The Merced area health clinic that closed its doors and filed for bankruptcy is being investigated by various state and federal agencies, according to court documents. The health clinics bankruptcy filing has also changed, which can mean some employees won't receive the wages they are owed.
Horisons Unlimited Healthcare, which operated eight clinics throughout Merced, Madera, Mariposa and Stanislaus counties, is being investigated by: the U.S Department of Justice; California Department of Justice; FBI; U.S Department of Health and Human Services; the California Attorney Generals Office; the California Department of Healthcare Services and the California Department of Public Health, confirmed documents filed through the U.S Bankruptcy Court Eastern District of California Fresno Division on Aug. 1.
Court documents filed on May 30 confirm the U.S Attorney’s office has an ongoing investigation into Medi-Cal and Medi-Care billing fraud involving Horisons and its former CEO, Sandra Haar.
Haar is also being investigated by the U.S Department of Justice and the California Department of Justice for alleged misconduct, according to the documents. She was the CEO for Horisons since the clinics opening in 2004 up until she was fired and sued for mishandling finances in March.
It is unknown how long Horisons and Haar have been under investigation.
A lawsuit was filed through Merced County Superior Court on March 3 alleges Haar engaged in misconduct that allowed her and her family to profit from the clinic.
Haar allegedly authorized “excessive personal salary and benefits” without the knowledge of the clinics board, including a loan she authorized and received of $758,346 that was used to purchase properties that would then be leased and occupied by Horisons.
Haar allegedly employed her husband for an annual salary of $65,000 with a $50,000 annual pension “even though he had no formal position or actual operational duties,” court documents said.
Haar did not respond to request for comment.
Will former Horisons employees be paid their wages?
Horisons originally filed for Chapter 11 protection on May 10 but was converted to a Chapter 7 case on Aug. 13, according to court documents.
In general, when a company’s files for Chapter 11 bankruptcy it's because they’re hoping to reorganize or restructure the debt, said David Jenkins, a bankruptcy attorney based in Fresno.
“The goal is to end up with a surviving company,” he told the Sun-Star in a recent phone interview.
A Chapter 7 case means all assets are going to be liquidated, Jenkins said, and it’s not at all unusual for bankruptcy cases to go from Chapter 11 to Chapter 7 because “it’s clear that the debtors hope of re-organizing is more of a delusion than a true hope.”
“Going into bankruptcy court doesn’t create money,” Jenkins added. “If you got enough money to pay bills then you don’t need (to file for) bankruptcy.”
Horisons owes at least $679,750 in administrative fees, $380,000 of that being unpaid employee wages for the payroll period ending on June 29, according to the court documents that were filed by Kavita Gupta, who was the appointed Chapter 11 Trustee before the case switch.
Former employee’s would only be able to receive their money if they file a claim, Jenkins said, and would only be able to get up to the statutory maximum which is $12,850. However, “more often than not” there isn’t enough money to pay everyone after the liquidation in Chapter 7 cases.
The clinics were also operating on a deficit of $1.2 million from May to June, documents said.
Since March, Horisons was operating without medical malpractice insurance until July 28, documents said.