Hawaii Healthcare Professionals Inc., a Honolulu home care business founded in 1995, is being investigated by the state for unpaid wage claims filed by nine current or former employees. The state and the Internal Revenue Service also have active liens against the company totaling $1.76 million for late payroll tax payments and unemployment insurance contributions.
The company said earlier this year that it had lost nearly half its staff of 105 employees since mid-2010 and closed its Maui division due to problems with Medicare and other insurance reimbursements.
When asked last week about the tax liens and unpaid wage investigation, Hawaii Healthcare owner Carolyn Frutoz-de Harne said the taxes have been paid in full and all but two employees have been compensated. She didn’t provide documentation verifying those payments as of late Friday, despite repeated requests.
According to documents filed with the Hawaii Bureau of Conveyances, the IRS filed liens totaling $1.72 million against Hawaii Healthcare for failure to pay employee withholding taxes starting in 2004, while the state liens totaled $39,990 for failure to pay unemployment insurance contributions from 2007.
A 2010 IRS letter sent to a Hawaii Healthcare client states that the federal agency is "attempting to collect delinquent taxes" and requests that any payment due to Hawaii Healthcare be paid instead to the U.S. Treasury.
Pam Martin, administrator for the state Department of Labor and Industrial Relations wage standards division, said the state is investigating nine cases filed since November by Hawaii Healthcare employees who say they were not paid wages they earned. The claims range from less than $100 to several thousand dollars, Martin said.
The company’s former bookkeeper, Ka’imi Kaupiko, said employee paychecks began bouncing last year when the government started garnishing Medicare reimbursements to pay the company’s back taxes.
"We were writing checks we couldn’t cash," said Kaupiko, who left the company on Jan. 20 and is one of the workers who filed a claim with DLIR for $432 in unpaid wages. "A majority of the time, she (Frutoz-de Harne) wouldn’t pay employment taxes. She didn’t have the money. That’s the real reason she’s in this situation, because of her taxes. Slowly but surely employees were leaving — people were fed up with it already."
Frutoz-de Harne said the IRS garnished $856,000 from Medicare payments last year, and the company paid another $565,000 toward the tax liens. She said her financial troubles have primarily stemmed from the economy and failure of payers, including Medicare, to provide reimbursements in a timely manner.
Before its current tax problems, the company had about a dozen tax delinquencies dating back to 1997 filed with the Hawaii Bureau of Conveyances. Those delinquencies were resolved, the documents show.
Frutoz-de Harne also said she is checking with employees to make sure they have been paid.
"We’re making calls to everyone we know who was on payroll, making sure if they haven’t gotten paid they certainly should be getting paid and we will rectify the situation," she said. "If we didn’t want to pay people, we would’ve just closed our doors."
There have been 17 unpaid wage claims filed against the company since 2008, some of which were resolved this month, said Martin at the state Labor Department.
Hawaii law requires employers to pay workers at least twice a month and within seven days of the end of the pay period.
Former caregiver Mark Arrambide said he left Hawaii Healthcare in January and that he is still owed about $1,500. "Every time I go into the bank, there’s either insufficient funds or they’re not supposed to cash the check right now," he said. "I’m way behind on my bills right now. I didn’t want to quit, but if I wasn’t going to get paid, I can’t afford to keep working for free."
The financial troubles have affected the quality of care, said one client.
Anahola resident Ka’e’e Ahloo, 50, hired Hawaii Healthcare to help with her 20-year-old quadriplegic son, Mike Nizo. The care was repeatedly disrupted when at least four caregivers abruptly quit, she said.
"I was very upset that highly-qualified employees and needy clients would have to deal with this. It’s stifling his progress," she said.
Nizo, who became quadriplegic after jumping off Hanalei Pier and breaking his neck in 2004, suffered a heart attack and stroke last year and hired the company in June for occupational, speech and physical therapy and nursing care several times a week.
But over the past eight months, "we’re lucky if he had three months of therapy," said Ahloo, who filed a claim in December with the Hawaii Better Business Bureau for services paid for but not completed.
Within the first two months of hiring the company, there started to be turnover, with workers quitting before completing the doctor’s prescribed therapies, she said.
"People weren’t completing the prescription. … After only a month of coming, they’d stop," Ahloo said. "A few weeks later the company would send out a new person. We would have a few sessions, then again (the worker) would say I can’t complete treatment."
Frutoz-de Harne said she wasn’t aware of any problems with Nizo’s service or any claims filed with the Better Business Bureau.