Arizona has witnessed one of its most alarming moments of leadership failure since the days of Governor Evan Mecham.
The birth of a child to a helpless woman on December 29, 2019 awakened Arizona to serious problems in the executive branch.
The story of the mother of the child who hasn’t walked, spoken, laughed or hugged her parents for over two decades has launched the facility known as Hacienda Healthcare into the lives of most Arizonans.
In most cases, the birth of a child is a time for rejoicing, and in this situation we must value and honor the life created and given to the family and into all of Arizona. This situation is marred by the ugly fact that the mother of this precious child is the victim of a sickening sexual assault by an individual inflicted with a malicious and predatorial perversion.
The victim was incapable of giving any form of consent.
We are left with questions: How did this happen? Are there more victims? What will be done to protect our children, parents and loved ones in similar facilities? How did Arizona leaders let us down?
The state of Arizona first let us down when Department of Economic Security (DES) auditors discovered over-billing practices at Hacienda during 2014. This was not the first time Hacienda was examined for over-billing.
The DES chief auditor, Derek Barber, compiled a comprehensive report identifying a systematic over-billing of approximately $4 million. Chief Auditor Barber received no cooperation from Hacienda; in fact, Hacienda was stonewalling and threatening to use their political connections if the audit was not stopped.
Court documents and documents from public records requests indicate that Charles Loftus, then chief law enforcement officer for DES, contacted the Arizona Attorney General’s Office. It was later discovered that Hacienda CEO William Timmons was a friend and donor of Governor Ducey.
Loftus decided that the attorney general’s office was the best agency to investigate the alleged fraud.
Arizona attorney general investigators are not under the control of the Governor, which provides them a safety shield from political influence. In one email, Loftus candidly warns other investigators that he located the campaign contribution records for Timmons and confirmed he was a large donor of Governor Ducey and to use “extreme caution” because of the “political sensitivity” of the case.
Moreover, Loftus said that Timmons boasted of direct contact with the Gov. Ducey and Kirk Adams, the former Chief of Staff to the Governor. Chief Loftus added in his message that DES staff were “terrified” Governor Ducey was going to clean house when he learned of the investigation.
While the criminal investigation was started by the attorney general’s office, DES officials started the process to terminate the state contract with Hacienda and move the patients to other facilities. Records indicate Hacienda had about 35 patients being paid for by DES funds, some as high as $10,000 per day.
Hacienda Healthcare provides critical inpatient care for extremely ill patients, many of whom are on a ventilator. Most of the patients are children and young adults who are covered by the DES DDD/AHCCCS program, then supervised by Dr. Laura Love. The costs of the care are paid by public funds supervised by DES. These funds are mostly federal pass-through funds.
Under direction of DES Director Timothy Jefferies, the state contract with Hacienda was in the process of termination, which necessitated movement of the patients to other medical facilities. This transfer would have included the incapacitated woman who gave birth around 30 months later, on December 29, 2019.
Interviews with Director Jeffries revealed why these patients had to be moved. If there were no state contract with Hacienda, then AHCCCS and Medicaid could not pay for the patients’ care at the facility. There needed to be a government contract to retain the patients at Hacienda.
The state and its employees were simply doing their jobs: protecting the vulnerable, investigating fraud and wasteful spending of taxpayers’ money. However, the day before Thanksgiving 2016, the governor let Arizona down by forcing Director Jeffries to resign and then firing all of his senior staff including Loftus. The contract with Hacienda was not interrupted, and the attorney general’s case was suspended.
Loftus said in an interview that there were a handful of fraud cases they were investigating, including a security company that allegedly overbilled around two-hundred thousand dollars from DES.
Loftus added the billing payment controls were non-existent before his arrival and there were some very strange “tentacles of procurement.” He chuckled and said the security company vendor said he was friends with the Governor, too.
When he was the assistant chief agent at the Arizona Attorney General’s Office, Loftus managed the case against Michael Veit who was the AHCCCS procurement manager. Loftus said he was responsible for approximately $6 dollars of fraud to the state of Arizona and is now serving a lengthy prison sentence.
Loftus said that Veit had many other fraudulent schemes that went undetected because he and his team of investigators received pressure “from above” to end the investigation and start the trial process. He added that the failed software known as HEA Plus was procured by Veit and was confident Veit was involved with the Hacienda contract.
Loftus ended the interview with a big smile by saying, “there seems to be several large fraud cases here in Arizona where Michael Veit and other state executive cross paths… makes you wonder.”
Emails released to ADI indicate that Chief Auditor Barber was not among the initial terminations. However, almost immediately after Jeffries was forced out, it appeared the first course of business for the new DES regime was to interrogate the Barber, demanding he change his audit findings of Hacienda.
ADI was told that Barber refused to make any changes and resigned. The former chief auditor did not respond to attempts to be interviewed for this story.
Former Director Jeffries and former Chief Loftus both have filed a libel suit against the state of Arizona.
Loftus told ADI, “Chiefs get fired, but the state took extraordinary joy in making up a fictitous story to hide the reason we were fired and to end our careers. I’m very saddened we could not close Hacienda. We tried, and if we knew what was happening, I would have used every power I had to protect those patients. This make me sick and then it pisses me off this is all over political IOUs.”