The previous Beaver County Board of Commissioners paid a $300,000 bonus to the new owners of Friendship Ridge after the sale of the facility in 2014 without any justification for doing so, newly appointed County Financial Administrator Ricardo Luckow tells the Beaver Countian.
The $300,000 payment by Commissioners Amadio, Spanik and Nichols to Comprehensive Healthcare Manage Services (the private company who acquired Friendship Ridge) came as the result of a provision in a sales agreement Beaver County signed with the company.
Although the final sale of the operations of Friendship Ridge occurred in March of 2014, Beaver County had an initial closing for the sale at the end of 2013 that saw the county receiving a substantial down payment from Comprehensive of $8 million. At the time of the initial closing, County Commissioners passed a resolution that approved a consulting agreement with Comprehensive to administer Friendship Ridge until the final sale of the public nursing home to the private entity had been completed. Beaver County paid Comprehensive $35,000 per month as part of that contract.
“[Comprehensive] desires to assist [Beaver County] with certain administrative services for Friendship Ridge including the negotiation, on behalf of the County, of any and all contracts to be entered hereafter on behalf of the County with respect to its operation of Friendship Ridge, including renewal or renegotiation of any existing contracts related to such operations, and also including monitoring of the management services provided under the current Management Agreement […] between [Beaver County] and Premier Healthcare Resources, during the term of this agreement until the [sale of Friendship Ridge is finalized],” read the resolution in part.
Under provisions of a separate Operations Sales Agreement, Comprehensive would not only be paid $35,000 per month until their purchase of the facility was finalized, they would also be entitled to a certain bonus payment based on their performance while administering Friendship Ridge on behalf of the county. Specifically, the agreement entitled Comprehensive to, “an amount equal to 50% of the savings in the expenses of operating the Facility for the period between the Initial Closing Date and the Operations Closing Date and the expenses of operating the Facility for the same period of time immediately preceding the Initial Closing Date.”
On April 21st of 2014 (approximately a month after the sale of Friendship Ridge was finalized), Pat Franitti, an employee of the Beaver County Controller’s Office, sent an email to Vince LaValle (the County Financial Administrator at the time) questioning a wire transfer to Comprehensive for the $300,000. “Can you tell me what this 300,000.00 to Comprehensive was for […] I need to know what expense account to charge it to,” he wrote.
Minutes later, LaValle responded to Franitti’s email, “that was part of the contractual agreement signed by the county and Comprehensive on performance savings ….it was agreed upon by the county and Comprehensive that they would pay $300k which was to be placed into escrow if not paid at closing, but it was not placed with Clark Hill [an outside law firm retained by the county to help with the sale of Friendship Ridge], it was paid to Comprehensive to avoid any further legal payments to Clark Hill. I would classify it as an operating transfer.”
Beaver County paid Comprehensive a total of $300,000 as part of that performance savings clause, which should mean that the company saved the county $600,000 while it was administering Friendship Ridge. But according to Ricardo Luckow, a Certified Public Accountant (CPA) who was appointed as County Financial Administrator just last month, no one from the county ever did a reconciliation to determine exactly how much Comprehensive actually saved in expenses during its time managing Friendship Ridge before the sale was finalized.
“The county never did anything, there were no reports created by the county at all” said Luckow. “Basically the county said Ok Comprehensive, you want some money? Here, here is some money for you, here you go!”
Luckow said proper accounting procedures should have been following by former Financial Administrator Vince LaValle before transferring the $300,000 over to Comprehensive. “The county should have closed the books and properly recorded all bills that were owed for the period Comprehensive was administering the facility, and then compared that final number to the same period of time immediately preceding them taking over,” said Luckow. “Comprehensive might have created something coming up with the $300,000 number themselves, but we don’t know how they arrived at that number and the county never did anything to check it.”
Financial Administrator Luckow said a review by the County Controller’s Office came up with numbers far different than the ones which would have justified a bonus payment to Comprehensive (Luckow worked as a consultant to the Controller’s Office before being appointed as Financial Administrator by the new Board of Commissioners).
“This is called a Budget Performance Report,” said Luckow. “As you can see, it shows that expenses actually went up during the time Comprehensive was managing Friendship Ridge […] It shows there were no performance savings at all, which would mean [the county] shouldn’t have paid them anything.”
Beaver County Controller David Rossi said the discrepancies with the performance bonus payment were among many issues surrounding the sale of Friendship Ridge discovered by his office. “That information was first found by my office last year as part of a review of the sale of Friendship Ridge. We turned that information over to the new Board of Commissioners and to Clark Hill [the outside law firm retained by the county]. As a result, the Commissioners have decided to have a forensic audit conducted of the transaction, a decision I am in agreement with.”
Representatives for Friendship Ridge have previously told the Beaver Countian they would not be commenting on controversies surrounding the sale of the facility until all of the outstanding issues with the county have been resolved — they have insisted all payments made to them by the county were for monies rightfully owed to them. Former County Financial Administrator Vince LaValle has previously said he would not be answering any questions as part of the Beaver Countian’s coverage.