California to end contracts with AIDS Healthcare Foundation

California will no longer contract with the AIDS Healthcare Foundation to provide healthcare plans for hundreds of HIV-positive patients in Los Angeles County after the state accused the high-profile nonprofit of using inappropriate tactics during collective bargaining.

The foundation and its controversial founder, Michael Weinstein, are a powerful political force in California, with the group funding rent control measures, challenging Los Angeles planning decisions, and driving statewide initiatives to reduce the cost of prescription drugs and porn performers’ wearing asking for condoms. Weinstein called the state’s move “pure retaliation” for his group’s push for higher interest rates.

According to the Department of Health Care Services, the foundation last year sent a letter to its health care enrollers, alerting them that they were no longer providing their care. At the time, the department was negotiating the monthly rate the state would pay per enrolled to AIDS Healthcare. A department official said the state had no plans to end the contract at the time the foundation notified its members that it would stop providing care.

The letter is said to have fueled fear among the 770 HIV-positive patients contracted for by AIDS Healthcare, prompting the state to call the move an improper negotiating tactic and a breach of contract.

“DHCS’s priority is to ensure the health and well-being of all Medi-Cal members, which is why we are not extending Medi-Cal’s managed care contract with the AIDS Healthcare Foundation beyond the current contract expiration date of December 31, 2022 will be extended,” Michelle Baass, director of the state Department of Health Care Services, said in a statement Thursday. “We will take all necessary steps to support members as they transition to other plans, including maintaining continuity of care.”

AIDS Healthcare has 67 outpatient health centers and 55 pharmacies in 17 states, including California, Florida, Georgia, New York and Texas, according to the most recent 2019 tax returns. Outside the United States, the foundation operates more than 400 health centers. The majority of the foundation’s $1.4 billion in annual revenue comes from pharmacy income.

Weinstein said the foundation’s negotiations to increase rates went nowhere last year, when AIDS Healthcare told patients it would end services at the end of 2021.

“They said we scared the patients,” Weinstein said. “This is the bureaucracy that cares more about the power to bounce vendors when they say bounce.”

The state said the foundation could not unilaterally end the contract last year, and collective bargaining continued.

“The result of the controversy was higher rates,” Weinstein said. “We never wanted to end the contract. … We subsidized this plan with millions of dollars a year.”

AIDS Healthcare began in the late 1980’s with a narrowly tailored mission to provide end-of-life care to people dying of AIDS, but its advocacy has expanded over the years. Now, AIDS Healthcare is one of the largest — and most controversial — nonprofits that has branched out into housing and several other areas. The contentious group is the subject of a mountain of lawsuits.

Weinstein’s flaming style of advocacy prompted a longtime Los Angeles County supervisor to call him a “thug.”

“Their approach is burn the house, take no prisoners,” said Steve Maviglio, a Democratic political adviser who has served as a spokesman for campaigns opposing statewide ballot measures backed by AIDS Healthcare.

“They will do whatever it takes to get their way,” added Maviglio, who filed a complaint against the group with the Fair Political Practices Commission this month. Maviglio claims AIDS Healthcare did not report campaign spending saying the foundation had hired people to protest outside his home in 2020.

AIDS Healthcare has a long track record of challenging Los Angeles officials in planning decisions. The group has tried for years to block multi-story real estate projects in Hollywood and elsewhere, filing lawsuits and launching public relations campaigns.

The foundation has used the ballot box to try to change California’s housing policy, spending millions in 2018 and 2020 on initiatives to expand rent controls statewide. Voters firmly rejected both efforts. It sponsored Measure S, a 2017 voting initiative aimed at halting approvals for new high-density developments in Los Angeles for two years. Proponents said it was necessary to curb gentrification, but voters slammed it by a wide margin.

The foundation has also opposed proposals in the Statehouse to boost California’s housing supply, including several by Sen. Scott Wiener, a San Francisco Democrat who is campaigning for zoning changes to allow for multifamily projects.

The foundation rejected a 2019 bill to force local governments to allow more apartment buildings and other high-density housing developments near transit and work centers, which failed, and then last year fought a modified version of the proposal. After Newsom signed the amended measure, Senate Bill 10, AIDS Healthcare sued to block its implementation, claiming that it allows local governments to override voter-passed initiatives.

In December, the foundation also filed a lawsuit after the Los Angeles City Council released its Housing Element, a blueprint that local officials were preparing to add hundreds of thousands of new homes over the next eight years. The group claimed the city violated environmental codes in approving their plan and would drive more gentrification and displacement of vulnerable people.

AIDS Healthcare also clashed with Los Angeles City and County officials over audits that found the nonprofit overbilled the county for HIV/AIDS-related services in 2011 and 2012 and incorrectly billed the county for services in had billed for which it should have paid from other funding sources in 2008 and 2009.

Claims based on these audits were dismissed in Los Angeles Superior Court. In one of those lawsuits, the foundation argued that the audit results were a form of retaliation for its expressed views on policies with which the district disagreed. A judge dismissed that case in 2014, noting that the foundation had sued “to gain a tactical advantage in its ongoing political battles” with the county.

Times editors Hannah Wiley in Sacramento and Laura J. Nelson in Los Angeles contributed to this report.

https://www.latimes.com/california/story/2022-06-30/california-aids-healthcare-foundation-state-contract California to end contracts with AIDS Healthcare Foundation

Alley Einstein

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