complaint·July 14, 2023

Complainant alleges that the Provider is deliberately overstating operating costs and under estimating revenue in the budget, increasing the Net Operating Income (NOI) over budget which is in violation of Health & Safety Code (H&SC) §1788(a)(22)(B) which states that “…changes in monthly care fees shall be based on projected costs, prior year per capita costs, and economic indicators.”, which in the complainant’s opinion excludes operating profits. The Department interviewed Ezekiel Griffin, Executive Director -Stoneridge, on March 1, 2022 and March 9 and Warren Spieker, Managing Partner of Continuing Life, Inc. on December 14, 2022 and received and reviewed the following documents: • PowerPoint presentations utilized at Budget planning meetings • FYE 2021 Quarterly Financial statements • Audited financial statements Statement of Operating Activities for the periods FYE 2019-2021 • FYE 2020 – 2023 Budget Presentation PowerPoints provided to compare. • Form 7-1 Annual Report Instructions Upon completion of review, it was observed that while the projections exceeded the actual revenue and expenses, the percentage of difference was reasonable, less than 4%. Additionally, the statutes do not dictate that a Provider must utilize a specific formula to project costs and revenues, it just states they must be based on projected costs, prior year per capita costs and economic indicators. While projected the costs were more than the actual expenses and revenue, there is no indication that the costs/expenses were deliberately overestimated, nor the projected revenue understated. The statutes do not state that a provider’s profit is disallowed by statutes determining the MCFI, however the Form 7-1 instructions do require the provider to explain how those funds will be used and or distributed. Therefore, the Department finds the allegation “unfounded” due to the satisfactory background information submitted to the Department and relayed to the residents during the budget planning meetings. -- Complainant alleges that the Provider and managing partner failed to keep minutes pertaining to decisions made that violates H&SC §1771.8(h) that requires, “… a provider shall maintain, as public information, minutes of the meetings held by the provider's governing body.” The Department reviewed the statutes associated with the allegations and confirmed that due to the Provider being a Limited Liability Company, they do not have a governing body and therefore are not required to maintain minutes. The Department has determined that this allegation is “unfounded” due to lack of evidence identifying that the Provider held meetings with a governing body.