Lawsuit Filed Against LA County, Board of Supervisors & Dir. of Public Health
05 Dec, 2013
On December 2nd, William F. Kruse and Roland Trinh (pictured) of Lagerlof, Senecal, Gosney & Kruse LLP filed a lawsuit in the Los Angeles Superior Court on behalf of the Los Angeles County Association of Environmental Health Specialists against the County of Los Angeles, its Board of Supervisors and Dr. Jonathan E. Fielding, the Director of the Department of Public Health (“DPH”).
The suit alleges that the defendants mismanaged Environment Health’s S7K Trust Fund (“S7K Fund”), a segregated account established specifically for the department of Environment Health pursuant to a 1999 Court Order, thereby breaching its fiduciary duty.
The Los Angeles County Association of Environmental Health Specialists is an employee organization organized under State statute represented by Local Teamsters 911. It is comprised of more than 500 members who are employees of Environmental Health, a department within DPH that conducts health inspections to assess environmental conditions to reduce and protect the public’s exposure to health risks. They are most recognizable as the health inspectors that examine and issue letter grades to restaurants and other food establishments throughout the County. Environment Health is the only fee generating department of DPH.
Background: The 1999 Court Order
In 1994, the Los Angeles County Association of Environmental Health Specialists and a taxpayer filed a lawsuit against the County Board of Supervisors alleging the mismanagement and misappropriation of fees in connection with the County’s health inspection program (Amjadi v. Board of Supervisors, LASC Case No. BC 110446). The case resulted in a finding that the County had inappropriately allocated to the County’s general fund moneys that should have been used solely for the health inspection program. On May 12, 1999 a judgment was entered ordering more than $10 million in fees collected from the issuance of health permits and licenses be solely used for the health inspection program, that health inspection fees not be raised until the $10 million is exhausted, and required that the County establish a segregated account for the deposit of the $10 million as well as the deposit of all future fees generated from health inspections. Pursuant to the court order, the County established the S7K Fund.
Through an extensive review of financial statements conducted by its legal counsel and the accounting firm of Maginnis Knechtel & McIntyre, the Association has discovered and alleges that since April 2010, and possibly earlier, the S7K Fund is repeatedly in a “net creditor” position, i.e., a balance is owed to the S7K Fund. The current suit alleges that money generated by Environment Health was not deposited into the segregated S7K Fund pursuant to the 1999 court order, but instead was commingled with moneys in the County’s general fund.
“The mismanagement of the S7K Fund is a violation of the 1999 Court Order,” said Mr. Trinh. “The County’s practice of collections of Environmental Health inspection fees completely defeats the purpose of a ‘segregated account’ as mandated by the Court Order. As a result, funds that should be available for the operation of Environment Health are not, and the department has experienced cost cutting measures that have resulted in diminished or deteriorating health inspection services for the community, and simply fewer health inspections generally. This is resulting in worsening public health standards in Los Angeles County. Furthermore, salaries for Environmental Health Specialists have seen little to no increase, despite the fact that health inspection fees charged to business owners throughout the County continue to increase.”
The lawsuit does not seek money damages from the County, but merely injunctive relief. Specifically, the Association wants the County to segregate all fees generated by Environmental Health and not commingle it with any other County moneys. The suit alleges all such fees should be deposited into the S7K Fund and maintained solely for Environmental Health pursuant to the 1999 court order. The Association also seeks an independent audit of Environmental Health revenues for the past three fiscal years.
On April 24, 2013, the Association through its counsel sent a letter to the Chief Executive Officer of the County informing him of its findings, emphasizing the consistent net creditor position of the S7K Fund and the decrease in overall revenue of Environmental Health. Neither the CEO nor the County formally responded to Plaintiff’s letter, which led to the filing of the lawsuit.