State Probes Figure in Medi-Cal Experiment

The state attorney general’s office is investigating whether a former state commissioner involved in the creation of an ill-fated Medi-Cal experiment, called Expanded Choice, would have profited from its implementation, a spokesman for the office said Tuesday.

The focus of the investigation is Robert (Nick) Starr, who was until recently a member of the California Medical Assistance Commission, according to Dan Beall, chief supervisor of the attorney general’s Bureau of Medi-Cal Fraud in Los Angeles.

As a commissioner and chairman of an Expanded Choice subcommittee, Starr helped design the experiment that would have required about 250,000 Medi-Cal recipients in the San Fernando Valley and San Diego County to receive all their health care from health maintenance organizations.

Investigators are exploring whether Starr had hidden interests in any health groups that hoped to participate in the pilot project, Beall said. Starr rented a medical building that he owns in North Hollywood to the Valley Health Medical Group, which actively sought an Expanded Choice subcontract, according to court records.

Designed to Save State Money

Expanded Choice was designed to save the state money by switching Medi-Cal recipients from the care of independent physicians to HMOs. But the proposal met stiff resistance from physicians and advocates of the poor, disabled and elderly--who receive health care under Medi-Cal--and was shelved, at least for this year, when money for its start-up was not included in the governor’s budget for 1986-1987.

Beall said investigators are trying to determine if “Robert (Nick) Starr and others were involved in any conflict of interest or any violation in the letting of contracts of the Expanded Choice program in the San Fernando Valley.”

Starr, 53, a Ventura businessman who operated medical laboratories for many years, could not be reached for comment.

Investigators declined to say what prompted the investigation. But at least some allegations have surfaced as a result of a broken partnership among physicians in the Valley Health Medical Group, which led to the filing earlier this year of a lawsuit and countersuit in Van Nuys Superior Court.

Countersuit Filed

Dr. Filiberto Zadini, a former member of the health group, has alleged in a countersuit that he invested in the North Hollywood medical practice after he was assured in 1985 that Starr would use his influence to obtain an Expanded Choice contract for the group.

In an affidavit filed in the case, Zadini said the medical group’s sole physician, Dr. Naum Rit, and Robert Marks, Rit’s medical consultant and a member of the state’s Board of Behavioral Science Examiners, assured him that Starr would see that the group received a contract. Zadini said in the affidavit that Rit told him a contract through the Expanded Choice program would “bring millions of dollars in earnings.”

Zadini alleged that Starr personally told him in September, 1985, that the commission would award an Expanded Choice contract to Valley Health Medical Group.

According to an affidavit filed by Marks and Rit, the medical group would not operate as an HMO, but hoped to obtain a subcontract with an HMO participating in Expanded Choice. The group then planned to attract a large number of physicians to the practice at 11311 Camarillo St. in North Hollywood, Marks and Rit said. Through most of 1985, Rit was the group’s only doctor. Zadini and two other physicians became investors in October, 1985.

Two Deny Allegations

In their response to Zadini’s countersuit, the two men “deny generally and specifically each and every allegation” made by their former partner.

According to both sides in the lawsuit, Rit’s group eventually signed a subcontract with United Health Plan, an Inglewood-based HMO.

Clyde Oden, the chief executive officer of United Health Plan, said Starr was never involved in negotiations between his HMO and the North Hollywood group.

Shortly after the subcontract was signed in December, Expanded Choice was postponed.

Beall said the focus of the state’s investigation “is what was going to happen . . . if the contracts were let.”

Investigators also are looking into possible Medi-Cal and Medicare billing irregularities by the Valley Health Medical Group, Beall said.

Rit and Marks referred questions to their attorneys.

The attorneys, Bruce Dizenfeld and Frederick Booke, allege that Zadini is a disgruntled former investor in the medical group who is simply trying to cause trouble for their clients. The attorneys said they had no knowledge of any improper connection between Starr and the tiny medical practice.

Rit and the Valley Health Medical Group first filed suit against Zadini and his business manager, seeking to stop the pair from taking documents from the medical office, interfering with Rit’s practice or operating out of the group’s satellite office in Van Nuys. The case has not yet come to trial, although an injunction was issued forbidding Zadini from interfering with Rit’s practice.

‘Open and Aboveboard’

Michael W. Murray, executive director of the California Medical Assistance Commission, said he would be “surprised” if an investigation of a possible conflict of interest was being conducted. “Everything we did was open and aboveboard,” Murray said.

Murray noted that the seven-member commission awarded no contracts in the Valley because the program was postponed indefinitely before it reached that point.

Starr, an original member of the commission, was appointed in 1983 by the Senate Rules Committee, headed by state Sen. David Roberti (D-Los Angeles). Starr’s term expired this year and he was not reappointed, although there was no connection between that and his performance, according to Cliff Berg, executive officer of the rules committee.

“From all reports I’ve gotten, he has done a good job,” Berg said.

Representatives of the attorney general Monday informed both the governor’s office and the Fair Political Practices Commission of the progress of its investigation, said Dennis Cowan, one of the Los Angeles-based investigators on the case. Officials with the Fair Political Practices Commission were asked to assist the investigation, Cowan said.