DEMA CEO denies wrongdoing as Sonoma County puts homeless housing sites out for competitive bids

Sonoma County Department of Health Services on Tuesday put three transitional housing sites for homeless people run by DEMA Management & Consulting out for competitive bids.

The request for proposals marks the first time DEMA will have to follow conventional bidding practices to secure the consequential work caring for homeless at the sites since the company became a health department go-to contractor in May 2020.

The company since then billed at least $26 million to the county through a series of no-bid contracts, the majority of which was reimbursed by the Federal Emergency Management Association, a Press Democrat investigation published July 30 found.

In an emailed statement, Dave Kiff, director of the homelessness services division, said this week’s request for proposals was not a result of The Press Democrat’s reporting and had been planned for some time.

“We have been working on the Interim Housing Site Management (Request for Proposal) for at least three months,” Kiff said. “Its preparation involved legal review as well as Human Resources consultation. Once that was complete and final review occurred ... we were able to release it.”

The company was founded by former emergency room nurse Michelle Patino and her wife, Mica Pangborn, during the pandemic as the government scrambled to respond to fears that COVID-19 outbreaks among the homeless population could overwhelm the health care system.

During an interview Tuesday at the offices of The Press Democrat, Patino and Pangborn said they had billed appropriately for their work staffing care sites for homeless people during the pandemic.

But if they made mistakes, they said they would make good on them.

“Every hour, every minute is accounted for,“ Patino said.

Rising to the occasion

Far from taking advantage of loosened contracting rules amid a health crisis, she said she and her company had risen to the occasion, met the county’s needs and saved taxpayers money.

“I've worked my butt off,” Patino said. “I've tried to assist this county and do everything I possibly can.”

The new request for proposals seeks one or more contractors to manage and provide housing support services at the tent encampment on the county’s administration campus in Santa Rosa, which has been operating since March.

It also covers Mickey Zane Place, the former Hotel Azura along Healdsburg Avenue downtown and a set of 26 RVs in a portion of the Sonoma County Fairgrounds.

However, the request for proposals states the fairgrounds site is likely to close later this year. It “serves as temporary shelter for persons transitioning out of homelessness,” and has been used to house people moved off the Joe Rodota Trail.

The managed tent encampment on Administration Drive, meanwhile, is likely to move in 2023 to a different location, according to the request, and the tents may be swapped out for some other structure.

In Tuesday’s interview with The Press Democrat, Patino said DEMA will submit a proposal to maintain management of the sites. She said she had known the projects would come up for a competitive bidding process soon but did not know exactly when.

The request calls for interested contractors to bid by Sept. 14. Given that timeline, DEMA’s proposal likely will come as the company’s previous billing remains under review by Sonoma County’s elected auditor-controller Erick Roeser.

Audit timeline

The auditor said his office’s work could take one to two months or longer.

Roeser opened the audit after The Press Democrat’s investigation was published online. He told The Press Democrat in an interview last week that his goal was to examine questions raised in the article.

The Press Democrat reviewed 26 months of the company’s invoices and interviewed 12 former and current DEMA employees. The newspaper’s reporting of $800,000 in questionable billing focused on a single position, the director of nursing, for which DEMA billed between $76 and $95 an hour.

Nine former health care employees told The Press Democrat they only remembered one person holding the director of nursing position.

One former employee, Heather Forbes, who held the position, said when she left the company, she was surprised to find a letter in her personnel file stating she was appointed director of nursing in March 2021.

But Forbes only understood herself as promoted to that position in September 2021, she said, calling the letter false. Several health care workers employed at the company at the same time as Forbes supported her account of being assistant director of nursing until September.

Patino, however, said in the interview she told Forbes she was being promoted to director in March.

Since publication, two more former DEMA employees have contacted a Press Democrat reporter to say they only ever recalled one person holding the position.

“There was never more than one nursing director,” said one of the employees, who asked to be anonymous because she was concerned about reprisal.

Before Tuesday, Patino had declined an interview with The Press Democrat about the newspaper’s findings. A July 11 email, copied to more than 90 people, accused the newspaper of “misinformation, conjecture, accusations, insinuations that seek to defame.”

An in-person interview

On Tuesday, however, she and Pangborn conducted an in-person interview with the newspaper’s reporters and editors. They were accompanied by Rob Muelrath, a public relations professional and political consultant.

Patino said she declined to do an interview about the findings of the newspaper’s investigation based on the advice of friends and colleagues, and because she was nervous and “did get a little scared,” at the idea of speaking to a reporter about the company.

Patino had spoken to a Press Democrat reporter in April. At that point, The Press Democrat had not uncovered questions in DEMA’s billing practices. When the newspaper sought an interview on those points as well as a lawsuit filed by a former employee, she ultimately declined.

But Patino agreed to speak this week, after the newspaper published its investigation, to share her side of the story on the advice of Muelrath and Pangborn, she said.

During Tuesday’s interview, Patino said she categorized an assistant director of nursing, a clinical director of nursing, herself, along with the actual director of nursing, when it came to billing the county and, ultimately, FEMA. Over the 26 months the newspaper examined, six different people held those positions and did that work, she said.

Employees, Patino said, would have only understood there to be one director of nursing because she directed them to report to just one person.

Her company carried higher costs because of its use of nurses and other medical staff, which necessitated high salaries and high costs of insurance, Patino said. And health department officials continued to give DEMA work because other providers were not equipped to meet the need.

“They wanted somebody that was going to be able to set up like a mini urgent care that would be able to be staffed 24/7,” Patino said.

Some of Patino’s former employees, however, recalled both poor staffing and little actual medical work at the sites. The Press Democrat interviewed a dozen former employees for its investigation, most of whom asked to remain anonymous because they feared retaliation from Patino.

Four of them described work shifts when there were not the proper number of medical staff on site, despite the high bills.

DEMA is Patino’s first business venture and grew rapidly, she said, and if there were any mistakes in the billing, she would correct them.

"I 100% can tell you I don't think I did anything wrong,” she said.

“Now could I have made some mistakes? I'm new, and I don't know what I'm doing and I have never done this before. If there is (billing errors) I will correct anything.”

You can reach Staff Writer Andrew Graham at 707-526-8667 or andrew.graham@pressdemocrat.com. On Twitter @AndrewGraham88