California Watch: Articles

Video: Texas firm accuses hundreds of Californians of mortgage fraud

Serene Fang — Thu, 24 May 2012 00:02:53 +0000

Serene Fang, Rick Jurgens and David Ritsher

Nearly a million California homeowners lost their homes in the foreclosure crisis. Now, some are being pursued by a little-known Texas company with a controversial strategy for seeking profit in the real estate collapse.

React & Act: What is second-mortgage debt?

Sarah Springfield — Wed, 23 May 2012 22:03:37 +0000

Sarah Springfield and Ashley Alvarado

Michael Short/California Watch Oscar Trejo lives in this San Jose home. Heritage Pacific Financial sued Trejo to keep a bankruptcy judge from erasing an $88,000 second-mortgage note against a house Trejo lost through foreclosure in 2008. Trejo won, but the firm has appealed.

To understand Rick Jurgens’ article on the second-mortgage debt and one Texas firm’s aggressive collection methods, you must first look at the origins of the mortgage crisis. Here, we provide an explainer, a glossary of terms, a guide to available resources and a recommended reading list.

Explainer: The mortgage crisis

Five years after the housing bubble burst in 2007, the mortgage crisis appears far from over. More than 250,000 Californians have received notices of default in the last year, on top of the nearly800,000 Californians who lost their homes to foreclosure since the crisis began.

The mortgage crisis, which contributed to the steep decline of the state and national economies, is rooted in poor lending decisions by both borrowers and banks. Lending institutions and borrowers entered mortgage agreements counting on a housing market many believed would never stop expanding. But the overheated market turned cold. Too many homeowners found themselves committed to mortgages they could not afford and were unable to refinance or manage their adjustable interest rates once changes set in. As a result, nearly 1.5 million Californians defaulted on their mortgages, and foreclosures became rampant.

What is subprime lending?

Not everyone has good credit. Not everyone has a high-paying job. When banks loan money to these borrowers for cars, houses or other large purchases, the practice is called subprime lending. Because the loans are riskier, they often come with higher interest rates or interest rates that adjust over time – mostly up.

Many of these mortgage agreements were poorly constructed. Down payments were low – making it easy for borrowers to accept loans without much money in the bank. Many adjustable interest rates were designed to skyrocket after a short grace period. There view process for loans was minimal.

These subprime loans, specifically those with adjustable interest rates, contributed greatly to the crisis. Once housing prices began to fall and the economy tanked, new homeowners found themselves unable to sell their homes or refinance.

Why did housing values decline so quickly?

The simplest answer is supply and demand. As housing prices hit new highs between 2005 and 2006, construction of new homes was booming as well – to the point where the number of available homes was soon higher than the number of people willing and able to buy them, even with subprime lending. As homes went into foreclosure and lending institutions sought to sell them, the market was further saturated, and prices dropped even lower.

Glossary

Mortgage: A large-sum loan, usually from a bank, for the purpose of purchasing property. The property itself is used as collateral.

Promissory note: Legal document guaranteeing payment of money by a certain date. Promissory notes are signed when mortgages are taken out, promising unconditionally that the principal value of the loan plus interest will be repaid in specific intervals over a given period of time and naming the borrower as personally responsible for this repayment.

Mortgage fraud: The intentional botching of mortgage paperwork to obtain a larger loan – or any loan at all – that would not have been granted had the lender known the truth.

Default: Persistent failure to repay a loan – either principal or interest – according to the agreed-upon schedule.

Foreclosure: Seizure and sale of a property when a homeowner cannot make payments on his or her mortgage or deed of trust.

Deed of trust: A legal document giving a third-party trustee the ability to quickly initiate foreclosure on a property once a borrower has defaulted on a loan. Colloquially, the term often is used interchangeably with mortgage.

Second mortgage: Arrangement similar to the original mortgage, but riskier for the lender and more expensive for the borrower. A second mortgage is made while the original loan is still in place. In the case of foreclosure, payments are made toward the second loan only when the first mortgage has been paid off. This usually translates to higher interest rates on the loan for the homeowner.

Deficiency judgment: Court order granting a lending institution the right to claim a borrower’s other assets– cars and jewelry, for example– if a foreclosure sale does not earn enough money to repay the original loan. However, most mortgages in California are “non-recourse loans,” which do not allow for deficiency judgments.

Debt collection: Once a borrower has defaulted on a loan, the lending agency usually will sell that account to a debt-collection agency. That account is often sold at a fraction of its face value. The collection agency can then sell that debt again to another institution, or work to get the borrower to repay the loan. The federal Fair Debt Collection Practices Act establishes consumer rights and appropriate conduct required of debt collectors.

Debt-collection lawsuit: If loans remain unpaid, debt-collection agencies often sue borrowers to get them to pay.

Default judgment: A court judgment issued in favor of a plaintiff when defendants fail to appear in court or respond to a court summons.

Bankruptcy: A legal evaluation of a borrower’s assets and a determination of how much outstanding debt can be paid off in exchange for the remainder of the debt being forgiven.

Discharge: Official order removing a borrower from responsibility to repay the full amount of loan following bankruptcy proceedings.

Recommended reads

"The Monster: How a Gang of Predatory Lenders and Wall Street Bankers Fleeced America – And Spawned a Global Crisis" by Michael W. Hudson
"Broke, USA: From Pawnshops to Poverty, Inc. – How the Working Poor Became Big Business" by Gary Rivlin
"The Debt Machine: How the Collection Industry Hounds Consumers and Overwhelms Courts" [PDF] by the National Consumer Law Center
"The Debt Buying Industry: A White Paper" [PDF] by DBA International

Resources

National Association of Consumer Advocates: Find a private attorney who handles debt-collection or foreclosure cases.
LawHelpCA.org: This website provides a searchable directory of legal aid providers, including Housing and Economic Rights Advocates in Oakland and the Public Law Center in Santa Ana.
DBA International and the Association of Credit and Collection Professionals provide debt buyers’ or collectors’ perspectives on their respective sites.

Texas firm targets Calif. homeowners with foreclosed 2nd mortgages

Rick Jurgens — Wed, 23 May 2012 22:03:29 +0000

Rick Jurgens

Michael Short/California Watch Oscar Trejo, pictured here at his current home in San Jose, said he had never heard of Heritage Pacific before it asked a judge not to discharge its $88,000 claim against him.

Adding new uncertainty in the state’s ongoing mortgage crisis, a Texas company is aggressively pursuing hundreds of Californians to collect second-mortgage debt – on homes they’ve already lost through foreclosure.

Many of these former homeowners believed their mortgage debt had been erased after their houses were taken by banks and lending companies. But the Texas company, Heritage Pacific Financial, has aggressively pursued collections and filed lawsuits claiming those debts still linger.

For Ahmed Abdelfattah of San Jose, debt collectors started calling in 2009, saying he owed Heritage Pacific $135,000. He said he’d never heard of the company before.

“It’s been a nightmare,” Abdelfattah said. “It’s cost me money and time, and they ruined my credit until now.”

Oscar Trejo said his first encounter came a few days before he expected to exit bankruptcy and get a fresh financial start. That was in November 2010, he said. Heritage Pacific sent Trejo, who also lives in San Jose, a letter saying it had asked a bankruptcy judge not to discharge, or erase, its $88,800 claim against him.

Trejo invested in properties in Merced and later lost them all in foreclosures. But he hadn’t done business with Heritage Pacific. “I had never seen the company’s name,” he said.

Heritage Pacific was started by identical twin brothers, Chris and Ben Ganter, who once starred in a reality TV show, “PayDirt,” about investing in the Dallas-Fort Worth real estate market.

The company’s lawsuits often accuse defendants of misstating their incomes on loan applications. While many borrowers did overstate their incomes on applications, consumer attorneys say Heritage Pacific is targeting people who filled out their forms honestly or whose mortgage brokers pumped up their applications without their knowledge.

Critics of Heritage Pacific say the company’s central tactic is forcing settlements from people who can’t afford a drawn-out legal fight and who don’t know the details of California law. The company has sued people with second-mortgage debts of less than $150,000, despite a state law prohibiting lawsuits alleging fraud on mortgages below that amount.

Heritage Pacific’s collection methods now face legal challenges, including a class-action lawsuit in Santa Clara County Superior Court that contends that the company is carrying out an “insidious and illegal debt collection scheme.”

The company doesn’t make mortgage loans, but instead attempts to collect payments on loans originated by others. Heritage Pacific launched its effort in late 2008 when it began buying – at a steep discount – second-mortgage loans that borrowers had stopped paying. Many of the loans were secured by houses that already had been sold in foreclosure by first-mortgage lenders.

By demanding payments from more than 1,000 individuals in California, the lawsuit contends, Heritage Pacific has violated “the rights of those who have already suffered the emotional and financial distress that results from the loss of their foreclosed home.”

Heritage Pacific is nothing more than “people in Texas acting as vultures,” said Will Kennedy, a lawyer in the class-action suit.

In an answer to the lawsuit, Heritage Pacific says it’s not suing “innocent home-owners who, through no fault of their own, lost their homes.” Instead, the company says it targets defendants who “made material misrepresentations to secure large loans upon which they soon stopped paying.”

Fraud claims “are the only ones we’re interested in pursuing,” Chris Ganter, the company’s chief executive and main owner, said in an interview.

But some former homeowners now threatened with legal action by Heritage Pacific dispute these claims. They told California Watch that the income they claimed on their mortgage applications was valid, and they stopped paying because they lost their jobs, their income plummeted and banks foreclosed on their houses. Others said they signed applications that had been prepared by brokers.

Amassing second-mortgage notes

Heritage Pacific had no trouble finding plenty of so-called non-performing second mortgages for sale. During the recent real estate boom, an estimated 25 percent of house buyers took on a second mortgage rather than make a down payment, according to a 2007 Federal Reserve study.

A giant foreclosure wave swept hundreds of thousands of Californians from their homes. They often left behind second-mortgage loans that looked uncollectible and worthless.

While lenders can sell foreclosed properties and keep the proceeds, in California theycan’t pursue borrowers if the sale falls short of the amount owed. Foreclosure also takes away most of the legal tools for creditors to seek payments on second mortgages.

Dallas Business Journal Chris and Ben Ganter, identical twins, started Heritage Pacific Financial. The brothers once starred in a reality show, “PayDirt,” about the Dallas-Fort Worth real estate market.

That’s where Heritage Pacific has stepped in.

Rather than shy away from seemingly worthless second-mortgage notes, Heritage Pacific spent millions of dollars to assemble an inventory of at least 40,000 second-mortgage notes, according interviews with company executives and deposition testimony.

Fraud accusations against former homeowners became Heritage Pacific’s tactic for restoring value to its second-mortgage notes. California law gives a lender that can prove that a borrower fraudulently obtained a loan for more than $150,000 the right to sue. A creditor also may allege fraud to prevent a debt from being erased in bankruptcy.

Abdelfattah, a 52-year-old naturalized American who was born in Egypt, said it wasn’t fraud, but a steep drop in his income as a sales manager at a local Honda dealership, that caused him to fall behind on his monthly house payments of $5,000.

In 2008, the holder of his first mortgage foreclosed on the three-bedroom, 1,170-square-foot Santa Clara house that he had purchased in 2005 for $675,000.

But to his chagrin, Abdelfattah found that foreclosure didn’t end his house-related financial woes. As the summer of 2009 faded, he started getting collection calls from two or three individuals representing Heritage Pacific. They wanted him to pay a portion of the $135,000 balance they said he still owed on the second-mortgage loan he had used in his house purchase.

The callers were “really annoying,” Abdelfattah said. One was “really aggressive, cursing on the phone.” They accused him of never having lived in the house. They sent him a letter asking him to verify his income, and another titled, “Demand for Payment of Outstanding Debt.”

In May 2010, Heritage Pacific named Abdelfattah in a lawsuit that claimed that he had used fraud to obtain a second mortgage. But on March 19, a Santa Clara County Superior Court judge threw out the company’s claim against Abdelfattah because the alleged fraud had involved a loan for less than $150,000.

Abdelfattah, who wants to buy a house, was only somewhat relieved: “They are not able to sue me, but (Heritage Pacific’s claim) still affects my credit.” Abdelfattah’s countersuit alleging violations of debt-collection law by Heritage Pacific is scheduled for a jury trial in July.

Heritage Pacific declined to comment on the details of Abdelfattah’s or other individual cases, but said, “Any court rulings against Heritage Pacific Financial will be appealed to the California Court of Appeals as soon as it is possible to do so.”

Heritage Pacific can ignore the prohibition on pursuing fraud claims related to loans for less than $150,000 because it still can get default judgments and out-of-court settlements from some defendants, said Kennedy, the attorney in the civil action.

As a practical matter, he added, “the law only applies to people who are in a position to defend themselves.”

Focusing on fraud claims

Heritage Pacific’s website portrays the company as a friend to its collection targets. It says the company wants to help foreclosed homeowners “begin again and regain financial independence without the baggage of old liens or bad credit history.”

The home page also features a link to a proclamation of the company’s intent to seek “justice against those who have perpetrated, conspired, and participated in the mortgage fraud (that) plagues our nation and our nation’s economy.”

Ganter said Heritage Pacific is pursuing appraisers and loan officers with its fraud claims. But while two lawsuits in Santa Clara County name appraisers as defendants, in dozens of Heritage Pacific second-mortgage lawsuits reviewed by California Watch, the defendants were homebuyers whom Heritage Pacific accused of overstating their incomes on loan applications.

Even Kennedy, the lawyer pursuing the class-action lawsuit against Heritage Pacific, acknowledged that the company is probably “able to find inflated incomes without too much problem, on a lot of them (but) not all of them.”

But that’s only part of the story, Kennedy stressed: “The banks knew exactly what was going on.”

Kennedy isn’t alone in identifying lenders and their agents as key drivers in mortgage market abuses.

Subprime loans were “often aggressively sold to consumers by profit-seeking lenders rather than sought out by consumers,” according to a report by the U.S. Government Accountability Office. And the U.S. Housing and Urban Development Department’s report on the root causes of the foreclosure crisis found that “most fraud is driven by mortgage brokers in their efforts to earn profits by originating loans.”

In California, aggressive lending helped inflate a housing bubble that more than tripled average house prices in the decade that ended in 2006. From 2000 through 2007, lenders originated nearly 3.3 million subprime mortgages in the state, according to the GAO.

But then the bubble burst, sending average house prices in the state down 46 percent since 2006. By March 2009, more than half of the 1.4 million subprime mortgages in California were delinquent, defaulted or foreclosed, according to GAO. By March 2012, about 835,000 homes in the state had been lost in foreclosure, according to DataQuick, which compiles real estate data.

Falling house prices and souring loans ravaged homeowners, lenders, and the housing and mortgage market in California and nationally. Among those hit by the slump was Ganter, a homebuilder who built 200 town homes in Texas suburbs and planned to build another 60.

In 2010, Ganter briefly sought bankruptcy protection for his Paydirt Real Estate Investment Trust, which listed a $6,300 rental deposit as its only asset and $572,000 in unpaid bills. Ganter said the bankruptcy did not involve Heritage Pacific and was later dropped.

Even as his real estate enterprise foundered, Ganter used money from investors to begin assembling a portfolio of second-mortgage loans. In depositions, a company executive put the total face value of the company’s claims in a range from $1.5 billion to $2 billion. To cash in on those assets, Heritage Pacific began pursuing collections from hundreds of foreclosed homeowners.

Lydia Pina was one. In 2009, Heritage Pacific’s collectors began pushing her to pay up on a second mortgage she took out in 2007, when she bought a house in Gilroy for $675,000. She lost the house in foreclosure 14 months later.

The collectors were willing to deal, according to Pina’s sworn declaration. If she would pay $29,000, they would settle their $139,000 claim. If not, they would garnishee her wages.

In May 2010, a process server came to Pina’s workplace. When the receptionist called Pina, she said she was late for a meeting and asked that he come back later. Instead, he left a summons with the receptionist. And that’s how Pina learned that she was being sued for $139,000.

That lawsuit remains pending in Santa Clara County Superior Court. Through her attorney, Pina declined to comment.

Debt collection methods

Ganter said he couldn’t comment on pending litigation, but said Heritage Pacific generally uses a “nice-guy strategy” to pursue collections.

In practice, the company’s collection methods don’t differ much from those used by debt buyers and collectors who search out and demand payments from borrowers on charged-off credit card accounts, student loans or medical bills.

Heritage Pacific first sends a form letter to a borrower, then follows up with at least 20 collection letters or telephone calls, according to depositions by a company executive and an attorney.

In a presentation to investors, the company said it typically offers to settle with borrowers who repay 20 percent of their outstanding balance.

Heritage Pacific’s first big foray into California came in U.S. District Court in Los Angeles, where in a three-month period beginning in December 2009, Heritage Pacific filed three lawsuits seeking $46 million in actual and punitive damages from 158 defendants who took out 143 loans.

That push yielded mixed results. One judge signed 21 default judgments ordering no-show defendants to pay $1.8 million. But a lawyer who showed up to represent one of the defendants persuaded another judge to shut down the company’s multi-party lawsuits. The defendants had “nothing in common … other than that they each applied for and received a loan that Heritage now owns,” the judge wrote.

Meanwhile, Heritage Pacific opened another front in California state courts. California Watch reviewed online records in 10 of the state’s 17 largest counties and found 365 lawsuits in which Heritage Pacific was a party.

A counterclaim filed in one of those lawsuits became a class action that seeks to keep Heritage Pacific from filing new fraud claims. The class action claims that the company goes to court “based upon a high statistical probability that the foreclosed homeowner lacks the resources to defend the lawsuit.”

When defendants fail to show up, courts can issue default judgments that affirm the validity of debts and allow creditors to seize debtors’ paychecks or property.

In a deposition, a Heritage Pacific lawyer estimated that 60 to 70 percent of the defendants in its lawsuits default, and the company has obtained about 200 default judgments.

But Ganter said default judgments aren’t very valuable. Heritage Pacific found itself paying $20,000 to $30,000 for “a piece of paper that says somebody owes you money.”

Michael Short/California Watch Santa Clara University law professor Gary Neustadter (left) is representing Trejo in his case before the 9th Circuit Bankruptcy Appellate Panel, with the help of SCU law student Jennifer Bregante.

Cases in bankruptcy courts

Heritage Pacific also has filed more than 220 cases in federal bankruptcy courts in California, including the claim against Trejo. Heritage Pacific contended that he had overstated his monthly income, but a judge ruled that while Trejo didn’t make $9,500 a month as he stated, the lender had “ignored obvious problems” with Trejo’s loan application and couldn’t block the discharge of his $88,800 debt.

Heritage Pacific has appealed that ruling to a Bankruptcy Appellate Panel, arguing that the lender’s reliance on Trejo’s undocumented assertions reflected “the custom and habit of the mortgage industry at the time.”

In the meantime, regulators in Arkansas have cracked down on Heritage Pacific’s fundraising. The Arkansas Securities Department found that in September 2010, four Arkansas investors paid $50,000 each to buy bundles of second mortgages from Heritage Pacific, and the buyers signed separate deals to pay Heritage Pacific to collect and distribute payments from their mortgages.

In December 2011, the securities department issued a cease-and-desist order directing Heritage Pacific to stop selling unregistered securities.

Ganter said that Heritage Pacific had not agreed to a settlement and that the case was “not finished up.”

Campbell McLaurin, an attorney for the Arkansas Securities Department, said he believed that his state was “not unique as far as (Heritage Pacific) seeking investors.”

In a deposition, a Heritage Pacific executive said the company had spent $20 million to $25 million buying second-mortgage notes, and the source of its funds was a “guarded secret, for sure.”

A contract disclosed in a lawsuit shows that in one instance, Heritage Pacific raised $500,000 from a company incorporated in Alaska but controlled by Guy C. Alexander III, an Orange County homebuilder.

“I can’t comment on our individual partners,” Ganter said. Alexander did not respond to phone messages left at his office.

Consumer lawyers hope that rulings in Trejo’s case and two other bankruptcy appeals, as well as the class-action lawsuit, will put a stop to Heritage Pacific’s collection campaign in California. The company hopes the outcome in those cases will leave it with the tools to make its second-mortgage loans profitable.

Meanwhile, as hundreds of lawsuits work their way through state and federal courts in California, it seems unlikely that the battles between foreclosed California homeowners and Heritage Pacific over millions of dollars of soured mortgage loans will end anytime soon.

Infographic: How does a police officer double his salary in a year?

Lauren Rabaino — Fri, 18 May 2012 07:05:04 +0000

Lauren Rabaino

The state of California operates a special police force devoted to protecting the residents of five board-and-care hospitals for the developmentally disabled.

These taxpayer-funded facilities – staffed by psychiatric technicians, nurses and doctors – are home to about 1,800 men and women with cerebral palsy, severe autism and other intellectual disabilities. They are located in Los Angeles, Sonoma, Tulare and Riverside counties.

Officers working for this police force – called the Office of Protective Services – are some of California government’s most proficient users of overtime. But even while they have boosted their paychecks, the force has been criticized for its sloppy investigations into potential crimes.

This graphic examines the force’s overtime pay from several vantage points. California Watch, which is part of the Center for Investigative Reporting, analyzed just how many hours the biggest earners claimed to have worked on their timesheets.

Overtime pay soars for state-run police force

Ryan Gabrielson — Fri, 18 May 2012 07:05:03 +0000

Ryan Gabrielson and Agustin Armendariz

Reneh Agha/Porterville Recorder Porterville Developmental Center Lt. Scott Gardner (left) and Cmdr. Jeff Bradley make their way to Tulare County Superior Court in April 2010. The two were indicted for embezzling about $121,000, but the charges were later dropped.

An unusually high number of police officers at the state’s board-and-care facilities for the developmentally disabled have doubled their salaries with overtime, enabling some to earn more than $150,000 a year, a California Watch investigation has found.

The state-run police force, called the Office of Protective Services, last year paid about $2 million in overtime to 80 of its officers. The officers patrol five facilities that house about 1,800 patients with intellectual disabilities in Los Angeles, Orange, Riverside, Tulare and Sonoma counties.

The small police force is one of the most proficient in the state at accumulating overtime – the percentage of officers boosting their salaries far exceeds the proportion at other agencies.

In total, the police department’s payroll has increased 50 percent through overtime in the past four years. For several of the officers, their overtime payouts would have required them to work 70 to 100 hours a week the entire year to earn the extra cash.

Twenty-two officers, about one-fourth of the entire police force, have claimed enough overtime to double their salaries – a rare occurrence at other police agencies, both big and small. The average salary for the 22 officers is about $124,000 a year.

At one point, the Office of Protective Services paid its officers overtime for patrolling a nearly empty facility. Patrol officers and detectives at the Agnews Developmental Center in San Jose claimed hundreds of hours of overtime – months after the institution closed in March 2009, finance reports show.

One officer working at the state’s center in Tulare County acknowledged in an interview that he received overtime pay for hours spent sleeping at work. A detective there was paid during a 2008 trip to Las Vegas that officials later said was unrelated to his job, court records show.

As the Office of Protective Services has accumulated overtime, questions have been raised about the quality of the work taxpayers have received from the police force.

A California Watch investigation in February found that over the past decade, the Office of Protective Services failed to conduct basic police work even when patients died under mysterious circumstances. State officials have documented hundreds of cases at the facilities of abuse and unexplained injuries, almost none of which have led to arrests.

In March, state officials announced they had hired an independent manager for the Office of Protective Services to oversee new training guidelines, and state lawmakers have introduced legislation that would direct serious criminal investigations to outside law enforcement, among other changes.

No one has claimed more overtime than Thomas Lopez, an entry-level patrolman at the Porterville Developmental Center. On top of his base salary of $54,133, Lopez’s paychecks have included at least $80,000 in overtime every year for much of the past decade, doubling and tripling his compensation.

In 2008, Lopez collected $208,000 in pay, including $146,000 through overtime. To achieve that income level, Lopez would have had to work 107 hours each week for the entire year, without any vacation or leave time.

Overtime has lifted Lopez into the same income bracket as doctors at the developmental center where he works. He’s paid more than his boss, Terri Delgadillo, the Department of Developmental Services director, who earns $158,000 for running the $4 billion state agency.

Even Lopez acknowledged that his paychecks are large. “If I were investigating overtime, I’d be the top suspect,” said Lopez, who owns seven houses worth $1.2 million and two classic cars valued at $50,000 each, according to two car auction websites.

Last year, Lopez received $150,275 – just below the salaries of Attorney General Kamala Harris and state schools superintendent Tom Torlakson. Sixty percent of Lopez’s income was from overtime.

Lopez contends he spends every waking hour at the Porterville center. He volunteers for day shifts and night shifts, weekends and holidays. The patrolman said his superiors are responsible for his hours, not him.

“The only thing I can tell you is it was signed and allowed by a sergeant,” Lopez said. “Even people who don’t like me will testify I was there.”

Bob Lewis, a commander with the Office of Protective Services, was responsible for police operations at the Porterville center most of the past three years and had final authority over Lopez’s overtime hours. The office’s overtime policy directs commanders to “reduce OT whenever possible.”

Lewis declined to comment because the Department of Developmental Services does not permit employees to talk to reporters. “I wish I could speak with you, but I can’t,” he said. Lewis received a promotion in September and now leads the police force at the Sonoma Developmental Center.

Documents show the vast majority of extra hours at the Office of Protective Services are for patrol shifts, with officers waiting for calls about incidents or circling the institutions’ parking lots, rather than investigating potential abuse cases.

“At night, it gets a little bit slow. It’s hard not to doze off sometimes,” Lopez said. “You try to stay up. But you better take your calls, and you better take your reports. It’s hard because that time drags.”

When asked if he sometimes sleeps during overtime shifts, Lopez replied, “Yes.”

The force currently has 27 vacant jobs out of 94 positions, but most of the shifts are covered by increased overtime and by hiring retired officers for temporary duty. Some of those officers – so-called retired annuitants – also have earned overtime pay.

Coby Pizzotti, a lobbyist for the California Statewide Law Enforcement Association, which represents the institution’s police, said the overtime payouts are a symptom of understaffing at the developmental centers. Fairview Developmental Center in Costa Mesa and the Lanterman Developmental Center in Pomona, for example, are staffed with just four patrol officers each.

“The budgeted positions aren’t sufficient to do the job adequately without getting an incredible amount of overtime,” he said.

The base pay for the force averages about $44,000 – relatively low compared with departments of similar size. At the Vallejo Police Department, for example, the average base pay is $98,000.

Delgadillo, the agency’s director, declined to comment on her department’s overtime payouts. But in a statement, the department said overtime was required “to meet the safety and security needs of the 24-hour licensed residential health care facilities” amid a state hiring freeze and worker furloughs.

“These residents require constant and immediate law enforcement supervision for all court hearings, community outings and medical appointments outside of the secure treatment area,” the department said.

At the same time, the department said it has moved to curb overtime payouts. In 2009, it implemented a new policy that requires police supervisors to approve overtime requests in advance and to assess whether officers’ workloads are reasonable.

Patricia Flannery, the official who oversees operations at California’s developmental centers, that year also ordered an internal audit of police overtime. Documents from the audit, obtained through a public records request, do not show any attempt to evaluate whether the officers actually worked the hours on their timesheets.

Between 2009 and 2011, overtime payouts at the Office of Protective Services declined about 25 percent. State officials said their “aggressive actions” to curb overtime – as well as using closed-circuit cameras to monitor patients instead of security towers – has led to the drop in overtime.

Despite the changes, seven officers at developmental centers still managed to double their pay in 2011.

City police and sheriff departments often generate large overtime bills. But the Office of Protective Services far outpaces other California law enforcement agencies in overtime, according to state and local payroll data of five agencies reviewed by California Watch.

The developmental center police officers on average added $19,600 to their paychecks through overtime in 2010 – $2 million in total, according to state pay data. Overtime accounted for 28 percent of all Office of Protective Services compensation that year. Eleven officers doubled their salaries with overtime.

By comparison, overtime was 12 percent of pay for police officers in Vallejo and at the similarly sized Santa Cruz Police Department. And at larger agencies, such as the California Highway Patrol and the San Jose and San Francisco police departments, the percentage of overtime hovers between 6 and 10 percent of pay, an analysis of local pay data shows.

To Loren DuChesne, former chief of investigations for the Orange County district attorney’s office, the overtime looks suspicious. DuChesne examined the Office of Protective Services for the state attorney general's office a decade ago, finding shortcomings in the force's ability to conduct criminal investigations.

“What I’m seeing here is just a carte blanche abuse,” DuChesne said. “Given the nature of the job, those guys on graveyard (shifts) at Sonoma or Lanterman, if you had more than one person, you had to be the most bored person that ever worked in a law enforcement vehicle.”

Lopez is among dozens of developmental center police officers who have recorded extra hours on their timesheets.

One patrolman at the Fairview Developmental Center in Costa Mesa, Daniel Butler, regularly collected more money from overtime than from his base pay. He worked for 14 years at the facility, but netted at least $60,000 a year in overtime from 2007 until his retirement in March 2011.

Butler did not respond to repeated interview requests.

Another Porterville officer, Rick Shannon, neared Lopez’s overtime levels in 2008. His paychecks included $114,000 from claiming extra hours.

Shannon, whose base salary was $50,000, was on pace to exceed $100,000 in total income for at least the fourth straight year when he suffered a fatal heart attack in July 2010 in the middle of a shift. In just seven months that year, Shannon received $44,830 in overtime.

At the Porterville center, supervisors have long approved overtime claims without verifying the patrol officers actually showed up for the shifts, said Martin Espinoza, a former detective at the institution. (Records show Espinoza earned $8,000 in overtime pay during the four years before he retired, much less than many of his colleagues.)

“I couldn’t comprehend how they could allow such a thing,” Espinoza said of the overtime claims. “These people are fairly intelligent and can figure some of this stuff out. It was so obvious.”

Indeed, a Tulare County grand jury in 2010 indicted the Office of Protective Services’ police chief and a top detective on embezzlement charges related to overtime abuse.

The police department in the town of Porterville found evidence that Scott Gardner, the developmental center’s investigator, claimed overtime hours on days when he was in Las Vegas, said Capt. Eric Kroutil, who conducted the investigation for the Porterville Police Department.

The detectives concluded that Jeffery Bradley, then chief of the Office of Protective Services, had sanctioned Gardner’s overtime. Bradley and Gardner were indicted on embezzlement charges in February 2010, but the prosecution was short-lived.

A judge threw out the charges last year, saying an Office of Protective Services internal investigation into the matter violated Bradley and Gardner’s rights under the California Peace Officers’ Bill of Rights. The internal investigation had been characterized as “administrative” rather than potentially criminal, meaning any evidence collected could not be used in a court of law.

Gardner declined to speak with California Watch. Bradley referred questions to his attorney, W. Scott Quinlan, who did not respond to several phone calls and e-mails. The Department of Developmental Services fired Bradley after his arrest, and Gardner resigned. Bradley has since appealed his dismissal.

Overtime at closed facilities

Patrol officers with the Office of Protective Services have accumulated overtime even without crimes to investigate or patients to protect.

At the Agnews Developmental Center in San Jose, which closed in March 2009, officers accumulated between 200 and 460 hours in overtime pay to patrol empty buildings in the three months after the facility shuttered.

Agnews officers claimed 1,307 extra hours in total during those months. By comparison, that’s twice the number of hours taken by officers and detectives at the Lanterman Developmental Center in Pomona, which then housed 440 patients with cerebral palsy and other intellectual disabilities.

The Department of Developmental Services operated an outpatient clinic at Agnews for two years after the closure. In a written statement, state officials said the agency “remained responsible for the safety and security” of the center as long as it owned the property.

State officials did not provide an explanation for why the Office of Protective Services spent more on overtime at Agnews than at Lanterman in 2009. But they said the Agnews overtime was necessary, “as the two full time peace officers employed were insufficient to cover the required 24 hour schedule seven days per week.”

Police overtime is supposed to serve a law enforcement purpose, protecting people or investigating crimes, said Leonard Matarese, a criminal justice consultant at the International City/County Management Association.

Matarese, a consultant and retired Florida police chief, said departments should account for extra hours on a weekly, if not daily, basis. The number of extra hours alone at the Office of Protective Services – 65,000 a year on average from 2008 to 2010 – raises alarms about the institution force.

“As a police chief, I just wouldn’t allow that,” Matarese said. “It sounds like it’s completely out of control.”

Patrolman cashes in on overtime

Lopez,the entry-level patrolman in Porterville, owns seven houses worth a combined $1.2 million, scattered across Porterville and the Los Angeles area. Lopez lives in one of his Porterville homes – a nondescript tan structure with a well-manicured front yard. The patrolman said he uses the house primarily to sleep and store his belongings.

In the garage of his main residence, he keeps two pristine 1956 Chevrolet Bel Airs, collectors’ items that gleam with the original factory paint colors of “Tropical Turquoise” and “Sierra Gold.” Each car is worth at least $50,000, or about the same as Lopez’s base salary.

His paychecks have included at least $80,000 in overtime every year for much of the past decade, state data shows.

Porterville, where Lopez works, is home to more than 500 people with developmental disabilities. About 200 of the patients are inmates, placed at the center by courts because they are unfit to stand trial. Because of this, a majority of the Office of Protective Services is based at Porterville.

Some days, Lopez said he earns extra hours by standing guard in the secure housing units. Other days, the overtime calls for him to transport patients to appointments and court dates outside the developmental center.

But many shifts don’t require him to do anything but show up – long stretches spent watching movies on his laptop and napping, he said.

“How many times can you spin around the facility?” Lopez said of his patrol work. “You’re waiting for a call, waiting for a help call, waiting for a report.”

Few at the Office of Protective Services have ever worked for a major law enforcement agency. But Lopez received his basic training at the Los Angeles Police Department’s academy before signing on with the developmental center force in 1996, personnel records show.

Judging by his training, which could have placed him at a much larger and better-paying police force, Lopez’s decision to work at the Office of Protective Services is unusual. The department typically hires detectives from other state agencies, such as the Department of Social Services, and other people with no law enforcement experience.

Lopez’s reported workweek is unusual, even if he spends a portion of it idling. In an interview, Lopez claimed he worked regular 12-hour shifts every week, and some days, he would work 20 hours.

In 2011, state pay data shows, Lopez’s workload averaged 85 hours a week at the Porterville center for 52 weeks to earn his $144,000 income. Of that, $90,730 was overtime.

Last year was nothing compared with 2008, when Lopez’s compensation peaked at $208,000 – 70 percent of it overtime pay. His timesheets claimed an average of 107 hours of work every week. He claimed no sick days or vacation.

Department of Developmental Services officials would not answer questions about Lopez’s overtime, citing California law making personnel information about police officers confidential.

Martin Espinoza, the recently retired detective at Porterville, wondered how Lopez avoids crippling fatigue from putting in more than 200 overtime hours a month.

“How is that possible?” Espinoza said. “You’ve got to sleep sometimes.”

How we analyzed overtime pay at developmental centers

Ryan Gabrielson — Fri, 18 May 2012 07:05:03 +0000

Ryan Gabrielson and Agustin Armendariz

This story was edited by Robert Salladay and Mark Katches. It was copy edited by Nikki Frick and Stephanie Rice.

To examine overtime at the Office of Protective Services, the in-house police force at California’s five developmental centers, California Watch performed a computer-assisted analysis of state and local finance data.

Data on the officers’ compensation is collected by the state controller and maintained by The Sacramento Bee, which publishes a searchable database of state worker pay on its website.

The pay data includes the dollar amounts paid to Office of Protective Services employees in base salary, overtime and “other,” which includes a wide variety of compensation, including severance and bonus pay for duties outside the scope of their primary job. We included four years in the analysis, 2008 through 2011.

First, we calculated the number of developmental center officers and investigators who earned as much in overtime pay as they did in base salary at least once during those four years. We limited the analysis to full-time employees, including only members of the Office of Protective Services who received at least the minimum annual salary of $41,000. During the period, 22 officers doubled their income with overtime pay.

Overtime accounted for 28 percent of all pay at the Office of Protective Services in 2010; median overtime pay per officer was $18,323.

These findings show developmental center officers receive large overtime payouts, but by themselves do not indicate whether the overtime is unusually large compared to other police agencies. To provide points of comparison, we obtained police pay data for the California Highway Patrol and the cities of San Francisco, San Jose, Vallejo and Santa Cruz.

The Office of Protective Services is unlike any other police agency in California, serving 1,800 developmentally disabled patients at five institutions across the state. So we sought out a diverse collection of departments to compare overtime spending.

We selected the California Highway Patrol because it is the most recognized law enforcement agency in the state. Vallejo and Santa Cruz police departments employ about the same number of sworn officers as the Office of Protective Services. We included the San Francisco and San Jose departments to assess how the developmental center force compares against large police agencies.

We narrowed this part of the analysis to the 2010 fiscal year, the most recent data available for the comparison agencies.

The Office of Protective Services’ overtime percentages dwarfed the other agencies we analyzed. The agency’s rate in 2010 was more than double those at the Vallejo (12.1 percent) and Santa Cruz (11.7 percent) police departments and about quadruple the rates at the San Francisco (7.6 percent) and San Jose (6.3 percent) police departments.

Overtime as a percentage of total pay is a particularly useful measurement for assessing overtime spending because it removes from the equation salary disparities between police departments. This is important, as developmental center officers’ salaries are roughly half as much as those of their colleagues at other law enforcement agencies.

Our reporting on developmental center police overtime also sought to determine whether it was feasible for officers to actually work the extra hours for which they’ve been paid.

The Department of Developmental Services, which oversees the police force, denied a California Watch public records request for overtime request forms and timesheets documenting overtime hours claimed by select developmental center officers.

Dianne Robbins, assistant chief counsel at the department, wrote in an August 2011 letter that police officer payroll records are personnel records under state law. “Those records are confidential and therefore non-disclosable,” Robbins wrote.

The California Supreme Court in 2007 rejected the contention that police offers’ payroll records are part of confidential personnel files. In their ruling, the justices wrote: “Penal Code sections 832.7 and 832.8 do not mandate that city payroll records reflecting peace officer salary information be excluded from disclosure merely because some of the facts relied upon in determining the amount of salary may be recorded in the agency's personnel files.”

California Watch cited the 2007 opinion in an appeal. The Department of Developmental Services continued to deny the request. Robbins responded in an October 2011 letter that the state Supreme Court ruling found “peace officer salary information is not confidential,” but that did not apply to timesheets and overtime claims. She concluded, “peace officer payroll records remain confidential and non-disclosable.”

California Watch then turned to the salary data kept by our news network partners at The Sacramento Bee.

We calculated an estimated number of overtime hours each full-time developmental center officer would have claimed to generate the extra pay per year. To reach that estimate, we divided the officers’ base pay by the number of work hours in a year (2080 hours, except for leap years). That provided the regular hourly wage.

We multiplied the regular hourly rate by 1.5, resulting in the estimated overtime hourly pay rate. Finally, we divided the officers’ total amount of extra pay each year by their hourly overtime rate, yielding an estimate of overtime hours claimed.

The 22 patrol officers and detectives at the Office of Protective Services who doubled their salary with overtime from 2008 to 2011 claimed an estimated average of 1,829 hours a year of extra work. For perspective, U.S. workers average about 1,800 work hours a year in total, according to the Organization for Economic Co-operation and Development.

React & Act: Key players for developmental centers

Ashley Alvarado — Fri, 18 May 2012 07:05:03 +0000

Ashley Alvarado

The key players in California

There are many agencies and individuals involved in the daily operations of California’s developmental centers and its police force, the Office of Protective Services. Here we list them – as well as organizations focused on protecting residents – by category.

Developmental centers

Canyon Springs Developmental Center
The Canyon Springs center in Riverside County opened in 2000 to care for a small number of patients with moderate to mild mental disabilities and behavioral problems. The treatment program aims to train patients to better control their behaviors and to provide life and employment skills in the hope that patients can return to homes in the community.

69-696 Ramon Road
Cathedral City, CA 92234
Phone: 760-770-6200
Website: www.dds.ca.gov/CanyonSprings
Number of patients: 57
Number of staff: 121

Fairview Developmental Center
The Fairview center in Orange County is the newest of California’s large institutions for the developmentally disabled, opening in 1959. It was built to house thousands of patients and has its own power plant, auditorium and industrial kitchen.

2501 Harbor Blvd.
Costa Mesa, CA 92626
Phone: 714-957-5000
Website: www.dds.ca.gov/Fairview
Number of patients: 377
Number of staff: 1,500

Lanterman Developmental Center
The Lanterman center opened in Los Angeles County in 1927 under the name Pacific Colony with a mission to detain the “feebleminded,” according to the institution’s official history. It became greatly overcrowded by 1946, with 1,900 patients in buildings designed for 1,500. The state is working to close Lanterman over the next two to three years.

3530 Pomona Blvd.
Pomona, CA 91769-0100
Phone: 909-595-1221
Website: www.dds.ca.gov/Lanterman
Number of patients: 274
Number of staff: 1,026

Porterville Developmental Center
The Porterville center in Tulare County is a long-term care institution and correctional facility. Of some 500 patients, about 200 are developmentally disabled inmates who’ve been convicted of a crime or are awaiting trial. The center is built on 600 acres surrounded by orchards and opened in 1953.

26501 Ave. 140
Porterville, CA 93258-2000
Phone: 559-782-2222
Website: www.dds.ca.gov/Porterville
Number of patients: 480
Number of staff: 1,500

Sonoma Developmental Center
The Sonoma center is one of the nation’s largest institutions for the developmentally disabled. It opened in 1891 on 1,600 acres southeast of Santa Rosa. The center is its own town – called Eldridge – and operates a water treatment plant and fire department.

15000 Arnold Drive
Eldridge, CA 95431
Phone: 707-938-6000
Website: www.dds.ca.gov/Sonoma
Number of patients: 542
Number of staff: 1,629

Law enforcement agencies

Office of Protective Services
Department of Developmental Services
Write: P.O. Box 944202
Sacramento, CA 94244
Phone: 916-654-1690
Website: www.dds.ca.gov
Contact Office of Protective Services Chief Corey Smith: corey.smith@dds.ca.gov, 916-654-1960

Cathedral City Police Department (Canyon Springs)
Write: 68-700 Ave. Lalo Guerrero
Cathedral City, CA 92234
Phone: 760-770-0362
Website: http://hbirddev.com/cathedralcitypolice.com/dotnetnuke
E-mail Chief Kevin Conner: k.conner@cathedralcity.gov

Costa Mesa Police Department (Fairview)
Write: 99 Fair Drive
Costa Mesa, CA 92626
Phone: 714-754-5281
Website: www.ci.costa-mesa.ca.us/departments/CMPolice.htm
E-mail: pdadjutant@ci.costa-mesa.ca.us

Los Angeles County Sheriff’s Department (Lanterman)
Write: 4700 Ramona Blvd.
Monterey Park, CA 91754
Phone: 323-267-4800
Website: http://sheriff.lacounty.gov
E-mail: info@lasd.org

Orange County Sheriff's Department (Fairview)
Write: 840 N. Eckhoff St., Suite 104
Orange, CA 92868
Phone: 714-647-7000
Website: http://egov.ocgov.com/ocgov/Sheriff-Coroner - Sandra Hutchens

Pomona Police Department (Lanterman)
Write: 490 W. Mission Blvd.
Pomona, CA 91766
Phone: 909-622-1241
Website: http://ci.pomona.ca.us/index.php/government/city-departments/police-department

Porterville Police Department (Porterville)
Write: 350 N. D St.
Porterville, CA 93257
Phone: 559-782-7400
Website: www.portervillepolice.com

Riverside County Sheriff’s Department (Canyon Springs)
Write: 4095 Lemon St.
Riverside, CA 92501
Phone: 951-955-2400
Website: www.riversidesheriff.org
E-mail: WebMgr@riversidesheriff.org

Sonoma County Sheriff’s Office (Sonoma)
Write: 2796 Ventura Ave.
Santa Rosa, CA 95403
Phone: 707-565-2511
Website: www.sonomasheriff.org

Sonoma Police Department (Sonoma)
Write: 175 1st St. West
Sonoma, CA 95476
Phone: 707-996-3602
Website: www.sonomacity.org/default.aspx?PageId=37
E-mail: sonomapd@sonomacity.org

Tulare County Sheriff’s Department (Porterville)
Write: 2404 W. Burrel Ave.
Visalia, CA 93291
Phone: 559-636-4625
Website: www.co.tulare.ca.us/government/sheriff

Coroner’s offices

Los Angeles County Coroner (Lanterman)
Write: 1104 N. Mission Road
Los Angeles, CA 90033
Phone: 323-343-0512
Website: http://coroner.lacounty.gov
E-mail Assistant Chief of Investigations Ed Winter: ewinter@coroner.lacounty.gov

Orange County Coroner (Fairview)
Write: 1071 W. Santa Ana Blvd.
Santa Ana, CA 92703
Phone: 714-647-7400
Website: http://egov.ocgov.com/ocgov/Sheriff-Coroner%20-%20Sandra%20Hutchens/Commands%20and%20Divisions/Professional%20Services%20Command/Coroner
E-mail: coroner@ocsd.org

Riverside County Coroner – Indio Facility (Canyon Springs)
Write: 47-225 Oasis St.
Indio, CA 92201
Phone: 760-863-8311
Website: www.riversidesheriff.org/coroner

Sonoma County Coroner’s Office (Sonoma)
Write: 3336 Chanate Road
Santa Rosa, CA 95404
Phone: 707-565-5070
Website: http://www.sonomasheriff.org/about_coroner.php

Tulare County Coroner (Porterville)
Write: 1225 S. O St.
Tulare, CA 93274
Phone: 559-685-2593
Website: http://www.tularecounty.ca.gov/sheriff/

District attorneys

Los Angeles County District Attorney's Office (Lanterman)
Write: 210 W. Temple St., Suite 18000
Los Angeles, CA 90012
Phone: 213-974-3512
Website: http://da.co.la.ca.us/
E-mail: webmail@da.lacounty.gov

Los Angeles County District Attorney's Office – Elder Abuse Unit (Lanterman)
Write: 201 N. Figueroa St., Suite 1600
Los Angeles, CA 90012
Phone: 213-580-3383
Elder abuse hotline: 877-477-3646
Website: http://da.lacounty.gov/seniors
E-mail: GSatriano@da.lacounty.gov

Orange County District Attorney’s Office (Fairview)
Write: 401 Civic Center Drive
Santa Ana, CA 92701
Phone: 714-834-3600
Website: http://orangecountyda.com
E-mail: http://orangecountyda.com/home/index.asp?page=160

Riverside County District Attorney’s Office (Canyon Springs)
Write: 3960 Orange St.
Riverside, CA 92501
Phone: 951-955-5400
Website: www.rivcoda.org

Sonoma County District Attorney's Office (Sonoma)
Write: 600 Administration Drive, Room 212 J
Santa Rosa, CA 95403
Phone: 707-565-2311
Website: http://da.sonoma-county.org
E-mail: http://da.sonoma-county.org/contactus.aspx

Tulare County District Attorney’s Office (Porterville)
Write: 87 E. Morton Ave.
Porterville, CA 93257
Phone: 559-782-9600
Website: www.da-tulareco.org
E-mail: Damail@co.tulare.ca.us

State-level agencies and lawmakers

California Department of Developmental Services
Write: P.O. Box 944202
Sacramento, CA 94244
Phone: 916-654-1690
Website: http://www.dds.ca.gov/

Former Assemblywoman Sally Lieber
Write: P.O. Box 652
Redwood City, CA 94064-0652
Website: www.sallylieber.org
E-mail: www.sallylieber.org/Contact.html - ContactUs-1ContactUs
Facebook: www.facebook.com/CAvoteSally
Twitter: @sallylieber

Office of Gov. Jerry Brown
Write: State Capitol, Suite 1173
Sacramento, CA 95814
Phone: 916-445-2841
Website: http://gov.ca.gov
E-mail: http://govnews.ca.gov/gov39mail/mail.php

State Attorney General's Office
Write: P.O. Box 944255
Sacramento, CA 94244-2550
Phone: 916-445-9555
Website: http://oag.ca.gov
E-mail: http://ag.ca.gov/contact/complaint_form.php?cmplt=PL

Advocacy and support groups

Californians for Disability Rights Inc.
Write: 909 12th St., Suite 200
Sacramento, CA 95814
Phone: 800-838-9237
Website: www.disabilityrights-cdr.org
E-mail: cdr4info@yahoo.com

Disability Rights Advocates
Write: 2001 Center St., Fourth Floor
Berkeley, CA 94704
Phone: 510-665-8644
Website: www.dralegal.org
E-mail: general@drlegal.org

Disability Rights California
Write: 1831 K St.
Sacramento, CA 95811
Phone: 916-504-5800
Website: www.disabilityrightsca.org
E-mail: info@disabilityrightsca.org

Disability Rights Education & Defense Fund
Write: 3075 Adeline St., Suite 210
Berkeley, CA 94703
Phone: 510-644-2555
Website: www.dredf.org
E-mail: info@dredf.org

Fairview Families and Friends Inc.
Write: 2501 Harbor Blvd.
Costa Mesa, CA 92626
Phone: 714-751-2344
Website: www.fairviewfamiliesandfriends.org

National Disability Rights Network
Write: 900 Second St. NE, Suite 211
Washington, DC 20002
Phone: 202-408-9514
Website: www.ndrn.org
E-mail: www.ndrn.org/en/contact.html

VOR
Write: P.O. Box 1208
Rapid City, SD 57709
Phone: 877-399-4VOR
Website: www.vor.net
Contact Northern California coordinator Helen Hawkins: helenphawkins@aol.com, 916-435-0412
Contact Southern California coordinator Otilia Gonzales: yodieee@hotmail.com, 714-995-7619

Other key contacts

Hospital Police Association of California
Contact board President Lorenzo Indick: 626-373-6000

U.S. Justice Department
Write: 950 Pennsylvania Ave. NW
Washington, DC 20530
Website: www.justice.gov
E-mail: AskDOJ@usdoj.gov
Contact the Civil Rights Division: 202-514-2151
Contact the Disability Rights Section: 202-307-2227

Joe Brann, law enforcement consultant overseeing policy and training improvements at the Office of Protective Services
Phone: 310-265-7479
Website: www.cdri.com/about-us/joe-brann.html
E-mail:jbrann@jballc.com

Coby Pizzotti, legislative liaison at the California Statewide Law Enforcement Association, which includes the Hospital Police Association of Californi
Phone: 916-447-5262
E-mail: CPizzotti@cslea.com

With campaign donations, bond underwriters also secure contracts

Will Evans — Thu, 03 May 2012 07:05:02 +0000

Will Evans

This story was edited by Robert Salladay and copy edited by Nikki Frick.

Education finance photo/Shutterstock

Leading financial firms over the past five years donated $1.8 million to successful school bond measures in California, and in almost every instance, school district officials hired those same underwriters to sell the bonds for a profit, a California Watch review has found.

The practice is especially pronounced in California, where underwriters gave 155 political contributions since 2007 to successful bond campaigns for school construction and repairs. One major underwriter, Piper Jaffray, has said it gets more requests for campaign contributions in California than in any other state where they do business.

The success rate of these underwriters is extremely high. In only five cases since 2007 has a campaign donor failed to receive a bond-selling contract from the school district.

School districts say they choose bond underwriters for their expertise and competitive rates and because they’ve served them well in the past. And underwriting firms say they contribute only after they’ve been hired to sell the bonds, avoiding any undue influence.

But critics say that no matter when the agreement is made, the campaign donations influence school districts’ business decisions. They argue that pre-arranged underwriting contracts bypass a truly competitive sale, leaving in doubt whether districts got the best possible deal.

“If this isn’t clear proof of pay to play, then pay to play doesn’t exist,” said Glenn Byers, Los Angeles County’s assistant treasurer, who oversees some school bond sales but doesn’t control the hiring of underwriters. “The timing of the payment is irrelevant. You paid and you got the job. That’s pay to play.”

Some states have banned the practice. Missouri, for one, outlaws donations to bond campaigns from companies with a financial interest in the bond sale.

In the past five years in California, five major underwriters donated $1.8 million to help pass 111 ballot measures, authorizing $15.5 billion in debt. A couple dozen other measures received underwriter contributions but failed at the ballot box.

Overwhelmingly, bond underwriters who donated to these campaigns were granted contracts by school districts.

In nearly all cases, the only underwriters that donated to a successful school bond campaign ended up working on the bond sale. Bond Buyer, a trade publication, found the same pattern in an earlier review of 2010 campaign contributions.

At times, multiple underwriting firms will donate to a single bond campaign. But even there, the success rate is high. In almost all cases in which multiple bond underwriters donated to the same campaign, they all were given contracts by the school district to market those bonds.

For donors, failure is rare. In only five cases out of 111 did an underwriter make a donation and fail to receive a contract to sell the bonds. In four of those, however, more than one underwriter made donations and the contract went to the firm that had contributed a larger amount to the campaign.

Former Assemblyman Joe Canciamilla, a Democrat from Pittsburg, tried and failed to pass a law in 2005 requiring competitive bidding of bond sales. In a competitive sale, which takes place after the election, the underwriter with the lowest bid wins the bonds.

Canciamilla said school districts instead negotiate underwriting deals before bond elections specifically to draw in campaign money. Districts are “in effect negotiating much more attractive deals for the underwriters in order to generate the money necessary to run the campaign,” he said.

Under state law, school districts can’t use their own funds for bond campaigns. That leaves other interested parties – underwriters, builders and organized labor – to pony up the necessary cash. For their part, underwriters have justified the practice to federal regulators by noting that bond campaigns simply need these contributions in order to convince voters.

Last November’s $63 million bond measure for the Newark Unified School District in Alameda County, for example, raised money from architecture and construction firms, the financial adviser and the law firm working on the bond issue, and local construction unions.

The only underwriter to donate, Los Angeles-based De La Rosa & Co., gave $20,000.

“All the money was donated by outside companies,” said Gary Stadler, a parent volunteer who was the campaign’s treasurer. “We said, ‘Hey, we’re going to pass this bond to improve the schools, we need some contributions, are you going to contribute?’ And of course they’re going to, because they’re going to work here.”

The district’s financial adviser, Oakland-based KNN Public Finance, had earlier considered proposals by four underwriters and ultimately recommended De La Rosa, said Newark Unified’s chief business official, Elaine Neilsen.

The district granted De La Rosa up to 1 percent of the bonds – potentially $630,000 in compensation – subject to negotiation before the bond sales. The company donated after signing the contract.

“De La Rosa & Co. respects and abides by the selection process of California’s school districts,” Chief Financial Officer Arthur Raitano wrote in an e-mail. “Accordingly, we neither discuss or consider contributions to bond ballot campaigns until such districts have selected their professional financing teams.”

Top 5 underwriting firms analyzed

Underwriters typically sign agreements with school districts before the election, and then give money for the political campaign that promotes the bond measure.

Underwriters act as middlemen, buying bonds from districts and selling them to investors. The underwriters buy the bonds at a discount from the district and then sell them at a higher price to their investors. Investors are essentially loaning money to the school district in exchange for regular interest payments and eventual principal repayment.

In February 2011, for example, the Glendale Unified School District picked two underwriters to handle a $270 million bond that would go before voters in April as Measure S. The money will be used to upgrade classrooms, science labs and libraries, and purchase computers, among other promises.

Instead of offering the underwriting contract to other companies, the district selected De La Rosa and RBC Capital Markets because it had worked with them previously, said Eva Lueck, the district’s chief business and financial officer.

RBC gave $25,000 to the “Yes on S” campaign two days after Lueck signed the agreement, according to filings. De La Rosa donated $25,000 a month later.

Lueck noted the donations came after the contract was signed.

“We were very conscious of not crossing any lines,” said Lueck, who also volunteered on the campaign. “We always look to, well, who would this benefit, and maybe they would be willing to contribute.”

After the election, the district issued its first batch of Measure S bonds – $54 million worth. The underwriters bought them at a .5 percent discount in order to collect $270,000 in compensation.

California Watch reviewed contribution data for the five underwriting firms most active in California bond campaigns: De La Rosa, George K. Baum & Co., Piper Jaffray, RBC Capital Markets and Stone & Youngberg. (A Stone & Youngberg managing director for public finance, Tom Lockard, serves on the board of directors for the Center for Investigative Reporting.)

All of the firms profited from bond sales they had supported with political donations.

The list of school districts benefiting from underwriter donations ranges from the tiny Blue Lake School in Humboldt County to one of the state’s largest districts, Long Beach Unified.

In a twist on the usual practice, Piper Jaffray last year contributed to three bond campaigns after the elections were over.

In one case, the Centinela Valley Union High School District in Los Angeles County hired Piper Jaffray in November 2010, the month voters approved a $98 million bond measure.

Well after the election, Piper Jaffray made a donation that may have indirectly benefited two school board candidates instead of the bond campaign.

In April 2011, Piper Jaffray gave $25,000 to Citizens for Better Schools, the committee that had championed the $98 million bond measure. The committee had cash reserves and no debt, according to campaign filings.

Later that year, the committee spent $53,000 campaigning for two school board candidates, one of whom unseated an incumbent.

Bond underwriters rarely give campaign donations to individual candidates or local elected officials. Federal regulations bar underwriters from doing business with a public agency within two years of giving campaign donations to an official of that agency.

A donation to a committee “that the contributor knows or reasonably should know” is backing an official is the same as giving directly to the official, according to an e-mail from Ernesto Lanza, deputy executive director and chief legal officer of the Municipal Securities Rulemaking Board. The self-regulatory agency’s rules carry the force of federal law.

“It’s those kinds of things, whether they’re innocent or not, that create a certain appearance of impropriety that creates part of the problem here,” said Canciamilla, the former assemblyman.

Neither the Citizens for Better Schools nor Piper Jaffray responded to requests for comment.

Piper Jaffray’s official policy reads, “We will not make, or indicate a willingness to make, any financial contribution as a condition to being retained as an underwriter."

Centinela Valley Superintendent Jose Fernandez said the district chose Piper Jaffray because of the firm’s extensive experience, and the board unanimously approved the decision. He said he was unaware of the contribution.

“I don’t know anything about that,” he said. “We stay out of it.”

The district’s contract with Piper Jaffray specifies, “The Underwriter is not obligated as a result of this agreement to make a campaign contribution in connection with the bond election, nor has it otherwise committed to make a campaign contribution.”

Reporting campaign donations

In 2010, in response to pay-to-play concerns, the Municipal Securities Rulemaking Board began requiring underwriters to report bond measure donations to the self-regulatory agency. The board is analyzing the data reported so far, before determining whether additional regulations are necessary, Lanza said.

The correlation between contributions and school district contracts “adds to the evidence that there’s certainly something to be looked at,” he said. “It sounds like there’s a little bit of smoke there.”

Some firms decline to make donations, such as O’Connor & Co. Securities, which is underwriting a bond passed last year in Monterey County.

“As a firm policy, we avoid participation in campaign contributions solely to avoid the appearance of a conflict of interest, even though at times this could put us at a competitive disadvantage,” said company President Will O’Connor.

The one case in which an underwriter made a contribution but the contract went to firms that didn’t give money occurred in the San Mateo-Foster City School District in 2008. Piper Jaffray gave $25,000 to support a $175 million bond measure there.

But after the election, the district instead selected Stone & Youngberg and RBC Capital Markets to sell the bonds. Those companies, neither of which made donations, simply offered a better deal, said Micaela Ochoa, the district’s chief business official at the time.

Ochoa said she solicited donations as a campaign volunteer on her own time, but made it clear that contributions wouldn’t guarantee a contract. Some firms didn’t want to give without any promises, she said.

“People would ask me, ‘Why are you even calling them?’ ” Ochoa said. “It is harder, but it’s also cleaner.”

Prime hospital’s stent placements violated state regulations

Christina Jewett — Wed, 02 May 2012 07:05:03 +0000

Christina Jewett

This story was edited by Denise Zapata. It was copy edited by Nikki Frick.

Monica Lam/California Watch Charleen Kerkes said she thought about suing after her husband died at Desert Valley Hospital. She decided against it after an attorney asked to exhume her husband’s body to perform an autopsy.

Dale Kerkes was lean and tanned at 71. In retirement, he turned a backyard hillside into a terraced garden and built a two-story garage.

On the morning of April 28, 2008, he and his wife, Charleen, saw his doctor to check into his occasional heart palpitations. Neither expected problems.

But during a stent placement to prop open a blocked artery, Dale Kerkes died on the operating table at Desert Valley Hospital.

Desert Valley had a limited cardiac license, which means it was allowed to place stents only in emergencies, such as after heart attacks. State hospital regulators determined several months later that the San Bernardino County hospital placed Kerkes "at great health risk” by performing the procedure without the trained staff or specialized equipment required.

Since then, in response to inspections, the hospital repeatedly pledged to follow state regulations and enforce its own policies.

Yet regulators found repeat violations when they examined the cases of another patient who died and two who were injured during cardiac care at Desert Valley.

A fourth patient, whose case was not examined by the state, was injured after a stent treatment that a lawsuit alleges should not have been performed at Desert Valley.

The state Department of Public Health – the agency that documented recurring problems and unmet promises – in March granted Desert Valley a full cardiac license for its new heart center. Public Health officials declined to be interviewed for this story but said in a written statement they conducted two thorough inspections and found no deficiencies.

Charleen Kerkes, who had hoped her husband’s death would lead to changes, feels defeated. “I do think my husband died in vain,” she said. “It’s disappointing.”

Charleen Kerkes, as well as other patients and family members, said they were not told that until March 20, Desert Valley Hospital had a limited license for cardiac surgeries. Nearby St. Mary Medical Center was in fact the only local hospital with a full license at that time.

The move to expand Desert Valley’s cardiac license came as the hospital’s interventional cardiologist, Dr. Siva Arunasalam, faces a trial over accusations that he performed heart surgeries for financial gain while working at St. Mary almost a decade ago. Arunasalam is not an employee of Desert Valley; its medical executive committee granted him admitting privileges that allow him to treat patients.

Families of Desert Valley patients also said they didn’t know Arunasalam had been banned in 2005 from operating at St. Mary. The hospital’s medical executive committee revoked his privileges, citing “hostile and disruptive conduct” that included “dishonesty” and disregard for patients’ welfare, according to court records.

Medicare records from Dale Kerkes’ procedure at Desert Valley, which Charleen Kerkes shared with California Watch, show that 40 minutes after Arunasalam deployed a stent, someone shouted, “code blue.”

Charleen Kerkes said she feared the worst when she saw another physician in street clothes sprint toward the operating room. In an instant, she lost the man who brought her coffee in bed each morning for 40 years.

“It was a nightmare,” she said.

After her husband’s death, Charleen Kerkes considered filing a lawsuit. She said she decided against it when an attorney who reviewed photos of the procedure asked to dig up her husband’s body to commission an autopsy.

Arunasalam, who has been treating patients at Desert Valley since 1995, declined to be interviewed and said through an attorney that he could not discuss individual cases due to patient confidentiality.

Desert Valley is owned by Prime Healthcare Services, which has been the subject of a yearlong California Watch investigation that uncovered a pattern of billing Medicare for rare ailments that generate lucrative bonus payments for the hospital chain. In recent months, FBI agents have questioned former Prime employees and a former patient about the firm’s billing practices.

Desert Valley implanted 118 stents in 2010, according to information supplied by Prime. That was four times the statewide average for hospitals with a limited heart care license, a California Watch analysis of hospital billing datashows.

Hospitals earn from $5,500 to $16,300 for stent procedures, depending on whether the case is done on an inpatient basis. For many patients, stents are not the only tool to manage clogged arteries. Leading medical research shows that medications and lifestyle changes can be just as effective as stents.

Prime Healthcare spokesman Edward Barrera said Desert Valley, which Prime bought in 2001, “has followed and continues to follow all applicable laws and regulations.” He said it is important “to remember that there are unexpected complications with coronary interventions at all hospitals that no one can predict or prevent.”

Barrera said two patients died during stent procedures in 2011 at Desert Valley. Statewide, the California Watch analysis shows that about 2 percent of patients undergoing a stent procedure die, about the same percentage for Desert Valley last year.

Kathleen Billingsley, chief deputy director of policy and programs at the state Department of Public Health, wrote hospital executives in November saying the new heart center would not be approved until the department is “assured of the absence of systemic health and safety issues in the hospital.”

Since then, state authorities said they performed extensive examinations of the hospital and its cardiac services, on Feb. 14 and March 20. Because the hospital was in compliance with regulations on both of those days, the full cardiac care license was granted, according to the public health department.

Inspections find repeated deficiencies

Of the 57 hospitals in the state with a limited heart care license, five facilities implanted more stents than the number Desert Valley says it placed recent years.

But only Desert Valley has been cited repeatedly for its heart care, state inspection records show. Since 2007, the state has found deficiencies in cases involving 40 patients seen in Desert Valley’s cardiac lab.

The California Department of Public Health has inspected Desert Valley Hospital dozens of times since 2007. During five reviews of cardiac care, it cited lax enforcement of hospital policies or failures to warn patients of surgical risks.

In response to Kerkes’ death, regulators inspected Desert Valley in July 2008 and determined that the hospital violated state regulations by implanting a stent “they were not licensed to provide.” An inspection in 2011 found that Arunasalam had performed a stent procedure that, for the second time, violated state regulations and resulted in a patient’s death.

Monica Lam/California Watch Desert Valley Hospital in Victorville was the first in the Prime Healthcare chain. State health inspectors have found repeat violations at its cardiac lab.

Hospitals that don’t correct violations face penalties ranging from loss of their state operating licenses to severance of Medicare funding. After each violation at Desert Valley, state public health officials have required the hospital to submit a “corrective action plan,” but they have not sanctioned the facility.

The key difference between hospitals with a limited cardiac license and a full open-heart surgery license is staffing and equipment. Limited-license hospitals are expected to diagnose heart conditions through imaging procedures and intervene only in emergencies.

Hospitals with a full license operate with a heart-lung machine and staff trained to crack open a patient’s chest and perform an emergency operation in case of complications.

The state is studying whether to allow coronary stent placements at limited-license hospitals. Legislators are expected to vote on any proposed changes.

But for now, “you’re not allowed to do it,” said George Smith, past president of the California chapter of the American College of Cardiology and an adviser for the state study overseen by the Department of Public Health.

Regulations defied

Although Desert Valley was allowed to implant stents only in emergencies, state inspectors found several cases over the last four years that did not meet that criterion.

As part of the July 2008 inspection in the Kerkes case, public health authorities found that the hospital performed stent procedures on 18 other patients in defiance of regulations. Some stent cases were scheduled ahead of time, records show, and some took place amid no evidence of an emergency.

Inspectors returned to the hospital in October 2008 and discovered that Arunasalam had injured a patient by delaying care, records show. On July 31, 2008, a 43-year-old uninsured patient suffered a heart attack, an emergency condition that would have allowed Desert Valley to implant a stent.

But instead of rapidly treating the man or transferring him to another hospital, Arunasalam waited too long, and the patient’s heart muscle became severely damaged, the inspection report says. The patient may need a heart transplant, Arunasalam wrote in the medical record and noted, “Overall prognosis was poor.”

In response to inspectors’ questions, Arunasalam said that after the July inspection, a Department of Public Health doctor told him to “let patients die before performing cardiac interventions,” according to an inspection report. Arunasalam – who has been licensed in California since 1989 – had scrawled on the medical records of several other patients that their care was “suboptimal” due to the state health department “protocol,” according to the inspection report.

Desert Valley administrators say they told Arunasalam to stop citing protocols that “did not exist.”

Again, the hospital pledged to change. An outside reviewer would look at all coronary stent cases, a new cardiac lab director would be appointed, and an attorney would train the hospital governing board on its oversight duties, according to a February 2009 report Desert Valley Hospital submitted to Medicare.

Former patient sues

Three months later, in May 2009, Steve Wong, a 54-year-old machine operator at a Rancho Cucamonga textile warehouse, received two stents in a procedure that left him in need of a heart transplant, according to a lawsuit Wong filed against Desert Valley and Arunasalam.

Courtesy Steve Wong Steve Wong went to Desert Valley Hospital with chest pain. His attorneys allege that the hospital and Dr. Siva Arunasalam made mistakes that badly damaged his heart.

Ilan Heimanson, Wong’s attorney, said a cardiologist paid to review the case found that Arunasalam should have implanted one stent and transferred Wong to a better-equipped hospital to implant the second one. Instead, Arunasalam placed stents in both vessels and did not prescribe medication strong enough to prevent major bloodclots, court records contend.

Both Desert Valley Hospital and Arunasalam said in court filings that their conduct in the case did not cause damage to Wong’s heart. “(Wong’s case) is replete with speculation and wrongfully attempts through smoke and mirrors to place responsibility on DVH personnel,” attorneys for the hospital wrote.

Arunasalam testified in a deposition that he placed Wong's stents because the case was a true emergency. Wong’s team did not prove that Arunasalam caused any injuries, according to the cardiologist’s attorneys.

Wong has said he wasn’t aware that Desert Valley was limited in the cardiac care it could provide. He testified in a deposition that he’s expected to live two to six more years unless he gets a heart transplant.

“I am scared of this operation because I had a narrow escape on my last operation,” he testified, noting that he hadn’t gotten on a transplant wait list or discussed it with his wife. “I’m not prepared myself emotionally.”

In November, San Bernardino County Superior Court Judge Steven Malone denied Arunasalam’s motion to be dismissed from Wong’s lawsuit. Malone cited Wong’s medical expert, who said Arunasalam should have returned Wong to the operating table as soon as it became apparent that he had a postoperative heart attack.

Public health inspectors made no note of Wong’s case or other catheterization lab deficiencies in a 90-page report documenting a wide-ranging inspection in August 2009. Department of Public Health spokeswoman Anita Gore said authorities did not receive a complaint about the case.

Prime spokesman Barrera said Prime could not comment on details of the case, but stated, “We are completely confident that we will prevail based on the facts.” Barrera said the hospital “cannot interfere with the clinical judgment of a highly trained cardiologist” as to which case is an emergency.

Doctor faces civil trial

Arunasalam attracts hundreds of patients with cardiac troubles to his medical office, the High Desert Heart Institute in San Bernardino County. Records show that he is board certified in internal medicine and cardiology and obtained his medical degree at Emory University in Atlanta.

During a 2005 employment trial that covered a wide range of practices at Desert Valley, Arunasalam testified on behalf of Prime chain owner and fellow cardiologist Dr. Prem Reddy. On the witness stand, Arunasalam dismissed doctors’ accusations against Reddy, saying the hospital owner is the only area cardiologist he trusts.

That same year, the state Medical Board filed an accusation to revoke Arunasalam’s license, alleging gross negligence and failure to keep adequate medical records. Thomas Douvan, an attorney for Arunasalam, said the case was dismissed.

Arunasalam faces a civil trial in coming weeks over St. Mary’s accusations that from 2002 to 2004, he implanted 59 medically unnecessary defibrillators in patients. A cardiac defibrillator is implanted to regulate the heartbeat. The hospital says it discovered the cases during an internal audit and refunded Medicare the $1.4 million it was paid for the procedures.

Arunasalam has denied all accusations in court records, saying Medicare never deemed the procedures improper. Also, his attorneys said St. Mary administrators attempted to ruin Arunasalam’s reputation because he planned to build a competing heart hospital.

Despite Wong’s case and others cited by inspectors, Desert Valley continued to implant stents in cases that did not meet emergency criteria.

Courtesy the Smith family William "Ned" Smith, 72, died during a stent procedure at Desert Valley Hospital. State inspectors say he did not sign a consent agreeing to the procedure.

William "Ned" Smith, 72, died during a stent procedure at Desert Valley Hospital.On Dec. 30, 2010, William “Ned” Smith, 72, of Hesperia died during a stent placement at Desert Valley, just weeks before the Air Force veteran was planning a vacation to a vintage air show with his wife.

Patricia Smith, who was married to Ned Smith for 48 years, said Arunasalam did not explain the hospital’s limited license status to the couple. She also said he told her that he was only going to examine her husband’s heart. Smith said she didn’t know a stent was placed until after her husband had died.

A Medicare report shows that when Arunasalam began the procedure, Ned Smith was pain-free and had stable vital signs.

A report approved by Arunasalam that Patricia Smith shared with California Watch says one of her husband’s arteries was perforated, which set off uncontrolled bleeding. According to the report, Arunasalam said he tried to plunge a needle into Ned Smith’s chest to draw out the excess blood, but the effort failed.

Patricia Smith said she remembers seeing Arunasalam emerge from the cardiac lab, somberly shaking his head. “I started crying, ‘No, no, no, this can’t be right,’” Smith said.

Smith said Arunasalam told her family that Ned Smith’s vessels may have been fragile because of his diabetes. Patricia Smith said she is upset that no one at Desert Valley told her that nearby St. Mary Medical Center had the staff and equipment to attempt to rescue her husband if something went wrong.

“He’s not God,” she said of Arunasalam. Smith and her son have shared her husband’s medical records with an attorney who has not yet filed suit.

Inspectors discovered Ned Smith’s case while investigating another Desert Valley complaint late last year. Inspectors determined that the hospital put patients in “immediate jeopardy” of injury or death when Arunasalam performed interventions in cases that didn’t meet the hospital’s definition of a cardiac emergency. In addition to Smith, another patient was rushed to a local hospital after a vessel ruptured during an October stent placement.

In November, the Department of Public Health said in yet another report that the hospital had once again failed to hold doctors accountable for violating hospital policies. And Desert Valley, the report said, had failed to send all of its stent cases for review by outside parties, breaking a promise to regulators.

Patricia Smith, who reviewed state inspection reports, said she is concerned patients at Desert Valley’s new heart center might not get clear explanations of surgical risks.

“I feel like they will take more advantage of the system by opening up the heart center,” she said. “They will have free reign.”

This story was edited by Denise Zapata. It was copy edited by Nikki Frick.

When and why should patients get a coronary stent?

Christina Jewett — Wed, 02 May 2012 07:05:03 +0000

Christina Jewett

Medical studies spanning years and examining thousands of patients have upturned conventional thinking about heart attack prevention and treatment. The studies found that for many patients, coronary stents are not more likely to save lives or prevent a heart attack than medication and lifestyle changes. Yet some patients are not given the opportunity to weigh the risks and benefits of various treatment options.

Regulators for the California Department of Public Health discovered that “there was no consent for placing stents” in William “Ned” Smith, 72, who died after the procedure. Nor was there an emergency need for the procedure, regulators concluded.

His case is one of several highlighted in an investigation of heart care at Desert Valley Hospital, a facility owned by Prime Healthcare.

Physicians typically place stents after performing an angiography, or an imaging procedure to inject dye into the coronary arteries to see whether vessels are blocked. In some cases, physicians thread a tiny tube through an artery in the groin or wrist and then inflate a tiny balloon. That balloon expands a small wire-mesh tube that’s meant to facilitate the flow of blood through the blocked artery.

Physicians agree that placing a stent within 90 minutes of a heart attack is beneficial to patients. They differ when it comes to patients who suffer from milder discomfort that comes with physical activity.

Here are some considerations to mull, based on a conversation with Dr. John Wong, the medical editor for coronary artery disease at the Informed Medical Decision Foundation. Wong is also chief of the Division of Clinical Decision Making, Informatics, and Telemedicine at Tufts Medical Center in Boston.

When is a stent elective?

Wong said a stent is considered elective, or a matter of patient preference, when a patient suffers from stable angina. That condition is characterized by pressure or pain in the chest during physical exertion or emotional strain. Stable angina symptoms tend to go away when the physical or emotional stress has passed.

What are the risks of getting a stent for stable angina?

According to Wong, elective stent placements carry a risk of death for 6 to 7 people out of 1,000. Complications include heart attack and artery perforation. Risk of death may be higher if you’re older, have diabetes, heart failure, kidney disease, or have more than a few vessels blocked.

A data analysis by the California Office of Statewide Health and Planning and Development showed that for 2009 inpatient cases, about 2 out of 100 patients died during hospital stays when a stent was placed. That data does not account for whether the patient had stable angina or a more dire condition.

What are the benefits?

Wong said that one study showed that coronary stents relieve the pain and pressure of angina more quickly than an approach of taking medications, exercising and improving one’s diet. However, that study found that in the long run, there was little difference in heart attack or mortality rates between those who had elective stents and those who pursued medical therapy and lifestyle changes.

What is the bottom line?

Wong said patients with stable angina should weigh the benefits and risks of both approaches and make a decision that fits best with their lifestyle.

“Some important questions are how much does the angina bother you, and does it bother you enough that you’d consider the potential harms,” he said.

What about getting a stent in a hospital with a catheterization lab versus one with open-heart surgery?

In California, nearly 60 hospitals have a cardiac catheterization lab that allows them to place stents in emergencies, such as after a heart attack, when a patient has pain that doesn’t subside with treatment or amid major swings in blood pressure. Those labs are meant for diagnostics, not treatments. A group of California cardiologists is currently studying whether the state should allow stents in those hospitals, as many other states currently do. That team is expected to send a report to lawmakers.

Hospitals licensed to perform open-heart surgeries have teams and equipment to crack open the chest and operate. If a stent procedure leads to a complication, such as major bleeding from a tear in an artery, those hospitals are best equipped to save patients.

Where else can I obtain information?

Emily Bazar with the Center for Health Reporting wrote guides about when elective angiography is appropriate and described a variety of heart procedures.

Health Dialog publishes a decision-making guide for patients who are diagnosed with coronary heart disease.