A string of businesses owned or backed by brothers with extensive real estate and healthcare holdings earned millions through contracts with government entities in Orange County under the supervision of disgraced former Supervisor Andrew Do. Those government contracts with Larry and Gary Nguyen’s businesses have raised questions and concerns from a range of public and private entities — including the Board of Supervisors, the county’s health plan for the poor, an insurance company and a whistleblower — an LAist investigation has learned.

One multimillion dollar contract — with the firm 360 Clinic to carry out COVID-19 testing during the pandemic — is the focus of a former employee’s whistleblower lawsuit that alleges executives engaged in billing fraud.

Another concerns a property deal in Tustin between the county’s low-income health plan, CalOptima, and one of the Nguyen brother’s companies, Yorba Myrtle LLC. Under an agreement signed by Do as CalOptima’s chair, the agency had been set to buy the property for $29.5 million — 60% more than the company paid less than a year earlier — when the deal fell apart.

There are at least two probes underway into these and more than a thousand of other contracts handled by Do at county agencies over the years:

• CalOptima has hired an outside firm to audit transactions approved while Do was on their board, including the Tustin property deal. 

• The Orange County Board of Supervisors is also preparing to conduct a widespread forensic audit focused on contracts that awarded pandemic relief funds, including the COVID-19 testing contract with 360 Clinic. They expect to release a request for proposals by the end of May, the first step in hiring an outside firm to do the work.

Do pleaded guilty to a federal bribery charge and is currently awaiting sentencing for accepting kickbacks from contracts intended to feed seniors during the pandemic.

Stuart Pfeifer, a spokesperson for several of the Nguyen brothers’ businesses, declined to discuss LAist’s questions in detail but said there has been “full compliance” in 360 Clinic’s business interactions with the county.

David Tang, Gary Nguyen’s business partner in Yorba Myrtle LLC, did not respond to LAist’s requests for comment left at his office and by email. Pfeifer did not respond to LAist’s questions about the Tustin property deal.

Paul Meyer, a lawyer for former Supervisor Do, told LAist “it’s inappropriate to comment at this time.”

Here’s what LAist has learned about the transactions through interviews and public records:

The COVID-19 testing supersites

In-mid 2020, politically polarized Orange County was engulfed in a fierce debate over how serious of a risk the pandemic posed and how to address it.

At a Board of Supervisors meeting that summer, Do — one of two supervisors on an ad hoc committee formed to try to ramp up COVID-19 testing — announced a public-private partnership with a brand new company. The partnership would provide free, drive-through COVID-19 testing at the Anaheim Convention Center and the OC Fairgrounds. The plan was to test up to 5,000 people per day, which health officials said was a key step to reduce the virus’s spread and get back to normal life.

The company chosen to carry out the testing, 360 Clinic, had been formed just five days before that announcement, according to state business records.

There was no competitive bidding for the work, the full Board of Supervisors never voted on it, and the payment details were never revealed in a public meeting. Instead, the company’s contract was rushed through under a pandemic-era emergency rule.

The true cost to taxpayers

The COVID-19 testing contract with 360 Clinic was supposed to cost Orange County taxpayers nothing. State and federal rules required private insurance companies to cover COVID-19 testing. And the cost for testing uninsured people was covered under a federal program to reimburse testing providers.

Two months after the initial agreement between the county and 360 Clinic, the parties agreed to change the contract — and put the county on the hook for uncollectible claims.

Tamarra Jones, who managed the county Health Care Agency’s Health Promotion and Community Planning division at the time, oversaw the 360 Clinic testing operation for the county. She said the contract change making the county the “payer of last resort” was one of many details of the testing contract that concerned her.

“It seemed as if they were getting paid lots of money for services I could not verify,” Jones told LAist.

 She added, referring to the 360 Clinic contract and others granted to private firms during the pandemic: ”It seemed as if friends of friends were getting contracts,” bypassing normal channels.

Jones, who is now director of public health for San Mateo County, said when she raised concerns about payments to 360 Clinic, she was told by Health Care Agency leaders to “just pay it.”

Internal emails obtained by LAist through a Public Records Act request show that the insurance company Blue Shield of California also had concerns.

In 2021, the health insurance giant was investigating billing by 360 Clinic, records show. O.C. Health Care Agency spokesperson Ellen Guevara confirmed that Blue Shield was investigating, but said her agency wasn’t informed of an outcome despite efforts to follow up. Mark Seelig, a spokesperson for the insurer, wrote in a statement to LAist: “Blue Shield of California does not comment on investigations or litigation.”

Guevara told LAist in an email that Blue Shield denied payment on claims submitted by 360 Clinic and that “the County ultimately stepped in as the payer of last resort to ensure continued access to testing and vaccination services for our communities during the public health emergency.”

While the investigation was ongoing, emails between Health Care Agency leaders show that the question of whether to pay 360 Clinic for claims Blue Shield had denied got kicked up to the highest level — Supervisor Do.

“Just talked to Sup Do,” Clayton Chau, then the Health Care Agency director, texted to Margaret Bredehoft, the chief of public health services at the time, in October 2021. “We should pay 360 to fulfill our contractual obligation.”

The final bill

In the end, the county paid 360 Clinic just over $3.4 million to cover testing the company said it couldn’t collect insurance on, according to Guevara, the Health Care Agency spokesperson. Public records obtained by LAist show that among the reasons 360 Clinic leaders claimed for being unable to collect insurance was that a high number of uninsured people were showing up at testing sites, and that employees were often unable to verify their basic information to receive reimbursement from the federal government’s COVID-19 fund for uninsured individuals.

The county’s multimillion dollar payout stands in contrast to another large COVID-19 testing contract in Orange County that LAist reported on last year. That contract, for weekly testing of students and staff at the Santa Ana Unified School District during the pandemic, cost the school district nothing because the firm directly billed private insurance or the federal government for all costs of the testing.

Pfeifer, the spokesperson for the Nguyen brothers’ firms, wrote in a statement that 360 Clinic had undergone a “comprehensive, independent audit” over the past three months “ordered by legal counsel and led by a former FBI Special Agent.” He said the audit included insurance claims submitted by the company and had “found full compliance across all areas.” Pfeifer did not respond to LAist’s request for a copy of the audit.

County audit and whistleblower lawsuit

A former senior employee at 360 Clinic filed a whistleblower lawsuit alleging she was abruptly fired after voicing opposition to what she claims was billing fraud by top executives at 360 Clinic. Those allegations helped derail a deal for another of the Nguyen brothers’ businesses: CalOptima’s board unanimously voted this past February to back away from a plan to run a senior health center for Vietnamese-speaking elders in Little Saigon.

The Tustin property deal

A second business deal being scrutinized, by CalOptima, involves a property in Irvine.

One of the Nguyen brothers, Gary, formed Yorba Myrtle LLC and purchased a former rehabilitation hospital in Tustin for $18 million in November 2021.

The exterior of the Tustin property that was almost purchased by CalOptima.

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Yusra Farzan

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LAist

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Five months later, in March 2022, the county’s chief real estate officer signed a letter of intent to buy it for $22.5 million. Ultimately, the county was unable to secure the state funding it would have needed to purchase the building, and the deal collapsed.

That’s when CalOptima stepped in with an even higher offer — at first, $27 million, and then a few days later, $29.5 million, a 60% increase in the property value compared to when Yorba Myrtle bought it less than a year prior. No permits for improving the property were filed with the city of Tustin between the time Yorba Myrtle LLC bought the property and then struck a deal with CalOptima to purchase it, according to the Tustin city clerk’s office.

An appraisal report prepared for CalOptima later that year concluded that the steep price increase was justified because it “reflects a willing buyer and seller. Considering these conditions, the current purchase price is a strong indicator of market value,” the report, which was prepared by the prominent commercial real estate firm CBRE Inc., states. A spokesperson for CBRE said they could not discuss the appraisal.

Do, then CalOptima’s board chair, signed the purchase agreement on Aug. 2, 2022. It’s unclear whether CalOptima’s board approved the purchase agreement, which is legally binding, and the price was never reported in a public meeting. Two days after Do signed the agreement, materials for the board’s Aug. 4, 2022 meeting state that “the price and terms of purchase” of the Tustin property “will be considered by the Board at a future meeting contingent on receiving the necessary approvals from the City of Tustin.”

In response to LAist’s emailed questions about whether and how board members voted on the purchase agreement, Deanne Thompson, a spokesperson for CalOptima, wrote that the agreement “was never final and included diligence and zoning contingencies that could have impacted price and terms. Had the purchase agreement become final it would have required a public vote.”

In response to further questions about the purchase price and price change from $27 million to $29.5 million, Thompson wrote that she couldn’t discuss the issue because the property deal is part of “an active internal investigation.”

Ultimately, the city rejected the proposed facility and the property deal fell through.

Still, Yorba Myrtle LLC collected $450,000 in forfeited funds that CalOptima had put into escrow, according to figures provided by Thompson.

What became of the Tustin building?

The Tustin hospital property ultimately sold earlier this year to another health care company. The price was $19 million — $10.5 million less than CalOptima had offered. LAist spoke with Tom Jurbala, director of business development for Generations Healthcare, which bought the property and plans to open a skilled nursing facility there. Jurbala said his company had considered bidding on the property when Nguyen first put it up for sale, but decided it wasn’t the right time for the company.

Asked whether he thought it was unusual that CalOptima had planned to buy it for so much more than he paid for it, Jurbala said “no.”

“They have their own parameters, I’m sure,” he said before adding: “I wouldn’t buy it for $29 million, I can tell you that.”

Senior Reporter Ted Rohrlich contributed to this report.

Caption on lead photo: Gary Nguyen, left, co-founder of 360 Clinic, along with 360 Clinic Dr. Dung Trinh, center and 360 Clinic CEO Dr. Venessa Ho attend the opening of the new COVID-19 testing clinic at Anaheim Convention Center, in July 2020