County May Get More Time to Pay Settlement

In the first glimmer of good news since the Medicare scandal erupted several months ago, the U.S. attorney’s office has tentatively agreed to give Ventura County two extra years to pay off a $15.3-million settlement, officials said Wednesday.

Under an arrangement negotiated by Supervisor John Flynn and County Counsel James McBride, the county could pay the federal government over five years instead of three. That would lower the county’s annual payment from $5.1 million to $3 million, a difference that might save several major public works projects that could have been delayed or scrapped, Flynn said.

“It’s a good deal for the county,” he said. “If this goes through, it will put us in much better financial shape.”

The Board of Supervisors will hold a closed-door meeting Tuesday to discuss the issue. Flynn said he will urge his colleagues to vote for the longer payment period because it could allow the county to avoid dipping into its reserve funds to pay off the debt.

That is important because a depleted reserve account could hurt the county’s bond rating, making it more expensive to borrow money for future building projects, Flynn said.

In making his case to Assistant U.S. Atty. Wendy Weiss, Flynn cited an Aug. 8 report in The Times that showed how the repayment could hurt Ventura County. Called “A Scandal’s Human Costs,” the report detailed how the $15.3-million financial hit might jeopardize a badly needed juvenile justice center, a social services complex in Santa Paula and new facilities at the public hospital.

The county agreed Aug. 3 to pay $15.3 million to settle a civil lawsuit that alleges its mental health department submitted fraudulent health claims dating back to 1990. The U.S. attorney’s office became involved after a whistle-blower alerted the federal government to prohibited billing practices.

Reacting to the possible deal, county chief executive Lin Koester said Wednesday a five-year repayment is attractive, but said supervisors must also consider that it would increase the amount of interest paid.

“My analysis up to now has certainly showed we are capable of paying it back within the three-year period of time,” Koester said. “It becomes an issue of what is most beneficial to the county.”

Once the board decides on a term, financial managers will present supervisors with a list of options on how the county can meet its obligation, Koester said. Those proposals will be presented to the board in time for an October budget review.

Auditor-Controller Tom Mahon said the county can pay the debt without dipping into reserves by reducing county programs across the board. The county also will receive $3 million from a national tobacco settlement, money that could be earmarked for a settlement payment, he said.

“It’s really up to the supervisors,” he said. “They will make that policy decision.”

Negotiations on a new deal began last week. Initially, Weiss refused to talk with Flynn when he telephoned her last week, he said. She later agreed to hear him out on a conference call that included McBride, the supervisor said.

Flynn told Weiss that unless federal prosecutors agreed to a more lenient payback schedule, the public projects would be jeopardized. The county has already weathered years of fiscal belt-tightening as a result of state raids on its budget, said Flynn, who is seeking reelection next year.

“I told her we were in bad financial shape and needed her help,” he said.