Long-standing laws protected Hacienda HealthCare

Hacienda HealthCare, which operates the facility where an incapacitated patient was raped and became pregnant, has a history of special protections from the state of Arizona.

The non-profit company operates the only private facility of its kind in Arizona and there’s a reason for that — a state law that allowed the non-profit to have a monopoly in the private, intermediate-care market.

“They had all the negotiating power. The state had to pay whatever they were asking, even if it was the highest rate in the country,” said Christina Corieri, senior policy adviser to Gov. Doug Ducey.

Ducey’s staff noticed problems with Hacienda HealthCare in the weeks before Ducey took office in 2015, and initiated a successful change in the law to remove the company’s monopoly during Arizona’s 2015 legislative session.

In addition, a separate Arizona law that is still on the books has allowed the company’s intermediate-care facility where the woman gave birth to operate without a state license since 1997.

State Sen. Heather Carter, R-Cave Creek, said she plans on introducing a bill that would change the 1997 law and force intermediate-care facilities to be licensed by the state.

If passed, the bill is likely to get support from Ducey. The governor’s office is aware of the exemption and is looking at giving Arizona a greater oversight role so that intermediate-care facilities are treated the same way as other Arizona health-care facilities, Ducey spokesman Patrick Ptak said.

Hacienda HealthCare has been under intense scrutiny since news broke earlier this month that a 29-yearold, non-verbal, incapacitated patient at Hacienda’s intermediate-care facility in Phoenix was raped and on Dec. 29 gave birth to a boy. A 911 call during the birth indicated that none of the staff knew the woman was pregnant.

On Dec. 31, William Timmons, the longtime CEO of Hacienda HealthCare, stepped down, and on Jan. 7 he left the company altogether. The facility has agreed with a state directive to hire a third-party manager to handle operations.

The Phoenix Police Department on Wednesday arrested one of the patient’s caregivers, licensed practical nurse Nathan Sutherland, 36. He is charged with one count of sexual assault and one count of vulnerable adult abuse.

Ducey called on entire Hacienda HealthCare board to resign after detailed how Timmons was allowed to continue on the job after multiple accusations of sexual harassment and questionable behavior.

In 2015, Hacienda de los Angeles, the Hacienda HealthCare facility where the woman was raped and gave birth, was the only private, intermediate-level facility allowed to operate in Arizona.

The reason for that monopoly was a state law that said the only private intermediate-level care facilities allowed to operate in Arizona were those that were under the contract with the state on or before July 1, 1988.

And the only private facility that qualified under that law when it came to the attention of Ducey’s staff was Hacienda HealthCare’s intermediate-level facility — Hacienda de los Angeles, 1402 South Mountain Ave.

In other words, Arizona law was giving Hacienda HealthCare a statutory monopoly in the intermediatecare market.

“It’s not something you usually see in a libertarian state like ours,” said Will Humble, executive director of the Arizona Public Health Association. “Private-sector competition is seen as what drives innovation and efficiency.”

Former Gov. Jan Brewer was a Republican legislator and co-sponsor of Senate Bill 1418, which appears to be the origin of the 1987 state law.

Brewer told on Tuesday that 1987 was her first year in the Senate and that she doesn’t remember the legislation or why it passed. She does remember visiting Hacienda HealthCare a couple of times, but that’s all.

The Arizona Legislature changed the law in 2015 as part of a larger Senate bill sponsored by then-Senate President Andy Biggs, R-Gilbert, that reduced cash assistance and refined requirements on the child-removal process through the Department of Child Safety. The impetus for the change came from Ducey’s staff. As Ducey prepared to assume his first term as governor, his staff noticed Hacienda was raising its rates and charging more than the national average for patients in intermediate care, Corieri explained.

Over the eight years leading up to 2015, Hacienda had raised its per-patient day rate by a total of 46 percent, Corieri said. The daily rates it was charging were more than quadruple the average national rate, raising, “serious questions.” she said.

A closer look at Hacienda revealed an even more troubling fact — that Arizona law was giving the nonprofit facility special power to charge those rates.

“That’s not right in any case. Our office felt it was not appropriate for a vendor to have a statutory monopoly and we approached the Legislature for the request to remove that language,” Corieri said.

Records show Tim Jeffries, then the director of the Arizona Department of Economic Security, first alerted Ducey that Hacienda was a “threat” in 2015.

Jeffries repeated his concerns in updates to the governor every three months until 2016, when a criminal probe was launched over allegations that Hacienda billed the state more than $4 million in bogus charges.

Jeffries told his concerns were driven by reports from case managers about patient care and by Timmons’ refusal to turn over financial records.

The criminal case was dropped in 2017 with no charges filed. The state’s Medicaid agency later sought an order to force Hacienda to turn over financial records — a battle that continues in the courts.

Hacienda de los Angeles continues to be the only private intermediate-care facility in Arizona.

There are intermediate-level care facilities in Arizona for people with intellectual disabilities at six locations, and all but Hacienda de los Angeles are run by the state.

Hacienda de los Angeles also continues to have an exception under Arizona law.

That’s because intermediate-care facilities in the state do not need state licenses, an exemption that is getting heightened scrutiny from public health officials in the wake of the rape case.

The law exempting them from normal state licensing requirements was passed in a bill sponsored by Laura Knaperek, a former Republican lawmaker who died in 2016, and Bob Burns, another Republican lawmaker at the time who now is chairman of the Arizona Corporation Commission.

When reached by Burns said he doesn’t specifically recall the bill and suspects it was Knaperek who did the research on it and persuaded him to sign on to the legislation.

It could have been that Arizona had a chance to save money by not “dual monitoring” the intermediate facilities along with the federal government, but that’s just a guess, Burns said.

“I was appropriations chair at that time and up to my eyebrows in budgets,” he said.

Burns could not recall the origin whether any entity lobbied for it.

Hacienda HealthCare’s website includes an article about Knaperek’s “tireless advocacy” for Hacienda, calling the longtime Tempe legislator one of Hacienda’s “strongest most effective supporters,” and says it has a nurse education training scholarship named in her honor. of the law, nor