Ex-DPH chief testifies he only learned about $1.7M healthcare scam in 2011

Former Department of Public Health Secretary Joseph Kevin P. Villagomez yesterday testified that he was not aware that Melvin Ada was stealing almost $2 million from the Commonwealth Health Center during a seven-year period and that he only learned about the scam sometime in 2011.

Villagomez was among nine witnesses that the U.S. government called to the stand yesterday in the ongoing jury trial in federal court of Leyda I. Ada, who is accused of conspiring with her husband, Melvin, to perpetrate healthcare fraud exceeding $1.7 million.

When Saipan Tribune left the courtroom yesterday afternoon, Bank of Hawaii Garapan branch manager Rosa Sumar, the ninth U.S. government witness for the day, was still on the witness stand. She has yet to complete her testimony. The trial will resume today, Friday, at 8:30am.

Villagomez testified that in July 2011 some people at the Department of Finance informed him that MMS, the supplier to CHC of medical supplies and equipment, particularly for hemodialysis patients, put on hold again their supplies due to non-payment.

Villagomez is now the Superior Courts family court manager. He served as public health secretary from 1999 to 2002 and from 2006 to 2011.

Villagomez testified that he was surprised because he signed the papers for payment of supplies, but he was told that the check was released to Melvin.

He said he learned that apparently MMS allowed Melvin to pick up the check and deposit it to the company’s account.

When he was told that Melvin was not coming to work for about two weeks already, Villagomez said he asked one of the staff to track Melvin down so he will know what’s going on and look at his desk because maybe the check for payment was there.

Villagomez said Melvin could not be found, but they discovered from his desk a box that contained a lot of purchase order documents.

He said they noticed from the documents that prices for supplies were changed, such as, for example, the original amount was $500, but the fabricated document indicated like $1,000.

“Obviously I was very worried,” said Villagomez, adding that he also found a lot of bank deposit slips in large amounts.

Villagomez said he then contacted their legal counsel, assistant attorney general David Lochabay, from the Office of the Attorney General’s Civil Division.

Villagomez said he showed Lochabay the documents, explained to him the circumstances, and asked that investigation should be initiated.

He said Lochabay told him that then-attorney general Edward Buckingham should be notified about the case so they later drafted a letter for Buckingham.

Villagomez said Buckingham replied that he would act on it.

Villagomez said he checked with human resources and found out that Melvin already surpassed the limit of days for being absent without official leave, which are grounds for his termination.

He said he drafted a letter that gave Melvin the option to resign. After a few days, Melvin resigned.

Villagomez said he asked point blank Joe Ichihara, Melvin’s father-in-law, whether he knows about Melvin’s scam, but Ichihara denied it.

He said he informed Ichihara that he initiated an investigation.

Villagomez said Medicare has been paying from $10 million to $12 million a year to CHC and of that amount $10 million is for hemodialysis alone.

Villagomez said Melvin was first assigned at CHC’s Material and Supply and that his father-in-law, Ichihara, was head of that office.

Melvin was then subsequently assigned to finance or accounting in the hospital because he has a background in purchasing.

Villagomez said he noticed that Melvin was missing work for a lot of days, often sometimes not providing notice at all.

He said once he asked Melvin what’s going on and he told him that his wife, Leyda, is sick and seeing a native healer and that part of the treatment is to move to Chuuk to address the problem.

“Absenteeism with Melvin was a problem,” Villagomez said.

He also remembered seeing Melvin driving a very nice Suzuki SUV, a sports car, and a black Nissan truck.

“He came with different cars,” Villagomez said.

During cross examination by attorney Mark Hanson, counsel for Leyda Ada, Villagomez said at that time he was not aware that MMS, a corporation in the U.S. mainland, has a representative on Saipan.

Villagomez said he was also not aware that the now Commonwealth Healthcare Corp. acting chief financial officer Corazon Pablo Ada, who then worked in the hospital’s finance or accounting section, investigated Melvin for the purported scam in 2008 and reported the matter to her supervisor.

Paul Guerrero, a friend of Melvin was also among the U.S. government’s witnesses yesterday. He testified, among other things, that Melvin at a time owned from eight to 10 cars.

Guerrero said he and Melvin became friends in 2005. He said Melvin asked him to work on old cars to make them nice.

Guerrero said in 2009 he had his first son so he “slowed down” so they were not seeing each other frequently between that year and 2011.

Guerrero said in 2011, Melvin told him that he was in trouble and that he needs to sell some of his cars.

Guerrero agreed with Hanson that Leyda Ada was not part of his and Melvin’s discussions about selling cars.

He said he was not aware that Melvin was stealing close to $2 million from CHC at that time.