Please make a note of the new address: http://www.ocregister.com/blogs/taxdollars

The OC Watchdog blog has moved! is a post from: OC Watchdog

Approved in 2006, the project to automate the state’s antiquated paper-based system for filing disability claims was expected to take three years to complete and cost $35 million, according to a report released in May by the state Legislative Analysts Office. The finished product, later dubbed SDI Online, would allow people to file disability insurance paperwork online and streamline the program’s management and payment of claims.

But reaching this technological nirvana proved neither easy nor cheap.

After three years of delays, the system finally launched in October, kicking off a labor-intensive transition from paper. During the transition, the program has accepted claims filed on both paper and via SDI Online, an increased workload that slowed service and delayed payments to thousands of hurt and sick workers.

On Thursday, people waiting in the crowded lobby at the disability program’s office in Santa Ana said the online system had not helped them resolve problems with claims. Some said they logged in but couldn’t see the status of their payments. Others said they could see their benefit information, but they couldn’t do anything else.

Kay Siakisini, of Orange, said an eye surgery in late September left her mostly blind in one eye and temporarily unable to work at her job as a retail merchandiser. When her first payment was late, she was unable to get help from the automated phone system (it hung up on her every time she called), and her attempts to track payments using SDI Online were just as fruitless.

“I spent I think four hours on the computer one day and it was just ridiculous,” said Siakisini. “So I just keep coming back here. I give up.”

It took about five weeks to get her first payment and four weeks to get the next one, she said.

Officials with the Employment Development Department, the state agency that runs the disability insurance program, apologized to the public and assured people that SDI Online works.

It said the cost of producing the system was justified and was in no way the fault of its developer, Deloitte Consulting LLP, a New York-based company that has been criticized, sued and attacked by lawmakers for its work on state projects that went over budget and failed.

The cost overrun, $123 million, is nearly the price of the new Newport Beach Civic Center.

So what happened?

EDD’s original plan was to hire a company to develop the computer project within nine months, according to the LAO report. But in 2007, officials amended the plan because  “procurement-related delays” caused the contracting process to take about 16 months, delaying the whole project by 23 months. Officials revised projected costs downward to $33 million.

The biggest cost increase from the original estimate  — about $84 million — happened during the contract-bidding process in 2009, state officials said.

“After extensive research was conducted by two vendors who submitted bids, both companies came to the conclusion that the completion of the project would entail more time, money and expertise than the EDD was first able to estimate,” EDD officials said Monday in a statement to the Watchdog.

One of the two companies, Unisys Corp., did not meet the bidding requirements, so its bid could not be reviewed, said Kevin Callori, a spokesman for EDD. So EDD awarded the contract to the other bidder, Deloitte Consulting.

The state agreed to pay Deloitte $59 million to develop SDI Online and 17 “interfaces,” or tools to allow communication between SDI Online and other systems, state officials said. The new estimated cost for the project was $119 million, and its new launch date was January 2013.

By November 2011, costs had climbed another $39 million — $8 million of it to pay for extra work EDD asked Deloitte to perform because of work needed to connect the new system to a new wage database, according to the statement provided by EDD.

EDD officials say that they are happy with Deloitte’s work and with SDI Online’s performance.

But other state agencies have blamed Deloitte for costly, high-profile failures.

Take for example the state court system’s ill-fated attempt to link every court computer in California.

The state originally planned to pay Deloitte $33 million to develop the courts’ computer project. One hundred contract amendments later, the state had paid Deloitte $310 million. The state spent $580 million on the project by the time the courts pulled the plug last spring because court officials didn’t think they would have the money to deploy it.

Deloitte agreed to repay $16 million to compensate for delays caused by “numerous quality issues,” a state report said.

The company also was the developer behind a hulking $95 million computerized payroll system for the Los Angeles Unified School District, according to the Los Angeles Times. When the system launched in 2007, it overpaid tens of thousands of teachers by a total $60 million, while underpaying others.

Deloitte agreed to repay the school district $8.25 million and to forgive $10 million in unpaid invoices, according to the article. The money covered about half the cost of fixing the system.

The high-profile projects prompted critical state audits and a legislative effort to prevent companies such as Deloitte from winning new state contracts. That legislation — which would have placed a five-year ban on state contracts for companies that had been successfully sued for breach of contract — was defeated.

Deloitte officials told the Los Angeles Times that extra costs and problems with projects often were the result of officials’ requests for work and services beyond what was included in contracts.

According to EDD officials, that’s what happened with SDI Online.

After settling on the original contract in 2009, officials said they asked Deloitte to update SDI Online — requests that accounted for the cost increase in 2011.

The work was mission-critical because new legislation necessitated upgrades to the department’s mainframe database, changing things so that SDI Online could no longer communicate with it as required, officials said.

“Deloitte has been an active partner from the very beginning, providing much-needed expertise and guidance in the design and implementation of this system, which provides faster, easier and more accurate services to those in need, especially once we are able to complete this transition from the old system,” EDD officials said in a statement to the Watchdog.

As far as Siakisini was concerned, her money could have been better spent.

“For that kind of money, just hire some more people and get a bigger office,” she said. “Let’s get some people working and make it so you can talk to someone face to face and get your problems solved.”

EDD computer project came in late, overbudget is a post from: OC Watchdog

SCE’s most recent annual report showed 19 executives and other SCE employees received more than $1 million in total compensation during 2011, and at least 130 others received $300,000 or more in total compensation. The 2,094 employees who earned at least $125,000 (but less than $250,000) in base salary racked up a combined $10.5 million in business expenses.

Four of the employees charged more than $100,000 to their business expense accounts, with the top-spender, identified only as “Manager 3,” charging $192,402, according to the report. The median expense total for the 2,094 employees was $3,358.

What specific items employees and executives charged to their accounts is anyone’s guess — at least right now — because SCE declined to provide documentation or details of spending. Instead, SCE officials provided general comments in a written statement.

“Sometimes employee-related business expenses are incurred and charged to credit cards for a group of individuals or a department, including the expenses charged by the individuals who have been identified,” the statement said. “These charges are reported under the employee responsible for the company issued credit card. Charges are recorded to either ratepayer or shareholder accounts, based on the business activity for which it is incurred.”

SCE officials did not say which expenses charged by individual employees reflected business expenses for other employees, nor did they say which expenses — or what percentage of expenses — were charged to shareholder accounts.

Ratepayer advocates said the reports suggest some SCE employees may be living the high life at ratepayers’ expense.

“Overall, when you look at this you have the sense of a company that is living high on the hog,” said Mindy Spatt, spokeswoman for nonprofit ratepayer advocate group, The Utility Reform Network, or TURN. “Their executives have huge salaries and huge expense accounts.”

“The majority of the money these highly-paid executives are getting comes right out of ratepayers’ pockets,” Spatt said. “Most of their expenses are billed to ratepayers, too.”

SCE ratepayers covered most or all of the employees’ compensation and expenses, according to documents the utility filed with the state. And ratepayers kicked in part of the total compensation for a handful of executives shared by SCE and related companies — including the top official at SCE’s parent company, Edison International, who earned $10.8 million in 2011 and charged $334,272 to his expense account.

Peter Thomas Dietrich, SVP and Chief Nuclear Officer responsible for overseeing SCE’s nuclear business at the San Onofre Nuclear Generating Station, earned $1,291,869 in total compensation in 2011, according to the report. His total compensation included a performance-based annual bonus of $288,264.

Not included in Dietrich’s total compensation was a $350,000 hiring bonus, a $75,000 housing stipend, a moving and mileage expense payment of $342,910, and $89,624 in charges to his expense account, the report said.  With total compensation, that all adds up to about $2 million (not including business expenses) — if you’re counting, which we tend to do.

Dietrich replaced Ross Ridenoure, who left his post for the good of the station after allegations of deep distrust between some employees and management at the plant surfaced in 2010.

Ridenoure received a cash severance payment of $581,095 upon his departure, as well as $31,702 in relocation expenses, according to SCE’s 2010 compensation report. Neither figure was included in his total compensation, which could not be determined based on the figures listed in the report because his name was redacted.

Two unnamed employees with the “SVP and Chief Nuclear Officer” title were listed as employees who retired, were fired, died, or were taking a leave of absence in 2010, according to SCE’s 2010 compensation report. The employees received total compensation of $283,824 and $2,557,014, respectively.

The numbers appear in reports SCE and other California utility companies must file annually with the California Public Utilities Commission, or CPUC. The reports, which show total compensation and business expenses for executives and employees who earned more than $125,000 in base salary during the year the report covers, provide transparency and information for officials to consider when deciding whether a rate increase is justified.

The CPUC does not collect or routinely audit business expenses, but ratepayer advocacy groups sometimes request the information and perform audits when utilities apply for the state’s permission to raise rates. It did not appear that any groups audited business expenses when SCE applied for rate increases starting in 2012.

Spatt said the advocacy groups’ audits include checks to make sure shareholders are covering lobbying expenses and other costs that cannot be billed to ratepayers.

Top-spenders in the $125,000-base-compensation-bracket in 2010 were:

• Manager 3 ($184,574 in total compensation) — $434,055 in expenses. The median expense total for the 274 employees identified in the report with a “Manager 3″ job title was $4,791. An SCE spokesman said the employee’s expenses included expenses for other employees. The spokesman would not say how many other employees’ expenses were included in the total.
• Mgr-Project/Product 2 ($143,554 in total compensation) — $290,032 in expenses. The median expense total for the 338 employees identified in the report with a “Mgr-Project/Product 2″ job title was $2,631.
• Mgr-Project/Product 2 ($149,729 in total compensation) — $144,778 in expenses.
• Manager 2 ($140,525 in total compensation) — $89,070 in expenses. The median expense total for the 471 employees identified in the report with a “Manager 2″ job title was $3,814.
• Mgr-Project/Product 2 ($147,415 in total compensation) — $83,150 in expenses.

Top-spenders in the $125,000-base-compensation-bracket were in 2011 were:

• Manager 3 ($223,085 in total compensation) — $192,402 in expenses. The median expense total for the 290 employees identified in the report with a “Manager 3″ title was $5,118.
• Manager 2 ($163,927 in total compensation) — $115,804 in expenses. The median expense total for the 503 employees identified in the report with a “Manager 2″ title was $3,222.
• Mgr-Project/Product 2 ($154,891 in total compensation) — $110,407 in expenses. The median expense total for the 404 employees identified in the report with a “Mgr-Project/Product 2″ job title was $2,520.
• Mgr-Project/Product 2 ($153,978 in total compensation) — $100,707 in expenses.

SCE serves 4.9 million customers in a 50,000-square-mile service area within Central, Coastal and Southern California, including much of Orange County. Southern California Edison’s forecasted revenue requirement — the money the company need to bring in in order to operate — was $6.3 billion, according to SCE’s most recent application for a rate increase.

The company expected to employ 18,543 workers in 2012, according to the rate application. The majority of the employee’s wages and benefits — about 80 percent — were funded with money from ratepayers.

More Watchdog:

Edison employees rack up millions in business expenses is a post from: OC Watchdog

If employees work at the Metropolitan Water District of Southern California for at least 10 years, the agency covers half of their medical insurance bills in retirement. If they work 20 years, it covers the entire cost.

And until last year, the benefit was even sweeter. Employees hired before 2012 got all their medical insurance bills in retirement paid by the district if they worked at least five years. The agency scaled back that offer through labor negotiations to reduce costs.

Lifetime medical care has become unusual among public agencies, in part because the cost to taxpayers or ratepayers can be significant. Life expectancy after retirement and health care costs have been rising.

Together, these factors have placed additional pressure on the agency’s $1.5 billion budget and water rates across the region. The agency’s retiree health payments grew from $8 million in 2006 to $12.7 million last year.

And in addition to these upfront costs, the benefit has created a growing mountain of future obligations.

The district has historically reduced upfront costs by passing the buck to future ratepayers.  But the agency hasn’t been setting any money aside to cover the medical benefit that current employees will be receiving in retirement.

In 2005, the agency estimated it would be required to pay about $310 million in future medical bills. By 2011, the debt had grown by 76 percent, to $545 million.

Then, in September last year, a financial consultant said the debt might’ve grown by an additional $30 million. As long as the agency didn’t change its practices, he said, the burden on future ratepayers would continue to grow.

Today, water bills across Southern California are playing a small role in the water agency’s long-term strategy to pay its debts.

The district has started pumping money into an investment fund that aims to generate revenue for future medical bills. It set aside $5 million this year and plans to gradually increase the amount to $25 million by 2017.

These annual contributions place more stress on the agency’s current budget and water rates, but the agency expects it will lower pressure in the long run. If its investments perform well on Wall Street, less money could need to be drawn from the operating budget for retiree health care.

The agency’s operating budget is funded mostly through water sales. Smaller water agencies purchase its water and then sell it to roughly 19 million people across Southern California. When the agency increases water rates, the pinch generally trickles down through the chain to ratepayers.

When the agency increased water rates this year, a small fraction of the hike was attributed to the rising cost of retiree health care and the agency’s plan to address it, said Gary Breaux, its top budget official.

The district’s rates climbed by 5 percent. Breaux said about 0.25 percent of the increase would provide additional funding for the investment plan.

Breaux said that beginning to fund the benefits is important and should reduce the debt over the next decade. At least for the near future, tackling the benefits’ cost through other means would be tricky.

As with pensions, the agency agreed to its retiree health care benefits through labor negotiations. If it wanted to change them for existing employees, it would need labor’s blessing to reopen contract discussions. That’s normally a very tough pitch.

The agency’s four labor contracts aren’t set to expire until 2015 and 2016.

Keegan Kyle is an investigative reporter at The Orange County Register. He covers public safety and local government issues. What should he write about next?

You can contact him by sending an email to kkyle@ocregister.com or by calling (714) 796-4976. You can also follow him on Twitter (@keegankyle).

More state government:

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Water agency’s debt for lifetime medical benefits climbs to $545 million is a post from: OC Watchdog

Rank-and-file firefighters saw it as a harmless rite of passage.

Administrators viewed it as an unacceptable – and possibly criminal – lack of professionalism.

What is certain is that a hazing incident involving Orange County Fire Authority Station 22 in Laguna Hills has deepened the rift between firefighters and administration. In a confidential survey of 259 union members, firefighters labeled the hazing investigation as a ”witch hunt” and another example of the administration punishing firefighters to satisfy the public.

The debate is centered on some bad haircuts and hungry firefighters.

In April 2012, the crew from Station 22 showed up at a nearby In-N-Out Burger, dressed in uniform and arriving in OCFA vehicles.

But something was off-kilter with six of the firefighters. They had wild haircuts, such as reverse Mohawks and clumps shaved off their scalps. One firefighter sported a brightly painted pate.

They were probationary employees, all being hazed by their veteran colleagues. At least one customer didn’t feel firefighters should be clowning around on the public dime.

The irate customer notified Fire Chief Keith Richter, who initiated the unpopular investigation – even consulting with the Orange County District Attorney’s Office.

In all, six probationary employees and seven others were disciplined for unprofessional conduct, said Battalion Chief Kris Concepcion. Details of the discipline were withheld by Concepcion under state confidentiality laws for firefighters, but respondents in the survey said they were given days off.   All of the workers involved are still employed by the OCFA.

At least two of the probationary employees were held down for their haircuts – a potential assault – but county prosecutors declined to file charges, Concepcion said.

Firefighters in the union survey chalked the hazing up to normal camaraderie.

“What could have been handled by a simple, stern warning, turned into the biggest morale-busting waste of money I have ever seen,” said one firefighter.

Said another, “Similar events have happened  hundreds of times.”

Not anymore, Concepcion said.

“We are taking appropriate measures to make sure nothing like this ever happens again at the OCFA.”

OK, readers, what do you think? Witch hunt or important investigation?

More Watchdog:

13 O.C. firefighters punished in hazing is a post from: OC Watchdog

Thousands were being murdered across the state each year, but Larry Bowler argued it was still unclear how often guns or what types of guns were involved. He said lawmakers were torn between anecdotal, partisan and indirect research on gun-related crime.

Former state Assemblyman Larry Bowler

So Bowler authored a bill.

He proposed the state Attorney General track gun-related crime and report its findings to the Legislature each year. Then, Bowler said, lawmakers would finally have “an accurate source of hard data upon which intelligent firearms policies” could be discussed.

His bill became law in 1996, and two years later, the Attorney General began reporting annual statistics on the illegal use of firearms in California. The office counted the number of guns used to kill people, aid robberies and help drug traffickers, and provided detailed information about the different types of guns.

How many were 12-gauge shotguns? How many were assault rifles? How many had serial numbers removed or silencers attached?

The reports were aimed at helping legislators improve California’s gun laws, but now, with gun policy back at the forefront of public attention, they don’t seem to share the spotlight. More research about gun-related crimes is accessible online, and the Attorney General’s reports only examine a tiny sample of incidents.

Consider gun-related homicides in California. Between 2008 and 2011, the Attorney General’s reports provided detailed information about 172 firearms involved in slayings. During the same period, law enforcement agencies across California reported that 5,324 murders had involved firearms.

The Attorney General’s reports, called Firearms Used in the Commission of Crimes, examined less than 4 percent of gun-related murders across the state. And the statistical gap for other violent crimes was even wider.

While the reports examined 411 guns involved in non-homicide crimes over the period, local law enforcement agencies across California reported 76,000 robberies and 70,000 aggravated assaults involving firearms. (For fellow math nerds, 411 is about .3 percent of 146,000.)

Two factors determine the tiny amount of information in the Attorney General’s reports. First, the office only tracks guns examined by forensic laboratories. If an illegal shooting occurs but no weapon is recovered, the incident wouldn’t be counted in the AG report.

Bowler’s law required that limitation. He argued back in 1995 that forensic labs would provide the best assessment of gun-related crimes because they have firearms experts.

But Bowler was surprised to learn another factor has narrowed the sample. The Attorney General’s Office says the law he authored does not require local forensic labs to participate; the annual survey is voluntary.

“This is the first of these I’ve seen since they were first generated,” Bowler wrote after being provided a copy of the office’s 2010 report. “I do not recall that portion of the bill that is now deemed to not require the local laboratories to report the information.”

Bowler said he didn’t know whether he neglected to include a requirement that local labs participate or whether the provision had been removed during the legislative process. But in either case, he said the goal was a statewide assessment of gun-related crime.

Despite its narrow scope, the reports have been used to describe statewide trends in at least some cases.

Greg Pagan, chief counsel for the Assembly’s public safety committee, said he has used them to gauge the impacts of past legislation. In 2004, for instance, the Legislature banned powerful .50-caliber rifles. Pagan said he cited the reports in legislative summaries, showing that no crimes in the state had involved the weapon.

“It’s helpful to know how many gun crimes are committed,” Pagan said. “The Attorney General’s report is something we use in our research.”

The Attorney General’s Office declined to comment on the report’s value, considering its limitations. In an email, spokeswoman Michelle Gregory wrote that the report “is mandated by the legislature and therefore it would be up to lawmakers to make any changes.”

After receiving a copy of the AG’s report, state Sen. Loni Hancock, D-Berkeley, said she would look into repealing the law that requires it and finding more useful information on gun-related injuries and deaths. She said the law had been sponsored by the gun industry and provided no financial support to evaluate gun violence across the state.

“As a result, the report contains significant omissions and is incomplete,” Hancock, chairwoman of the Senate’s public safety committee, wrote in a statement. “I personally find the report useless and misleading.”

The Assembly’s public safety committee plans to discuss gun policy this Tuesday. Carlos Alcala, a spokesman for chairman Tom Ammiano, D-San Francisco, said the office has seen the Attorney General’s reports on gun-related crime but has also reviewed many others.

“We are aware that the information is not comprehensive, but have not yet found that a hindrance to pursuing our policy goals,” Alcala wrote in an email. “This is not a topic on which we have felt a great need for additional information.”

An Uzi is classified as an assault weapon.

Even with its limitations, Bowler argues the report is still valuable to lawmakers. He said some accurate conclusions can be drawn from the sample, such as the infrequency of crimes involving assault weapons. California first banned the weapons in 1989, and national lawmakers are now considering whether to reinstate a similar ban.

Whether reviewing the Attorney General’s reports or crime statistics reported by local law enforcement agencies, most gun-related crimes across the state in recent years have involved handguns.

Keegan Kyle is an investigative reporter at The Orange County Register. He covers public safety and local government issues. What should he write about next?

You can contact him by sending an email to kkyle@ocregister.com or by calling (714) 796-4976. You can also follow him on Twitter (@keegankyle).

More state government:

More Watchdog:

Report provides tiny picture of California gun crime is a post from: OC Watchdog

Ernesto Miranda, who inspired the  “Miranda warning,” was a rapist. An anti-Semitic scandalmonger from Minnesota, Jay Near, established the principal that governments can’t ban a publication.

Now meet Zulmai Nazarzai, home loan modification fraudster, two-year resident of the Orange County Jail and the person who might place a limit on judges’ sweeping contempt powers.

Orange County Superior Court Judge Andrew P. Banks declared Nazarzai in contempt of court  in December 2010 after he failed to turn over $360,540 to a receiver for his former company. Nazarzai has been in jail since then.

Orange attorneys Thomas Murphy and Afshin Eftekhari have already failed in one bid to free their client. They’re about to try again with a claim that under California law no one can be jailed on civil contempt charges for more than one year.

Under normal circumstances, Nazarzai wouldn’t be in jail. Like most people accused of fraud in Southern California, he was sued — an action that can lead to heavy fines and onerous court orders but not to jail or prison time.

His Irvine-based company, Statewide Financial Group Inc., doing business as WeBeatAllRates.com and U.S. Homeowners Assistance, claimed a 97 percent success rate in modifying customers’ loans. It also claimed it could reduce principal on customers’ loans by as much as 20 percent.

In July 2009, then-Attorney General Jerry Brown sued the company and got a court order shutting the business down and naming a receiver.

Some three years later the state won a $4 million judgment, including $2 million in restitution to 1,000 victims, against the company, co-owners Nazarzai and Hakimullah Sarpas and senior manager Fasela Sheren, also known as Sharon Fasela. In his 20-page ruling, Banks declared the company had “routinely made extravagant and false promises to consumers” who had each paid thousands of dollars for services they never received.

But while the lawsuit was still in its early stages state attorneys learned that Nazarzai had $370,000 of the company’s funds — money that should have gone to the receiver.

That’s when events took a bizarre turn.

On July 1, 2010, Banks ordered Nazarzai to give all but $10,000 of the stash to the receiver by noon the next day. On the morning of July 2, according to his later sworn account, Nazarzai counted out the money in cash from a closet and gave it to his co-defendant and girlfriend, Fasela, to deliver to the receiver while he attended to an obligation at his daughter’s school.

Fasela packed the cash in a black duffel bag and took the 91 Freeway to the receiver’s office. But she never made it. She woke up in the hospital. The black duffel bag with the money was gone.

A witness had seen Fasela pull off the 91 and park. He had pulled off and stayed with her until an ambulance arrived. Then police arrived and inventoried the car. There was no black duffel bag.

Neither Fasela nor Nazarzai reported any missing money to the police that day. They didn’t mention it until later.

Banks called it “the most incredulous story I’ve ever heard, and I’ve heard some whoppers.”

He ordered Nazarzai jailed for contempt until he produced the money or the case was concluded.

A civil contempt order can’t be appealed under California law, his attorneys said in court papers. The only escape hatch is a habeas corpus writ, the “Great Writ” of English and American law requiring jailers to show cause why they have locked someone up.

Murphy and Eftekhari, Nazarzai’s lawyers, sued Sheriff Sandra Hutchens, arguing that the state failed to prove that their client still had the money at the time of the contempt hearing in November and December, months after Fasela’s drive on the 91. The state trial and appellate judges and federal district court judge who reviewed the habeas petition all rejected that theory.

By the time the federal judge ruled on the habeas petition, the state was winding up its civil suit against Nazarzai. Banks handed down his $4 million judgment in July 2012. Hoping to win his freedom, Nazarzai decided not to appeal.

But his co-defendants did appeal — and Banks decided that with the case still active Nazarzai would remain in jail.

In the next week Murphy and Eftekhari will begin their second habeas petition, based on a never-tested 1957 state law saying that no one can be held in jail for more than one year on a civil contempt charge. Nazarzai has now been in jail for 25 months.

“I haven’t given up on the guy,” said Eftekhari. “It’s a dangerous issue for future generations.”

But when he put Nazarzai in jail for contempt, Banks said the defendant had an easy way out:

“I think he’s got the money in his possession, custody or control,” Banks said. “And he holds the keys to getting out of jail.”

More Watchdog:

Is this loan scammer unjustly jailed? is a post from: OC Watchdog

Fitzgibbons is suing Integrated Healthcare Holdings Inc., owner of Western Medical Center Santa Ana and three other central-county hospitals, over the incident. He claims that then-chief executive Bruce Mogel orchestrated the gun plot and other incidents to silence him and other critics.

David Robinson, an attorney for IHHI, portrayed Fitzgibbons’ case as “sour grapes,” the result of a spurned bid to buy West Med Santa Ana in 2004.

This case is really about two stories.

The first is the sensational tale that unfolded on June 28, 2006: 911 calls about someone driving in midday traffic waving a firearm, followed shortly by the arrest of Fitzgibbons, a mild-appearing infectious-disease specialist, after a gun and black gloves were discovered in his parked car. The district attorney ultimately declined to prosecute.

The second is the complex tale of IHHI, a company with little capital that managed to overcome financial and political obstacles to buy four hospitals in 2005.

Fitzgibbons and several other physicians railed against the IHHI bid, and especially against IHHI’s bidding partner, Hemet physician and medical entrepreneur Kali P. Chaudhuri. He had angered local physicians in 2000 when he abruptly closed KPC Medical Management, a group medical practice with an estimated 250,000 patients.

Their opposition forced IHHI into the arms of another partner — a Ponzi scheme, Tustin-based Medical Capital Holdings. MedCap provided most of the loans necessary to buy the hospitals. But when the Securities and Exchange Commission shut down MedCap in August 2009, IHHI was thrown into a severe cash crisis. In a court-ordered sale, Chaudhuri won control.

In the telling of Ted Mathews, Fitzgibbons’ lawyer: Until IHHI began suing him, “Dr. Fitzgibbons led a doctor’s life.”

In Robinson’s telling, Fitzgibbons was spending so much time trying to buy West Med Santa Ana that his practice suffered. His income in 2004 was half what it had been in 2003 because, he later testified, he was spending so much time on the hospital.

The linchpin for the Fitzgibbon’s case concerns the actions of a missing witness, Mogel, who now resides in Arizona, as told by former IHHI President Larry Anderson.

Mathews told jurors that in early June 2006, right after Fitzgibbons won a lawsuit against IHHI, Mogel told Anderson that he was going to humble Fitzgibbons. Right around then he instructed Anderson to award a $10,000 contract for unnecessary Internet services to a company controlled by Mikey Delgado, whom Mathews described as a “thug.”

But Anderson, Robinson told the jurors, is a liar. In a 2008 deposition in which he first described the $10,000 payment, he also told a striking story of watching with Mogel as police arrested Fitzgibbons.

“People do not know how powerful I am,” Mogel said, according to Anderson’s deposition.

When IHHI directors read the deposition, Robinson said, they were outraged. So they appointed a committee chaired by one of their number, retired Superior Court Judge C. Robert Jameson, to investigate. And they discovered that Mogel wasn’t in town that day. He was in Orlando, Fla., at his daughter’s soccer tournament.

We’ll keep an eye on the case and let you know what happens.

More Watchdog:

Lawyer: Hospital chief planted gun to ‘humble’ dissident doctor is a post from: OC Watchdog

In recent months, the OCFA has clawed its way through several embarrassing episodes:  The agency collected hundreds of thousands in inspection fees for hazardous materials  inspections that were never done, it endured some blistering criticism from the O.C. grand jury for salaries that jurors said were far in excess of economic demand, and it took heat from Irvine officials after a hazmat engine crew took its truck to watch one of the firefighters’ kids’ Pop Warner football game.

The anonymous survey, completed in December by the Orange County Professional Firefighters Association, decried management for lying to the media in an attempt to spin out of embarassing controversies and likened the firefighting agency to “Titanic.”

“I have witnessed behavior from our management at HQ that would get one fired, sued or arrested in the civilian/corporate world,” said one respondent. “We have turned from a  premier fire department to one that has non-firefighter leadership and less ability to think and act like firefighters.”

Another firefighter said many of his colleagues have given up in frustration.

“I am not proud of the organization,” said the commenter. “I’ve recently gotten rid of firefighter items in my home. I was considering putting in to teach this next academy, but I’m so disappointed in management that I didn’t want to be at HQ.”

Joe Kerr, former president of the union, said the survey was meant to generate talking points to take to the administration as well as to the board.

“Firefighters are at the point where they are tired of being blamed for everything,” Kerr said.

Battalion Chief Kris Concepcion, speaking for the administration, said the OCFA takes seriously the concerns of the rank and file.

“If there are things we need to fix, I’m sure we’ll do that,” Concepcion said.

Heavy on the minds of firefighters is the hazardous materials inspection program, which charged businesses $360,000 in fees for inspections that didn’t occur. Administrators chalked it up to a lack of communication and failure to follow through on the work.  Now the department is considering turning over the inspection program to the county’s Health Care Agency.

One firefighter complained, “You have an assistant chief who dropped the ball with our inspection program and a battalion chief telling blatant lies to the Register about it to save face.”

While he was not named, Concepcion agreed it appeared that the “battalion chief” remark was aimed at him. Concepcion countered, “I don’t ever lie to you guys.”

Many of the firefighters railed about Fire Chief Keith Richter and the perception that he is a weak leader.

“The fire chief does not own up to any of his blunders nor his staff errors. We have become a rudderless ship for 3-plus years and now the wheels are coming off the cart,” said one firefighter.

Added another: “It is obvious he is here for a paycheck. I don’t know who his sounding board is, but whoever is giving him advice is equally out of touch. All we can rely on is the crew on the rig, and it’s getting really old having to watch your back with your own boss.”

Richter declined to respond, but Concepcion argued that he is the right guy for the job.

“I personally like working for the chief. I think he is the right leader at the right time, with all the fiscal challenges. I think he is taking us in the right direction, although that is clearly not the feeling in the survey,” Concepcion said.

Firefighters in the survey also mourned what they call a loss of integrity.

“The seemingly lack of upper management integrity is most disturbing to me. What happened to doing the right thing? And do ethics somehow disappear with promotion?” wrote one firefighter.

The public backlash against the high costs of overtime and generous pensions is grating on firefighters, who contend in the survey that their work is being unfairly portrayed in the media. Some say they have only themselves to blame.

“I really think that we are going to be our own worst enemy,” said one firefighter. “If we fail to provide the best service possible, the public is going to attack us and our careers. The people with whom we have been in contact with on calls, are always the ones to defend us and say we are worth every penny. It is the people who don’t know how we operate and why, who believe we are sucking the system dry.”

One firefighter answered the question – ”What’s the biggest threat to the fire service?” — with a single word: “Ourselves.”

More Watchdog:

O.C. firefighters express doubt about their leadership, future is a post from: OC Watchdog

A wood utility pole was weakened by drywood termites before it fell in a 2011 windstorm that caused widespread power outages, according to a report released Jan. 11, 2012, by the California Public Utilities Commission, or CPUC. Photo courtesy of the CPUC

A state probe of widespread power outages brought on by a 2011 windstorm received scattered news coverage after it was released last week, with most  reports focusing on Southern California Edison‘s destruction of most of the failed power poles before they could be examined by state inspectors.

Perhaps more alarming are details in the report that raised questions about how well SCE has been maintaining its network of wooden utility poles — and whether the utility has been doing all of the in-depth safety inspections for which it has charged ratepayers.

The 2011 mini-disaster began on Nov. 30, when powerful winds began ripping through the San Gabriel Valley, uprooting trees, shearing off power lines and knocking over 248 of SCE’s wooden utility poles, according to the report  by the California Public Utilities Commission, the state’s public utility watchdog. No one was hurt, but about 440,000 customers lost power — some of them for a week.

State investigators found that 21 of 60 wooden poles had been weakened by termites, woodpeckers, rot or other damage before the wind knocked them over, according to the CPUC‘s report. Investigators said the 21 poles did not meet safety standards, and SCE violated safety rules by allowing the unsafe poles to remain in service.

SCE is required to evaluate the structural integrity of wooden utility poles by drilling into them every 10 or 20 years, depending on the poles’ age, to make sure they are solid and strong, according to CPUC documents. In SCE’s application  to raise rates in 2012, the CPUC noted that SCE claimed to have accomplished more drilling inspections, or “intrusive inspections,” than were actually performed in 2009 and 2010, and that inspections in 2010 “resulted in only (a) tiny fraction of poles needing prompt corrective action.”

As for the poles downed during the 2011 windstorm, CPUC investigators said they couldn’t determine if any of the remaining 188 downed poles were unsafe because SCE destroyed them before investigators could begin their probe — a violation of evidence rules, according to the report.

The 60 poles SCE delivered for inspection were cut into pieces — some of which were missing — and the pieces were scattered throughout different bins, making it hard for inspectors to reconstruct them.

Unable to independently evaluate the condition of the majority of the fallen poles, state investigators had to rely on SCE’s inspection data, according to the report released last week. SEC’s data suggested that about 8 percent of the 248 downed poles failed to meet safety standards.

“Based on the information available, CPSD (CPUC’s Consumer Protection and Safety Division) staff believes that having access to the physical evidence that was disposed of by SCE, would have significantly increased the likelihood of finding more instances where SCE failed to comply with GO 95 (evidence) rules and where such noncompliance directly resulted in unnecessary damage to facilities and prolonged outages,” the report said.

SEC could face formal enforcement action including financial penalties if it does not comply with the CPUC’s recommendations to correct problems.

Dan Chung, a spokesman for SCE, said Thursday that the utility provider failed to gather and carefully catalog the fallen poles because it was busy repairing dangerous downed power lines and working to restore power to customers.

“There needs to be some semblance of balance of preservation of poles for later discovery versus restoration of poles now for the public, who is out of power for more than a week,” Chung said. “We tried to balance that as best as we could, but we made restoring power a priority.”

As for the downed poles, Chung said some failed to meet safety standards, but it wasn’t a surprise that winds capable of uprooting 100-year-old oak trees also knocked down some 18-inch-wide wooden utility poles.

SCE serves 14 million customers in a 50,000-square mile area that includes most of Orange County, according to the utility provider.

The utility system includes about 1.5 million utility poles, which are made of materials including steel, wood and concrete, Chung said. He said the poles are inspected regularly according to mandated schedules and whenever workers encounter or climb them in the course of their regular duties.

Wood utility poles must be subjected to an intrusive inspection every 20 years — or every 10 years if they are 15 years old or older, according to the case SCE filed with the CPUC to set rates for 2012. The average wood pole’s lifespan is about 45 years.

SCE planned to do about 130,000 intrusive inspections of wood poles each year starting in 2012, at an estimated cost of about $5.5 million a year, according to the rate application. Private contractors typically do most of the intrusive inspections.

The CPUC’s Division of Ratepayer Advocates, which tries to make sure utilities are spending consumers’ money wisely, argued in the rate case that SCE’s plan to conduct 130,000 inspections per year was unrealistic.

The ratepayer advocates pointed to SCE’s inspection cost history from 2005 to 2009, a five-year period during which SCE spent about $4 million each year, according to the case. Advocates said the money spent probably covered about 77,300 intrusive inspections each year.

Advocates also argued that the numbers of intrusive inspections SCE reported in recent years were inflated because they included much-less-costly visual inspections and “records corrections,” according to the case.

The CPUC noted in its preliminary decision on the rate application that SCE reported in its 2010 annual report that only about 86 percent of the 140,755 intrusive inspections it claimed to have accomplished in 2010 were actually intrusive inspections. The rest — about 19, 036 — were much-less-expensive visual inspections.

Skeptical that SCE could actually accomplish the 130,000 intrusive inspections it planned in 2012, the CPUC allowed SCE to have the approximately $5.5 million it requested for intrusive wood pole inspections — but directed SCE to spend up to $753,000 of that money on a study to determine if poles are carrying too much weight, according to the case.

The study is due in July.

The CPUC also directed SCE to include in its next case to adjust rates the actual number of intrusive inspections it performed in 2012 and 2013 — and the condition of each pole.

Probe raises questions about power pole safety is a post from: OC Watchdog