LOS ANGELES (CN) - The AIDS Healthcare Foundation claims in court that Los Angeles County used a bogus audit to demand millions of dollars to retaliate for its blowing the whistle on the county's misuse of federal money, and for its support for a condom law for porn actors.
The AIDS Healthcare Foundation and its president Michael Weinstein sued Los Angeles County, its Department of Public Health, its Division of HIV and STD Programs and other officials, including County Supervisors Zev Yaroslavsky and Gloria Molina, in Federal Court.
The foundation claims the county retaliated against it for its demand for enforcement of the law requiring condoms on porn movies made in L.A. County, and for objecting to the county's alleged misuse of federal funding for HIV/AIDS patients.
The Health Resource Services Administration distributes federal funds under the Ryan White Comprehensive AIDS Resource Emergency Act, and the AIDS Healthcare Foundation has contracted with the county since the late 1990s to provide health-care services using the money, according to the lawsuit.
The foundation claims the county misappropriates federal funding by failing to follow statutory guidelines, by, among other things, "grossly" understating the amount it spends on administration, and failing to use the funds in a "timely and effective fashion."
It also claims the county spent federal money for a "lavish" media center.
"Rather than using its substantial funding to accomplish the goals in which it is tasked, Los Angeles County, Los Angeles County Department of Public Health, and various of their divisions and leaders, have indulged in the gross misuse of resources, waste of public funds, favoritism, professional back-scratching, and retaliation against those that hold them accountable for doing their jobs," the 39-page complaint states.
The county this year pushed through a $75 million contract with a private pharmacy administrator called Ramsell in just one day, without competing bids, the complaint states.
The foundation says it sued the county in Superior Court for violating competitive bidding rules, and won a judgment invalidating the contract in June.
After the foundation criticized the county and its officials publicly, the county reacted with "considerable hostility," the group says.
"In their latest campaign to harass, intimidate, and defame AHF [AIDS Healthcare Foundation] defendants pursued a phony audit, which manufactured findings based on inaccurate information, and is the purported basis for defendants' threatening to withhold over $1.7 million dollars in payments to AHF," the complaint states.
The county claimed that the AIDS Healthcare Foundation had overbilled $1.7 million for its services and asked it to pay the money back, according to the complaint.
The foundation claims that county officials "ramped up their threats" in the months before the general election, when the group was campaigning for Ballot Measure B, which requires porn film actors to wear condoms.
Voters approved the ballot measure in November, and it will go into effect this month, according to the lawsuit.
"In addition to creating a bogus audit and disingenuously demanding millions of dollars from a nonprofit organization, defendants have escalated their attacks on plaintiffs by parading this audit in front of other providers and the public at large," the complaint states.
The foundation also claims the county favors health-care providers who make campaign contributions, and who do not challenge or question the county's use of funds.
It claims the defendants reallocated $1.2 million to the Tarzana Treatment Center at the expense of the plaintiff's organization in the Antelope Valley.
"Defendants' retaliatory act of cutting 100 percent of its funding to AHF in Antelope Valley not only caused AHF significant monetary loss, but was done at the expense of patients, further demonstrating defendants' malfeasance and ill will toward plaintiffs," the complaint states. "Those interests directly conflicted with defendants' statutory obligations to allocate AIDS funds most effectively and with absolute undivided loyalty to the interests of the populations they serve."
The county also cut $3 million in services to HIV/AIDS patients when it refused to award a contract to the foundation group for a benefit program, according to the complaint.
"Such a heartless and irrational decision can only be attributed to a desire by defendants to punish plaintiffs for their criticism of defendants' mismanagement and ineptitude, and to eliminate any major competition for funds for defendants' favored agencies - i.e., the agencies that uncritically tow DHSP's line," the complaint states, abbreviating Division of HIV and STD Programs.
The AIDS Healthcare Foundation seeks compensatory and special damages for retaliation, violation of the False Claims Act, constitutional violations and defamation.
It is represented by house attorney Samantha Azulay.
The county did not immediately respond to a request for comment.