AIDS Healthcare Foundation claims victory as court throws out lawsuit over its billing of L.A. County

The AIDS Healthcare Foundation, long at battle with Los Angeles city and county officials over policies and payments, claimed a victory recently when a court dismissed a lawsuit involving charges that the foundation had overbilled L.A. County for HIV/AIDS-related services.

The Los Angeles Superior Court in May dismissed a lawsuit filed by the foundation over claims that the county had conducted flawed audits, as well as a countersuit by the county for breach of contract.

“We’re a big organization, and that makes us a big target, but the sum total of it is that AHF is clean as a whistle,” said foundation President Michael Weinstein in an interview.

The AIDS Healthcare Foundation is a Los Angeles-based nonprofit organization that provides HIV/AIDS prevention services, testing and healthcare globally. The group became well known in L.A. earlier this year for bankrolling Measure S, a highly contentious ballot measure that would have put a temporary moratorium on certain development in the city of Los Angeles.

Weinstein and his foundation had previously sparred with city and county officials over efforts to require and enforce condom use in the adult film industry and to separate the city of Los Angeles from the jurisdiction of the county’s health agency.

The dispute over billing began in 2012, when an audit concluded that the AIDS Healthcare Foundation had charged the county for services it should have paid for using other funding sources, to the tune of $1.7 million in 2008 and 2009.

A second audit, completed in 2014, found that the foundation had overbilled the county by $3.5 million in 2011 and 2012.

Because the foundation was reimbursed for those services through a dedicated federal funding stream, the county was left on the hook to repay the federal government and sought to recover the money. The foundation sued to invalidate the audit findings.

In a separate lawsuit, the foundation argued the audit findings were a form of retaliation for its outspoken views on policies with which it and county officials disagreed. In early 2014 a judge dismissed that case, finding that the foundation sued not to protect its 1st Amendment rights, as it claimed, but “to obtain a tactical advantage in their ongoing political battles” with the county.

An appeal on that case is still pending, Weinstein said.

The billing case was dismissed in May, after a county review of the foundation’s billing practices found that the foundation had not charged the county for $6 million in expenditures that were allowable under the federal funding stream, known as the Ryan White Comprehensive AIDS Resources Emergency Act.

The dismissal means neither the foundation nor the county will have to repay any funds.

Attorneys for the county declined to comment, citing ongoing litigation.

The AIDS Healthcare Foundation claimed a second victory late last month when a judge decided in its favor in a whistleblower case in Florida.

That lawsuit involved charges filed by three former employees that the foundation engaged in an illegal kickback scheme, awarding employees bonuses for referring clients to services the foundation itself provided. The judge in that case sided with the foundation, noting that the law allows for such payments and referrals in certain circumstances.

Weinstein said the bad publicity from the lawsuits, particularly over the audits, had hurt the foundation’s reputation and ability to provide services. He acknowledged the years of battle with the county but said with the election of two new supervisors last year, “we really would like to put the acrimony behind us.”

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