North Sacramento residents campaign against a mental-health chain with a troubled past

City council will vote on the last regulatory hurdle facing Signature Healthcare Services LLC this Tuesday

Woodlake neighborhood homeowners display protest signs against a psychiatric hospital proposed in north Sacramento.

Woodlake neighborhood homeowners display protest signs against a psychiatric hospital proposed in north Sacramento.


In less than a week, a psychiatric-hospital chain with a spotty record and a north Sacramento neighborhood with a NIMBY reputation will clash over the fate of a 120-bed mental-health facility.

This Tuesday, the Sacramento City Council will vote on the last regulatory hurdle facing Signature Healthcare Services LLC, which wants to build a 71,000 square-foot hospital on a 7-acre plot of grass south of Expo Parkway.

The 24-hour facility for acute psychiatric care would lie roughly 1,500 feet beyond the edge of Woodlake, a middle-class neighborhood with a somewhat fraught history of its own. Residents have long complained they’re ignored by political representatives and blighted by accumulating liquor stores and social-service facilities. Last year, a nasty public debate ignited when a card room relocated to a nearby hotel following little public input.

Despite the tetchy relationship with residents, city officials say they recorded no objections to the inpatient operation in June, when planning commissioners swiftly blessed the applicant’s rezoning request.

“We had no opposition at that time,” senior planner Lindsey Alagozian told SN&R.

That’s probably because few residents actually knew about the project or the franchise behind it.

Founded by retired Michigan psychiatrist Dr. Soon K. Kim in 2000, Signature Healthcare Services, which does business as Aurora Behavioral Health Care, has scattered eight psychiatric hospitals across Arizona, California, Illinois and Texas, amassing both fortune and fines.

In 2010, the U.S. Department of Health & Human Services collected a $104,747 fine from Signature for employing someone who “was excluded from participation in Federal health care programs,” a release states.

In 2009, Kim agreed to pay a $350,000 settlement to Michigan state health officials regarding a patient-privacy lawsuit. Then-Attorney General Mike Cox asserted that patient records were being burned at three of Kim’s hospitals, possibly as far back as 2006.

According to a Detroit Metro Times investigation in 2003, IRS and state health-care regulators, internal lawsuits and Kim’s own financial straits forced the doctor to shutter his two Detroit-area hospitals in 2000 and 2002. The Metro Times documented allegations that Kim’s practices inflated Medicare payments by extending patient stays and hospitalizing those without proper documentation.

That’s essentially what’s being argued in a whistle-blower lawsuit much closer to home.

In 2010, the United States government and a mental-health worker sued Aurora’s hospital in Pasadena for fraudulent Medicaid and Medicare billings. The complaint depicts a poorly run and sparsely staffed enterprise that contributed to eight patient deaths and “several rapes,” dating back to 2003.

“Defendants realize huge profits by billing for care and treatment never rendered,” the complaint states.

The lawsuit, being heard in the Central District of California court, is scheduled for a jury trial next spring.

The company’s real-estate attorney, Ryan Hooper, told SN&R he was prohibited from commenting on ongoing litigation, but defended the company’s track record and said the planned hospital would fill both mental-health and economic needs.

“A lot of the allegations are just that—allegations that don’t go anywhere,” he said.

The proof of that, Hooper added, is that the company’s accreditation hasn’t been threatened in its 13 years of existence. “This is one of the most highly regulated areas of business,” he asserted.

And business is “booming,” thanks to the Affordable Care Act, said Hooper. Parity laws in the act require insurance companies to provide equal access to mental-health care. Signature’s business model serves a clientele that is 80 to 90 percent insured, providing services for which the company is reimbursed.

Plaintiffs in the Pasadena lawsuit say this is how defendants were able to collect roughly $50 million in federal and state contracts, then siphon this money out of the hospital until it was “unable to meet operating costs.”

Similar allegations were made at the Detroit hospitals a decade earlier.

“The unusual part of this story is this trail of defrauding the government … goes way back in time,” said Woodlake resident Mike Acosta, a former administrative assistant at a state psychiatric hospital in Southern California, who began researching Aurora after reading about the project in SN&R. “If not for your story, we would never have even known about this.”

He and wife, Lola, have played Paul Revere in the weeks since, unearthing legal documents and unflattering media coverage, and sharing the information with their neighborhood and local elected officials.

These residents promise to be out in force on Tuesday, when the council considers the request to take a grassy commercial grid and rezone it for hospital construction.

Councilmen Steve Cohn and Allen Warren, who represent the lot and the concerned constituents, respectively, didn’t answer requests for comment before deadline.