Sonoma County’s elected finance chief says DEMA audit will be thorough and independent

Sonoma County’s elected financial watchdog will review three years of records for a company that billed $26 million through county contracts to run temporary housing sites during and after the pandemic, auditor Erick Roeser told The Press Democrat on Monday.

His office’s investigation will be independent from a review by the Department of Health Services, which made DEMA Consulting and Management one if its principal emergency contractors through the pandemic.

Roeser and his staff will review invoices and supporting documentation the company provided the health department since June 2020. The company had billed more than $26 million by April 2023, all through contracts began during the pandemic and initiated without a competitive bid process.

Both Roeser’s office and officials with the Department of Health Services said they would begin financial reviews of DEMA’s contracts and billing following a Press Democrat investigation that first published Wednesday and identified $800,000 in billing for positions nine former and current health care workers at the company do not remember existing.

“What we do in my office will be wholly independent from what Health Services is doing,” Roeser said in a phone interview Monday.

Board of Supervisors Chair Chris Coursey said Roeser’s audit was an “appropriate” response to the newspaper’s investigation.

“Questions have been raised and they need to be answered,” Coursey said.

“It’s not that I don’t think these contracts have had oversight and will continue to have oversight, but the specific allegations made in the story need to be looked at,” he said.

Roeser has practically “full, free, and unrestricted access” to county government records, according to his agency’s charter. However, he has more limited authority to request internal DEMA documentation that isn’t required by oversight clauses of county contracts.

Still, he told The Press Democrat on Monday he believed his office had the authority and ability to get to the bottom of the questions the newspaper’s investigation raised about DEMA’s billing practices.

“It will come down to what documentation is available and what we’re allowed to look at, what the vendor is required to provide to the county,” he said. “I don’t want to speak out of turn and say we will perform work that we will not be able to but (answering questions raised in the newspaper’s investigation) will be the objective.”

DEMA, founded in May 2020, grew at a rapid pace over the first two years of the pandemic as the health department hired it to run an increasing number of sites to house vulnerable homeless people and provide them medical care.

It ultimately managed seven sites, and continues to run three, including the county’s newest, a managed encampment opened in March on the county administration campus in Santa Rosa. DEMA was hired for all of the sites under emergency orders.

The Board of Supervisors has not awarded any of those contracts through a vote because they were reached outside of a formal competitive bidding process. Coursey on July 6 told The Press Democrat he was not aware of the amount of money the company had billed for or the details of the contracts before the newspaper’s inquiry.

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.

The company typically billed for about 12 positions, ranging from paramedics to infectious disease nurses to administrative positions like medical record and payroll technicians, at the local sites where it provided health care and managed housing for homeless people medically vulnerable to COVID-19.

From August 2020 to October 2022, 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.

DEMA‘s founder, Michelle Patino, said the company had six employees “categorized under” director of nursing on staff during the period reviewed by The Press Democrat. But nine medical employees of the company said they only ever recalled one person holding the position at a time. At the most, employees said, there were two, since Patino categorized herself as a director of nursing.

Patino denied any improper billing.

Roeser said his office has the authority to open an audit at any time into county spending, but in this case he ordered his staff to investigate DEMA’s contracts and billing following The Press Democrat’s report.

The process, he said, could take one to two months if not longer. “I’ve let my internal audit manager know that this is a high priority and we will conclude and issue a report as soon as possible,” he said.

As auditor, he has the authority to review invoices and supporting documentation that DEMA provided the health department. He can also evaluate if the company billed for anything outside the scope of the contracts and review whether the county followed proper processes and safeguards when writing the contracts.

His office does not, however, have the authority to audit a private, for-profit company like DEMA’s internal finances and accounting data.

“We don’t have the authority to go into and do an audit of DEMA’s books like the (Internal Revenue Service) would from an income tax perspective,“ he said. If necessary, he said, he would consult with the County Counsel’s Office to determine if he has the authority to request more information from the contractor.

On Friday, county communications manager Paul Gullixson said the Department of Health Services would conduct a financial review of payments to DEMA and other contractors the county had hired to respond to the pandemic. That review, Gullixson said, was required by the Federal Emergency Management Agency, which ultimately covered the cost of DEMA’s services during the emergency.

It was not clear on Monday when Health Services had planned to begin that review and to what extent the newspaper’s reporting accelerated that process.

Health Services Director Tina Rivera instructed her assistant director, Roy Dajalos, “to provide DEMA a courtesy call,” last week to alert the company to the coming review, she wrote in an email to the newspaper on Sunday morning.

“Our team has subsequently began the notification process to DEMA and will be notifying other FEMA contract providers of this financial review,” Rivera wrote. In an email Monday, she said the department had made courtesy calls to other FEMA providers as well.

In an email to a Press Democrat reporter on Friday, Patino said Dajalos called her Thursday morning and told her the health department would be “requesting documents for an audit.”

The company was “more than happy to cooperate and provide any documentation requested,” she wrote, “and reassure the community that (their) tax dollars are being spent accordingly.”

Roeser’s office did not give DEMA any advance notice of its investigation, he said. For his office, “it wouldn’t be standard practice to reach out to a vendor,” he said. But since the health department works closely with DEMA, he said, “It would be more appropriate in that case.”

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