Waste, Fraud, & Mismanagement

The state’s Medi-Cal system paid $17.6 million to a Long Beach nonprofit that fraudulently obtained the money by submitting phony claims for drug and alcohol abuse treatment, The Associated Press reported May 9. Three people were convicted May 9 in the scheme. “They were the latest among 19 people convicted of federal charges involving a Long Beach-based nonprofit called Atlantic Recovery Services, later called Atlantic Health Services,” the AP reported. “The organization provided treatment for substance abuse to students at…

San Francisco spent $250,000 to develop a database intended to track the performance of contractors on city construction projects, but three years later the database has yet to be used, the San Francisco Chronicle reported April 13. The San Francisco Civil Grand Jury studied the “performance evaluation database” that was recommended in a 2014 city controller’s audit. The database was completed in 2018 and tested in 2019. “Yet, the departments that oversee public construction projects – which include the Department…

“The state’s weak oversight of hospice agencies has created opportunities for large-scale fraud and abuse,” and the evidence “strongly suggests” that such fraud is occurring in Los Angeles County, the state auditor reported March 29. At the direction of the Joint Legislative Audit Committee, the auditor reviewed the state’s licensure and oversight of hospice agencies, which typically offer palliative end-of-life care to individuals with medical diagnoses of fewer than six months to live. The fraud indicators that the auditor found…

Funds from a voter-approved $1.2 billion bond to address homelessness in Los Angeles are not stretching as far as expected, as the average cost of housing projects in construction was $600,000 per unit in 2021 – and 14 percent of units in construction cost more than $700,000 per unit – Los Angeles City Controller Ron Galperin reported February 23. “If nothing changes, … costs could soon reach $900,000 or $1 million per unit,” Galperin predicted. The per-unit cost was $530,000…

James Hammond, the superintendent of the Ontario-Montclair School District, receives compensation of more than $600,000 a year “through a series of opaque perks, including one that allows him to cash out a generous complement of sick time,” the Riverside Press-Enterprise reported November 14. Hammond, the highest-paid K-12 administrator in the state – and possibly the world – for three years in a row, received 85 days of leave this year, and that number will continue to increase by five days…

“Federal officials expect BART’s four-station extension in downtown San Jose could cost as much as $9.1 billion, or about $4.4 billion more than the initial price tag,” the San Jose Mercury News reported this week. The estimate came from the Federal Transit Administration, which said it is sending $2.3 billion in federal transit funds or a quarter of the final project cost, whichever is less. Officials with the Valley Transportation Authority (VTA), which is overseeing the six-mile extension, issued a…

The California Prison Industry Authority (CalPIA), which provides work opportunities for inmates under the jurisdiction of the California Department of Corrections and Rehabilitation (CDCR), gave nearly $1.3 million in unlawful gifts to other state agencies and repeatedly violated merit-based employment principles, the state auditor reported July 27. CalPIA, established to be a self-supporting and semiautonomous state agency similar to private industry, employs more than 900 people who work primarily on-site at adult prisons throughout the state. The agency produces goods…

The state wasted more than $1.6 million in tax dollars because of lax management of employees – including two California State University employees who spent up to 16 hours each week teaching at community colleges while also being paid to perform their state university work – State Auditor Elaine Howle reported May 25. During a three-year period, the Cal State Los Angeles lab workers spent an estimated 2,800 hours – valued at more than $103,000 – teaching classes at local…

California’s taxpayer-funded agencies are spending heavily to address homelessness, but have not followed a coordinated plan and do not base the spending on effectiveness, the state auditor reported February 11. The report, issued while the Legislature is considering a proposed $2.4 billion-per-year tax increase on California employers and consumers to generate funds for homelessness programs (with no sunset date), stated: “With more than 151,000 Californians who experienced homelessness in 2019, the State has the largest homeless population in the nation,…

The Employment Development Department (EDD) this week acknowledged that 9.7 percent of the 19.5 million unemployment insurance claims it has paid since March were fraudulent, and said an additional 17 percent are under investigation for possible fraud. That works out to $11.4 billion in confirmed fraud and an additional $20 billion in possible fraud. Julie Su, secretary of the California Labor and Workforce Development Agency – which oversees the EDD – said during a conference call with reporters: “There is…