Grand Jury Begins Probe Into Botched Merger : County: Panel aims to determine who is to blame for costly mental health agency debacle. Koester has testified, and Flynn will be questioned this week.

The Ventura County Grand Jury has launched an investigation to determine who’s to blame for the county’s botched mental health agency merger that will cost taxpayers at least $15.3 million, county officials said.

Before his retirement last week as the county’s chief administrative officer, Lin Koester was questioned by the jury at length about his role in the failed merger and who was responsible for the worst financial disaster in county history.

Supervisor John K. Flynn is scheduled to meet with the 19-member grand jury Friday to discuss the merger and the county’s troubled mental health system.

“I welcome the opportunity,” Flynn said. “It’s a good chance to review everything, to see if the county really was negligent.”

Marvin Reeber, grand jury foreman, said state law prohibits him from discussing the panel’s business.

The jury, comprising mainly retired professionals, investigates the management of various county and city government agencies and releases the findings in a report to supervisors each spring. Though it also issues indictments, the grand jury has no penalty powers in noncriminal matters.

A new panel was seated last month, and its members decided to delve into the mental health issue. The investigation began shortly after the county was ordered to repay $15.3 million in Medicare reimbursements as a result of years of faulty billing practices uncovered by the aborted merger.

The mental health system has been under a spotlight since shortly after supervisors in April 1998 combined the county’s mental health and social services departments--a move federal officials said violated organizational rules.

Supervisors rescinded the merger decision about nine months later, in December, prompting half a dozen federal and state audits into the county mental health system. One uncovered nearly a decade’s worth of unallowable billing practices, resulting in the $15.3-million penalty.

But the county stands to lose millions more as a result of the other audits:

* The county is at risk of losing $5.3 million in special funding it receives each year for being a state model for mental health programs and services.

Flynn said he will talk with state Department of Mental Health director Stephen Mayberg later this week in a continuing effort to preserve the funding. That issue is not expected to be resolved for a few months. In the meantime, the county is losing $436,111 a month from that funding.

* Supervisors want to preserve about $2 million yearly it receives in hospital-based Medicare reimbursements for its mental-health and medical clinics.

The Health Care Financing Administration has determined that 34 of 43 clinics violate organizational rules and are not entitled to a higher reimbursement rate. The county has appealed the decision.

* County counsel is within weeks of settling another financing administration case in which the county may lose about $300,000 in Medicare reimbursements it received during the time the merged agency existed.

While supervisors say the grand jury probe is unlikely to uncover any new scandals, they hope it will draw attention to those people responsible for the unsuccessful merger and for the years of faulty billing practices.

“There are staff people who drafted the blueprints to the merger,” Supervisor Frank Schillo said, referring to Human Services Agency Director Barbara Fitzgerald and CalWORKS manager Randy Feltman, the county’s former mental health director. “They were also responsible. That issue has not been addressed.”

Supervisor Judy Mikels said she wanted to know who was behind the years of improper Medicare billing that led to the $15.3-million penalty.

“The most important question is: How did we get into a billing practice that wasn’t allowed?” Mikels asked. “If that’s the way the investigation goes, then we can finally answer the lingering questions, so hopefully we can finally put the whole issue to bed.”