Firm co-owned by legislator’s husband gets state settlement

SACRAMENTO — The state paid a $74,400 settlement to a company co-owned by the husband of state Sen. Mimi Walters (R-Laguna Niguel) after her office repeatedly called the prisons agency to check on a claim filed by the firm.

The senator’s husband, David Walters, co-owns a company that provides pharmacists to the California corrections system. The firm filed a claim with the state last year contending that the business was underpaid for its services.

A spokesman for Mimi Walters said this week that the aide who made the calls, D. Everett Rice, was following the senator’s policy to aggressively help constituents deal with state red tape.

Mimi Walters was kept informed about the efforts and does not believe they were improper, said the spokesman, Garth Eisenbeis, who is the senator’s chief of staff.

“The company…was treated like any other business needing help working with a state bureaucracy,” Eisenbeis said.

Walters is chairwoman of the Senate Ethics Committee and vice chairwoman of the powerful Senate Appropriations Committee, which screens bills, including prison-related measures, that affect state finances.

Prison officials said they did not give special treatment to the Walters firm, Drug Consultants Inc., even though they were contacted almost daily by the senator’s office.

Derek Cressman, regional director of Common Cause, a nonpartisan open-government advocacy group, said the calls crossed a line.

“Placing one call to inquire about the status of something might be acceptable, but placing multiple calls on an almost daily basis looks like an effort to influence the outcome of a decision that Sen. Walters had a financial interest in,” Cressman said, “and that’s inappropriate.”

The staff of the prison healthcare agency documented the calls from Walters’ office and notified the senate Rules Committee about them this week.

The records “raised potential ethical issues that needed to be reported to the appropriate authorities,” said Joyce Hayhoe, director of legislation for the prison health services division.

The agency reviewed Drug Consultants’ claim and found that the state paid the firm the amount called for in its contract. But the reviewers recommended a settlement anyway, saying a state official had mistakenly told the company that a higher billing rate was allowed.

Since 2003, Drug Consultants — a subsidiary of a firm in which David Walters is a 40% shareholder — has provided healthcare workers at 28 prison facilities. The state has paid $62 million to the firm during that time, according to state records.

Last July, the state cut its hourly rate for the pharmacists the company was sent, from $93.98 to $77.40. Although Drug Consultants manager Keith Moore signed contracts agreeing to the cut, he continued to bill at the old, higher rate for 2 1/2 months.

In the company’s claim, Moore said government supervisor Eugenia Frye told him in August that his billings would still be paid at the old rate. A month later, she told Moore that she had been given incorrect information, and the state eventually balked at paying the higher rate.

Moore said he called Sen. Walters about the problem. “She said I should call Everett Rice to see if he could help,” Moore recalled.

Rice, the senator’s district coordinator, called at least four officials involved in managing the contract and reviewing the claim and pressed for information on when it would be settled, according to the prison agency’s documentation, obtained by The Times through the state Public Records Act.

He did not disclose that Drug Consultants was owned by his boss’ husband, officials said.

“Senator Mimi Walter’s office has already inquired about the status of this claim,” wrote Tamrah Brusato, a claims processor for the state claims board, in an email to coworkers on Dec. 12, 2011, a week after the claim was filed.

The paperwork shows that Rice also contacted Dawn Kearns, a staff services manager for the prison healthcare agency, and Stephanie Wheatley, the prison agency’s senior staff attorney.

In a Dec. 20, 2011, email, Wheatley wrote to Kearns: “Please let me know if there is anything else you need to research this claim. Senator Walter’s Office calls almost every day requesting a status.”

Twenty minutes later, Kearns wrote back that she “spoke with Everett Rice from Senator Walter’s Office also today. I told Mr. Rice the estimated time of completion of the response would be the end of the first week in January to have our response to you.”

“The Senator’s Office is checking in again,” Neil Ennes, legislative manager for the claims board, said in a Jan. 18 email to another staffer.

Ennes said in an interview that Rice’s calls were “really just to check on the status, see what we could do to move it along.”

The state Victim Compensation and Government Claims Board approved the $74,000 payment Feb. 16.

State officials raised questions about the calls from Rice this week after The Times requested the documents involved in the claim.

patrick.mcgreevy@latimes.com