Santa Clarita / Antelope Valley : Hospital and Group Sue 2 Ex-Officials

Antelope Valley Hospital Medical Center and a nonprofit group associated with it filed suit Tuesday alleging fraud, conspiracy and conflict of interest by a former hospital administrator and a former board member.

The suit alleges that Mathew Abraham, a former hospital assistant administrator, used the nonprofit group that handled employee insurance as a means of funneling hospital funds to himself. The suit also contends that Abraham arranged to have the group sign a lucrative lease for office space owned by Larry Parker, who was a board member at the time.

Robert Harenski, administrator of the 341-bed Lancaster hospital, said the hospital’s attorneys are convinced the arrangements were improper and illegal. “I’m convinced based on what I know. The attorneys wouldn’t have taken this step if it didn’t look bad,” Harenski said.

The lawsuit was the result of a months-long investigation by attorneys for the hospital, which is a public agency run by a five-member publicly elected board of directors. Antelope Valley Health Ventures, the nonprofit group associated with the hospital, joined the district in filing the lawsuit.

Abraham served as assistant administrator of the hospital district from January, 1986, until he resigned in September, 1992. He was interim administrator for a five-month period beginning in September, 1991. He also served as a member of Health Venture’s board from 1986 to 1992.

Parker was an elected member of the hospital’s board of directors and served from November, 1988, through May, 1992. He did not seek reelection. Parker was also on Health Venture’s board for at least 11 months beginning in November, 1990.

When the hospital board decided to create a self-insurance program for its employees in October, 1991, Abraham secretly arranged for Health Ventures to administer that program for a first-year cost of at least $400,000, an amount the hospital alleges is more than three times what was appropriate, according to the suit. Health Venture was originally created by the hospital in 1986 to operate a dialysis center.

Then, according to the suit, Abraham got Health Ventures to give him a contract to serve as administrator of the self-insurance program. He was to receive $5,000 monthly and a share of the program’s savings to the hospital, officials said. The hospital in January switched to a different company to administer the program.

The hospital lawsuit followed Abraham’s filing last week of a demand for arbitration seeking more than $1.3 million for his services related to the insurance program.

In another allegation, the hospital contends that Abraham arranged in May, 1991, for Health Ventures to pay about $3,000 monthly for 1,600 square feet of office space in a building that Parker owned on 12th Street West at Avenue N in Palmdale. At the time, Parker also was a Health Ventures board member.

Between June, 1991, and last month, Health Ventures paid Parker in excess of $66,000 for the office space, an amount that the hospital described as “excessive and commercially unreasonable.” The deal was a five-year lease, but Health Ventures terminated it this month.

The hospital and the nonprofit group are seeking to have the court declare the administration and lease agreements invalid, and are seeking unspecified monetary damages from Abraham and Parker.

Neither Abraham or Parker could be reached for comment Tuesday.

Times correspondent Sharon Moeser contributed to this story.