terminated, is true then not only was the March 16th closed session job performance review a foregone conclusion (read: farce) it also demonstrates that Lund's statement to the public about conducting further interviews was nothing less than utterly misleading. In essence Lund doubled-down on public misinformation.
In a followup on the recent story about Transparent California not being able to get MCDH officials to supply salary information for the years 2014, 2015, and 2016 (coinciding with Edwards' tenure): If readers check Transparent California's website they can now find the MCDH salary information for 2015. However, as of the end of the first week in January the same info for 2014 and 2016 is not forthcoming.
Malcolm,
Thank you for your continued updates regarding MCDH.
Very interesting. I wondered about improper billing when I noticed that both the emergency room and the emergency room physician had received separate Medicare payment for their services. I called and left a message at the hospital asking if that was correct billing, since I assumed the physician was included in the emergency room payment. I never received an answer. I still wonder.
Physicians are always paid separate from a hospital regardless of the hospital. They are independent contractors. All hospitals have a quality assurance department which is supposed to make sure the doctors are properly ordering to provide quality care. Also patients are not billed for individual tests anymore. Medicare and most insurance companies bill by a diagnosis code. It is complicated and there are crooked and greedy people out there. I think most of it is the computer billing systems are not set up properly to bill the appropriate billing codes and/or not monitored well enough. Every year Medicare changes what can and cannot be billed and makes it often complicated so often hospitals don’t even know sometimes when they have compliance issues. If anything most of the people working in a hospital looking at billing systems are doing their best to bill appropriately because they don’t want Medicare to come in for an audit and fine their facility. They risk losing their job. About what is going on at MCDH, I am sure Medicare will get involved and determine if their billing practices are out of compliance.
While it is good to know some people are still reading an article seven months later, Carol Tirado’s comments seem, in part, odd. Doctors as independent contractors was not a factor in the Transparent California issue. The matter at hand was whether or not MCDH reported the pay made to its salaried employees to Transparent California in a timely manner. In addition, Tirado’s comment “patients are not billed for individual tests anymore” is not at issue. What was at issue in the Hardin case was the failure to properly code, setting the entire billing process off on the wrong foot. It appears that Tirado has not read other pieces about MCDH, in which the jury rigged electronic record system there is presented in greater detail. I would suggest that if a reader is going to go back to an article from more than seven months ago, said reader should spend the time reading all, or at least much more, material on the subject.