A Santa Rosa company earned more than $26 million through no-bid Sonoma County contracts. A Press Democrat investigation finds questions in its billing

Editor’s note: This is the first in a two-part series. Read the second story here.

As victims of the deadly COVID-19 virus packed hospitals and emergency rooms in the spring of 2020, public health officials in California and elsewhere around the country feared that one group in particular could swamp the health care system.

Homeless people were especially vulnerable because of medical issues exacerbated by high rates of alcohol and drug use and other stresses of living on the streets. Crowded encampments and group shelters made self-isolating and quarantining less accessible, sparking worries about high rates of death and serious disease.

California and federal officials poured billions of dollars into finding facilities to shelter the state’s most vulnerable residents. In Sonoma County alone, spending on homelessness increased by 550% in the first two fiscal years of the pandemic, reaching more than $44 million in the first 15 months.

At the heart of that response in Sonoma County was a new for-profit startup company with no track record or experience.

Though first registered as a company in January 2020, Santa Rosa-based DEMA Consulting and Management’s founders, Michelle Patino and her wife Mica Pangborn, said the company got off the ground in May of that year.

A former emergency room nurse, Patino’s willingness to quickly ramp up care sites and her ability to rapidly hire nurses and paramedics was a boon for scrambling health officials.

Those officials in turn would prove a boon for DEMA.

In just one year, the company grew to more than 100 employees. At the height of the pandemic, Patino says she had 190.

DEMA would go on to bill taxpayers more than $26 million through contracts with the Sonoma County Department of Health Services. Because emergency pandemic orders suspended many routine government checks and balances, DEMA’s contracts were awarded outside the normal competitive bidding process. That means government officials were not required to find the cheapest bidder, and elected officials did not get a vote on the health department’s choice.

Sonoma County has never audited DEMA’s contracts, and the company’s pandemic-era contracts have never come up for review by the Board of Supervisors. But a two-month investigation by The Press Democrat shows the company billed at least $800,000 for staff positions that current and former employees say they don’t remember interacting with or even knowing about.

Patino, a former emergency room nurse at Kaiser Permanente, defended the company's billing, saying it was appropriate and without irregularities.

“DEMA is a company of integrity and solely bills for services rendered by the appropriate staff,“ she wrote in a May 11 email to The Press Democrat.

(Late Friday, two days after this story posted online, a county spokesman confirmed that Erick Roeser, who leads the Auditor-Controller-Treasurer-Tax Collector’s Office, had ordered an audit to examine the issues raised in the Press Democrat investigation. Patino acknolwedged in an email on Friday that she had been contacted by Roeser’s office.)

The Press Democrat reviewed 26 months of the company’s invoices. Though DEMA contracted and billed with the health department, its payments during the pandemic ultimately came from the Federal Emergency Management Agency, or FEMA.

Ultimately, The Press Democrat focused on one category of employee DEMA was billing for: the director of nursing, for which the company charged the government between $76 and $95 an hour.

A review of contracts and invoices for that position showed $800,000 in billing that doesn’t align with what nine health care workers formerly or currently employed at the company say they saw on the ground.

At most sites, DEMA typically billed for about 12 positions, ranging from paramedics to infectious disease nurses to administrative positions like medical record and payroll technicians.

Patino repeatedly declined to speak to The Press Democrat about her company’s billing. She did speak to a reporter on April 4 to discuss her company’s growth. At that point, The Press Democrat had not uncovered questions in DEMA’s billing practices.

When the newspaper sought a second interview to discuss those points and inquire about a lawsuit accusing company leaders of sexual harassment, she declined.

(Editor’s note: The lawsuit is the subject of part two of this investigation.)

Patino later said she was willing to provide an interview, but over several weeks of emails and text messages The Press Democrat was unable to get her to commit to one.

On July 11, Patino responded to a series of questions by email while accusing The Press Democrat of retaliating against her because the newspaper’s journalists were initially prevented from visiting the county’s latest, DEMA-managed, homeless housing site in Santa Rosa in March.

She characterized The Press Democrat investigation into the company as “misinformation, conjecture, accusations, insinuations that seek to defame” and said the newspaper should instead be reporting on the good work the company has done during and since the pandemic.

She copied the email to more than 90 people, including all five Sonoma County supervisors, leaders of other area homeless service providers, other elected and appointed officials, and what appears to be a right-wing news site based in Delaware called Liberty Sons.

For this investigation, The Press Democrat interviewed 12 former and current DEMA employees. Of the 12, nine agreed to speak only on the condition of anonymity, saying they feared retaliation from Patino as they advance their careers in the medical field.

The employees described a company where expansion was jet-fueled by federal dollars with little oversight from Sonoma County government officials or agencies.

“I feel like (DEMA) had the county wrapped around its finger,” said Branden Bowman, an EMT and former administrator of one of the care sites.

Typically, state law requires most government service contracts to go through a public process in which officials seek bids from a slate of vendors to provide transparency and ensure competitive pricing.

But during the pandemic, emergency orders suspended competitive bidding laws so government officials could react swiftly to the evolving health crisis.

County health department leaders, first Barbie Robinson, who left in May 2021, and then her successor, Tina Rivera, signed the contracts with DEMA owner Patino without public deliberation as the county rushed to shelter people from the virus.

An influx of dollars to a short-funded system

While DEMA has yet to win a contract in Sonoma County through competitive bidding — an attempt to win contracts in Santa Rosa and Rohnert Park last year were unsuccessful — it remains a no-bid go-to for the county’s health department.

In March of this year, DEMA secured the $120,000 a month contract to run the county’s new managed homeless camp, established under an emergency order as county supervisors grappled with a growing tent village along the Joe Rodota Trail.

The county expects to spend $3 million on the new temporary site, even as some worry the county isn’t providing sufficient funds to address homelessness’s root causes.

In a Feb. 21, 2023, email obtained by The Press Democrat through the California Public Records Act, Jennielynn Holmes, the CEO of longtime service provider Catholic Charities, expressed concern to health department leaders about directing money toward a new site while existing programs suffered.

“We (and by we, I mean Catholic Charities, our partner nonprofits and government entities) are not always able to staff basic services including already stretched behavioral health programs, substance use programs, and more,” Holmes wrote.

In May, the Sonoma County Continuum of Care Board, which distributes local, state and federal dollars to service providers, rejected nearly a third of the grant requests from nonprofits in its latest round of funding allocations.

Dan Drummond, the longtime executive director of Sonoma County Taxpayers said the contracts to DEMA and other vendors under emergency orders deserve scrutiny.

“You had a situation where you have a lot of people who are vulnerable, so maybe you don’t have the opportunity to go out and seek competitive bids,” Drummond said. “But this has been going on for several years now.”

The Sonoma County Taxpayers Association is a nonprofit fiscal watchdog group founded in 1945 that describes itself as nonpartisan and dedicated to monitoring local government spending and budgets.

Large sums of money awarded through no-bid contracts raise skepticism with the public about government spending and whether taxpayers are getting the best deal, Drummond said.

“It looks awful on the surface,“ Drummond said of the $26 million billed by DEMA.

A business borne from disasters

Patino was hailed as a local hero in the 2017 North Bay wildfires. Supplementing grit and experience with her personal network of health care workers, she pulled together a clinic to provide medical care at a crowded evacuation center.

“Without her, lives would have been lost,“ state Sen. Mike McGuire, D-Healdsburg, said at a January 2018 event, according to a cell-phone video posted by Patino’s wife on social media.

Others echo those praises, describing Patino as a woman of action and steady amid chaos.

“Michelle was always very clinically competent. She also has a lot of energy, is willing to step in and help, especially in times of crisis,” said Pedro Toledo, the chief administrative officer for Petaluma Health Center, which worked with DEMA at its beginning.

Patino traces the idea for her company to the 2017 experience and to the Kincade Fire two years later, when she again sprang into action to establish a medical clinic for evacuees. Those experiences showed the need for a company focused on medical responses during disasters, she said.

With a global pandemic rounding the corner, her timing was fortuitous.

Six months after the Kincade Fire, California was scrambling to shelter its homeless from COVID-19. State and local governments throughout the spring of 2020 leased or bought hotels and motels that had been emptied by health orders and travel and event restrictions.

In Sonoma County, officials entered a lease with Sonoma State University to house homeless and other vulnerable people in empty dormitory rooms, along with options for COVID-positive patients to isolate and receive care.

DEMA began work as a subcontractor for Petaluma Health Center, which first managed the site. But Petaluma Health pulled back to focus on increased demand at its own clinic.

The Sonoma State site required 24-hour care, and the nonprofit did not have the staffing, Toledo said.

DEMA took over.

Rivera, assistant county health director at the time, found the company effective.

“I was pleased with their work, and they were really one of the only disaster medical providers in Sonoma County,” Rivera said in a March 30 interview with The Press Democrat. “They cared for the patients and, really, their operation simply began to evolve.“

As public health orders slowed the spread of the virus and blunted surges, the county expanded and shifted its pandemic shelters.

In August 2020, Patino signed a county contract with then-health director Robinson to run six sites for eight months at a maximum cost of $9 million. The contract was expanded five times as the pandemic wore on, with an amendment in December 2021 raising the payment cap to $21 million.

Over the next seven months, DEMA grew from 20 employees to 125, Patino said.

Sonoma County eventually established seven sites to house homeless and other particularly vulnerable people during the pandemic.

DEMA managed all seven. Two of the pandemic-era sites, the former Hotel Azura and the fairgrounds site, remain operational. DEMA manages both, along with the new camp at the county administration site.

The Press Democrat obtained invoices for the company through October 2022, which amounted to more than $23 million.

In response to a separate request made in April, the Department of Health said the company had billed an additional $3.6 million from Oct. 30, 2022, to March 18, 2023, a roughly five-month period.

A review of meeting agendas for the board of supervisors, which oversees the health department, indicates the county’s top elected officials had no input into the company’s contracts.

Board chair Chris Coursey, who became a supervisor in January 2021, said he does not recall a vote or substantive discussion of the company’s work during his tenure, though he said he has visited two DEMA sites and met with Patino.

“The details of the contract and the amount of money, I have not been aware of those kinds of details,“ he said in a July 6 interview with The Press Democrat.

Good salaries for lighter work

DEMA attracted health care workers with salaries comparable to hospital positions.

In her April 2023 interview with The Press Democrat, Patino said the company strove to pay well. “One thing about our company is we pay a living wage,” she said.

The county’s contracts with DEMA dictate the rate it can charge per position, with a cap on the maximum hours per worker, per billing period. Though the contracts were with the county, the money came from the Federal Emergency Management Agency.

Public health experts say providing health care to homeless people at shelter sites can reduce costs and burdens on the health care system elsewhere, by reducing emergency room visits, for example. In the long term, the costs of paying medical staff for homeless shelters and supportive housing facilities could pay off for taxpayers.

Patino, in her April interview, said she believed the model would continue to find funding streams as states and cities square up to an aging homeless population.

“We're there every single day working with these individuals, to assist them in becoming healthier and to have better, healthier, active lifestyles,” Patino said, “and I think that's why we grew.”

But expensive model aside, some of DEMA’s invoices in Sonoma County don’t correspond with accounts from former employees about how things looked on the ground.

The company billed for a director of nursing position at each site. In one month, June-July 2021, the company billed 792 hours to that position at a cost of $65,768.

The company had six employees “categorized under” directors of nursing on staff during the 26-month period, with one being herself, Patino wrote in an email to The Press Democrat. She did not specify whether those employees were in the positions concurrently, and she declined to provide the names of the others.

But nine current or former medical employees said DEMA had just one director of nursing for all its sites. That person managed nurses, crafted medical policies and procedures and worked principally out of the company’s headquarters on Apollo Way in Santa Rosa.

Heather Forbes, a nurse who previously held the director position, said there was only one director of nursing when she held the position from September 2021 until she left the company in February 2022. She was director of nursing across all DEMA’s sites during that time, she said.

The $65,768 DEMA billed the county for directors of nursing hours in June 2021 alone was close to half of Forbes’ annual salary for the position.

“I wish I got paid per site; that would have been great,” Forbes said.

Forbes joined the company in January 2021 and only recalled there ever being one director of nursing, she said. She was an assistant director of nursing and then was promoted in September 2021, as she understood it.

But when she quit the company, she said, she requested a copy of her personnel file. In it was a letter, a copy of which she provided to The Press Democrat, that said she had been designated the director of nursing in March 2021. That letter was false, she said, as she was never told she was the director until she received her promotion that fall.

From August 2020 to October 2022, a 26-month stretch, DEMA billed more than $1.5 million for more than 18,930 director of nursing hours across the seven sites. There are approximately 18,980 hours in 26 months, meaning the company billed for directors of nursing working all but 50 of those hours, according to a Press Democrat calculation.

Forbes says she often worked 60 hours a week, but was paid a salary set at 40 hours a week. The company should have billed $316,160 for a director of nursing over 26 months at that rate.

Patino said she also served as director of nursing. If she billed for herself at the higher rate, $95 an hour, than that would account for another $399,360. If, as the nine health care workers interviewed by The Press Democrat described, there was only one director of nursing, then even when also including Patino that leaves more than $800,000 in billing unaccounted for.

Over that same 26-month period, DEMA billed $2.2 million for physician services. The company had one doctor, Dr. Amy Adams, on staff. It also employed a physician’s assistant, the former medical employees said. Adams’ husband also worked at the company, eventually becoming director of nursing after Forbes departed, according to former employees.

Nurses could text or call Adams at any time with health concerns from site residents. But the former and current employees interviewed by The Press Democrat don’t remember working with or hearing about other physicians.

Adams did not respond to multiple messages seeking comment, including one left with someone who picked up her home phone.

The company had “several” physicians “that worked for us at different times during the period stated above,” Patino said in response to written questions, adding that on staff were physicians’ assistants, nurse practitioners and doctors.

DEMA’s highest billing for physician services came through the Healdsburg Best Western, an alternative care site for COVID-positive or COVID-exposed people. DEMA’s contract there allowed it to bill $1,950 an hour for on-call physician services and stated there would be 3.3 physicians on the job.

In the 16-month period that site operated, DEMA billed more than $4.6 million for the site, $893,000 of which was for physician services.

The hotel had 60 rooms available for people to isolate if they tested positive for COVID-19 or came in contact with someone carrying the virus. Patino said the site provided services to 1,481 people, all of whom received daily physician check-ins.

In late January 2021 there were 10 people staying there, according to a previous Press Democrat report. DEMA billed $159,169 for the last two weeks of that month, including $27,312 for physician services.

Patino said the cost more than paid for itself by eliminating more expensive emergency room visits.

In a May 24 email, she wrote that the sites DEMA ran may have averted as much as $24 million in emergency department costs over two years of the pandemic. She calculated that sum citing statistics that homeless people, who are the highest users of emergency departments, can run up as much as $44,400 a year in individual medical bills. That figure is for people who go to the emergency department weekly.

‘Appropriate contract monitoring’

The county’s internal audit division has not audited the company’s expenditures. The Sonoma County Administrative Office, which also has the ability to conduct audits, has not done so either, according to county spokesperson Paul Gullixson. Nor has the county’s disaster finance administration division.

Monitoring DEMA’s spending “includes regular meetings between the County and DEMA, the collection and review of daily activity logs and other documentation, and the review and reconciliation of all invoices prior to payment,” disaster finance division administrator Ryan Burns said in a statement to The Press Democrat.

“For (Federal Emergency Management Administration) FEMA expenditures, Disaster Finance does not typically audit vendors,” Burns continued. “We review the invoice and supporting documentation to ensure the costs are necessary and reasonable and are in line with FEMA policy and guidance.”

Rivera, the county health director, said health department staff make regular visits to DEMA sites.

“There is appropriate contract monitoring,” she wrote in an email to The Press Democrat.

However, former employees said they saw little indication of county oversight and rarely if ever recalled site visits.

“There was a lot of political stuff (DEMA) took advantage of because of (the pandemic),” said Forbes, the former nursing director, and the government “was throwing money everywhere.”

For some first responders grappling with the stress of providing emergency care during the pandemic, DEMA’s salaries came with far less demanding work.

“All you do is take vital signs, come on over,” is how one former nurse for the company, who asked not to be named because she feared retaliation from Patino, described the pitch she got from hospital colleagues who had joined DEMA.

“Sometimes we didn’t do anything all day,” she said.

“Most medical situations `were rudimentary in nature,” said another paramedic, who also asked to speak anonymously. “There was a lot of b------- we handled. Every few days there was something that required actual attention.”

But at other moments, there was short staffing despite the high bills. Four health care workers with the company, who all agreed to speak on condition of anonymity, said there were days where sites did not have the medical staff they were supposed to.

“A lot of the time there was no nursing staff, it was just the techs running the show,” an EMT who worked at two of the sites said.

Two other employees recalled times that, under proper medical procedure, they were supposed to be paired with nurses or paramedics, but were left alone for shifts.

“All I’m trained to do is call 911,” one employee recalled.

This story has been updated to correct the month of former Health Department director Barbie Robinson’s departure from Sonoma County; to indicate that data about DEMA’s success placing site residents in housing came from the Sonoma County Department of Health Services; and to clarify the job title of Branden Bowman and employment status of Dr. Amy Adams.

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