Merced health clinic pitted in legal battle with dueling board members

Board members leading the non-profit health clinic Horisons Unlimited are embroiled in a legal battle, with two sides pitting lawsuits against one another over allegations of mismanagement and misuse of financial assets.

The dueling suits filed in March show a board divided over the February dismissal of Sandra Haar, a nurse practitioner who had been CEO of the clinic since its opening in 2004.

The clinic describes itself as a faith-based organization serving communities in Merced, Mariposa, Madera and Stanislaus counties with a variety of medical, dental and chiropractic services. It operates eight clinics, with a new clinic coming to the town of Riverbank, according to its website.

According to its 2014 tax filings, Horisons reported nearly $7.6 million in revenue, with functional expenses of $6.7 million.

The first suit filed by Horisons Unlimited on March 3 claims the board discovered financial misdeeds after Haar went on medical leave in late 2016 and appointed an interim CEO, Cylia Estrada. Among several allegations, Haar is alleged to have authorized “excessive personal salary and benefits” for herself and her husband and to have used the clinic to take out loans that allowed her husband to purchase properties that then were leased to Horisons.

But a suit filed three weeks later by eight members of the 17-member board claims “a renegade group of board members” wrongfully seized control of the board and “began squandering Horisons Unlimited’s assets by ... voting to make large expenditures and improperly giving large raises, bonuses and benefits to various employees.”

The suit claims board chairman Luis De la Cruz and his supporters violated the clinic’s bylaws by improperly removing members deemed “hostile to their private agenda,” and demands that actions made to reshape leadership of the clinic be declared void.

De la Cruz declined this week to speak with the Sun-Star about the lawsuits. Haar, who last week declined to speak to the Sun-Star, did not respond to requests for comment Wednesday.

Aaron Dyer, a Los Angeles-based attorney representing the Horisons board led by De la Cruz, said the allegations in the second suit are without merit.

It “was filed in response to the company’s lawsuit against the former CEO in an attempt by her to regain control of the company,” Dyer said in a statement emailed to the Sun-Star. “Our filings will show that the personal attacks about the actions of the board chair, who receives no compensation whatsoever, and the allegations about excessive payments to management, are false.”

The suit filed on March 24 in the Merced County Superior Court alleges that board members perceived by De la Cruz as supportive of Haar were excluded from meetings that led to the dismissals of four board members as well as six-figure pay raises for two top administrators.

The suit alleged Horisons Chief Financial Officer Daniel Kazakos’ yearly salary was tripled to $150,000 with a back pay of more than $13,000. Kazakos was making $50,000 a year as CFO when he started eight months earlier, it says.

For Estrada, her interim CEO role was made permanent, her salary was boosted to $200,000, and she was awarded back pay of more than $244,000, the suit alleges. Estrada formerly was employed as a medical assistant at the clinic, earning $25 an hour, it says.

The Sun-Star was unable to reach either Kazakos or Estrada for comment before deadline on Wednesday afternoon. Their attorney, Gerry Hinkley, did not respond to a request for comment from the Sun-Star.

As CEO, Haar had been paid $316,000 in 2014, with an additional $158,400 in reportable compensation from related organizations, according to its Form 990 filing.

Haar’s daughter, Sara Price, as director of the clinic earned $48,127 in salary and $312,846 in reportable compensation from related organizations. Three other relatives of Haar also were paid as employees of the clinic; Haar’s husband, Norman, who earned $60,320; her daughter Katie Haar, who earned $12,687; and her son-in-law, Kevin Price, who earned $47,840.

The lawsuit filed on March 3 alleges Haar employed her husband with an annual salary of $65,000 and a $50,000 annual pension “even though he had no formal position or actual operational duties.”

According to the 2014 tax filing, Sara Price as director worked an average of 20 hours per week. Two other officials, CFO/Secretary Barbara Rolland and Director Laine Gale also worked an average of 20 hours per week but received no compensation.

The tax filing lists the clinic’s highest compensated independent contractors that year were: a dentist who was paid $261,441; a dentist who earned $213,847; a physician assistant who earned $207,037; and a counselor and psychotherapist who earned $130,754.

The lawsuit filed March 24 names eight board members as plaintiffs: Rolland; Morris Anzai; Linda Hinshaw; Mildred Lucas; Patrick Lucas; Pastor Don Ramsey; Tom Raney; and Linda Whitlow.

Adam Miller, one of the lawyers representing the eight board members, declined to comment on the lawsuit.

Defendants are Horisons Unlimited, De la Cruz, and two board members: De la Cruz’s wife, Irene; and David Bruner.

Dyer, representing Horisons, said the defendants would file papers this week “that will show that the board’s actions were at the behest of federal regulators, and were not an improper attempt to take control of the company.”

This story was originally published April 26, 2017 at 5:17 PM with the headline "Merced health clinic pitted in legal battle with dueling board members."