PPH sues contractor for $5.1 million

Palomar Pomerado Health is seeking at least $5.1 million from the contractor hired to manage many of its expansion projects.

A lawsuit was filed in San Diego Superior Court on Thursday, alleging Rudolph & Sletten, Inc. breached its contract with the public hospital district, committed fraud and negligently misrepresented costs while working on projects from April 2005 to July 2008, when PPH terminated the contract.

The projects included Palomar Medical Center West, Palomar Medical Center and the district’s satellite center. The company was also hired to work on Pomerado Hospital.

According to court documents, PPH alleges the contractor knowingly submitted bills listing employees at higher rates and titles than appropriate for the tasks they performed; claimed executives’ on-site work when no such work was performed or billable; for employees’ time not included in the signed contract; for reimbursable expenses, such as lunches, dinners, computer software and employee training time not permitted in the contract; and for hours not incurred by the contractor.

“R&S has violated the public’s trust, and it’s our responsibility to ensure public funds aren’t being misused,” said Janine Sarti, PPH’s general counsel.

According to PPH officials, the excessive charges were discovered through a routine audit that began in February and raised concerns among its board, executive team and Independent Citizen’s Oversight Committee.

Since October, PPH and R&S officials have been in mediation talks, which concluded earlier this week “without any positive results,” according to a PPH press release.

“This is a very serious situation when public funds are at risk,” said Bruce Krider, PPH Board of Directors chairman.

“The citizens can be assured that the PPH board and the ICOC are on top of the situation and will pursue charges and aggressively do the things necessary to resolve the matter,” Krider said.

“It’s the public’s money and we won’t tolerate this type of business practice,” said Margaret Moir, ICOC chairwoman. “As a public agency, we take the trust and responsibility given to us by the citizens very seriously.”

In the lawsuit filed, PPH is seeking a minimum of $5.1 million plus interest, lawsuit costs, economic and consequential damages, punitive and exemplary damages, and any other amounts the court deems “just and proper.”