PHOENIX — A prominent Valley therapy clinic that receives state reimbursement funds to treat special needs children delayed payments to therapists for weeks and months at a time, and still owes an unknown number of them compensation.

12 News has also learned that Head To Toe Therapy, Inc. hired a business consultant who was previously convicted of theft and fraud to make decisions for the company during financial troubles.

The clinic’s owner says only “a handful” of therapists received late payments and that most have been paid back. But nine therapists who spoke with 12 News allege they are owed money ranging from $1,500 to $13,000 and they say the scope and depth of the problem may be deeper. A tenth therapist who spoke with 12 News said he was recently paid back the remaining money he was owed earlier this month.

When pressed to specify how many therapists are still owed money, an attorney representing Head To Toe Therapy, Inc. said on Thursday they are waiting for information from an accountant to answer that question.

12 News has no evidence of intentional wrongdoing by anyone associated with Head To Toe Therapy and the company’s attorney maintains that the company’s problems started with a “cash flow issue” during an attempt to update a billing procedure nearly a year ago.

Head to Toe is a privately owned therapy clinic that receives money and patient referrals from the state.

Now the state is working to get answers. The Arizona Department of Economic Service (DES) Division of Developmental Disabilities (DDD) has opened an investigation. DDD investigators are scheduled to meet with the company this week.

“As a result of nonpayment to their therapists, services to DDD members were not provided. As such, DDD will be addressing this issue with Head to Toe as it is a violation of their contract,” said DES Press Secretary Brett Bezio.

“It broke my heart to leave”

The company’s financial problems have had a ripple effect. Nine former therapists who worked as independent contractors for the company provided interviews to 12 News, most on the condition of anonymity for fear of retaliation. They allege they are still owed compensation dating back to as early as April. The therapists describe the past year as a time of personally being delinquent on household bills, eating at food banks, borrowing money from others and watching their credit damaged while they waited for paychecks.

“Personally, it has been a big burden on my family. Financially it has wrecked my credit,” said a current therapist with the company who said he was owed as much as $4,500 at one point but has since been fully compensated. “The big thing now is it looks like Santa will not be coming.”

Families that qualify for state aid appeared to have suffered consequences as well. Because unpaid therapists were quitting, families referred to the company for speech and physical therapy services were left in limbo.

“Scheduling was disorganized. And that’s what parents would complain about, not getting their children in,” said one therapist who declined to be publicly identified out of fear she would not be paid more than $7,000 still owed to her. “Therapists were basically forced to double-up or triple-up sometimes, depending on the day. They (children) weren't getting that one-on-one that we were supposed to be giving them.”

The therapist said she ultimately felt she had no choice but to leave.

“It just broke my heart to leave because the whole reason I knew I wanted to be a therapist, from a very young age, was for the children,” the therapist said.

According to a statement from the company’s owner and chair Bridget O’Brien, there were five reasons dating back at least a year for why the company stopped paying independent contractors on time.

“These have been challenging times for Head to Toe. For more than 10 years we’ve been honored to serve Arizona’s children providing speech, physical and occupational therapies,” O’Brien said in a written statement to 12 News. “We look forward to closing this chapter and doing right by all and thanks to all of the dedicated therapists who work with us to continue helping Arizona’s children.”

Reasons for not paying therapists

Arizona Department of Economic Service secures contracts with vendors like Head To Toe Therapy through an application process for the purpose of providing disability services to families that qualify. As a “qualified vendor” of the state, Head to Toe Therapy is responsible to provide payroll to its therapists for services authorized by Division of Developmental Disabilities. The clinic has 16 employees and it pays a separate unknown number of independent contractors who work as therapists.

Some of those contractors work at the clinic located at 7th Street and Missouri Avenue in Phoenix. Others provide in-home services to families. Head To Toe Therapy also rented space in the East Valley from the Florence Unified School District, according emails.

Because the therapists operate as “independent contractors” they are not traditional employees who are guaranteed a salary and benefits. Head to Toe Therapy typically paid independent contractors on a monthly basis, the company said.

O’Brien provided to 12 News a statement of five reasons for the company’s financial troubles over the past year. Some of those reasons, and the timing of when contractors were told of those reasons, appear to be disputed by the DDD and therapists.

For example, according to the statement from O’Brien, Head To Toe Therapy learned through a recent state audit by DES that it owed the state money.

“A recent audit by the Department of Economic Security showed that our independent contractors were submitting incomplete paperwork resulting in a substantial reimbursement back to the state and therefore delaying some payments to our therapists,” the statement reads.

However, DES says there hasn't been an audit of Head To Toe Therapy since 2015.

“DDD (a division of DES) has not completed an audit on Head to Toe since 2015, and there have been no claim disputes in 2017 or 2018,” DES spokesperson Brett Bezio said.

The current and former therapists who spoke with 12 News say the company only first mentioned concerns about improper or incomplete paperwork this summer. By then, several other reasons had already been given to therapists for the company’s financial struggles including computer billing system errors and a “loan shark” episode that drained the company of its accounts, emails show.

A former longtime therapist for the company said if indeed the problem amounted to “paperwork” deficiencies exposed by an audit, as O’Brien stated, then she doesn't understand why she still has not been paid.

“I have sent my billing statements. I have sent in all of my progress reports. I have sent in all of my daily notes. I have texted numerous times the amount that I am owed, and still haven’t received full payment,” said Rebecca Downs, a speech language pathologist who said she is owed $13,000 dating back to June.

In addition to the audit from DES, computer problems in January 2018 caused another major issue, O’Brien said.

“Head to Toe attempted to enhance its billing procedure to better serve its clients and therapists. After months of work converting all of the data to the new billing system, the new system did not work as well as anticipated,” O’Brien wrote in her statement.

It then took weeks to transition back to the old system and “payments from insurers and the Department of Developmental Disabilities were delayed for weeks to months,” O’Brien said in the Oct. 5th statement to 12 News.

In the event of any financial setbacks, clinics like Head To Toe that are approved vendors of DES are supposed to have three months’ worth of reserves available to pay subcontractors, according to a spokesperson for DDD.

Between Jan. 1 and June 12 of 2018, the DDD paid Head To Toe Therapy a total of $2.1 million in reimbursements, Bezio said.

O’Brien made references to a computer issue in a March 7th email in which she stated that checks were going to be late and that she tried to sell her home to pay the therapists. O’Brien blamed “a software provider” for not fulfilling its part “submitting billing claims.”

“For those of you who absolutely need the money today, you can contact me and let me know exactly how much you need and I will try to get a loan so I can try and get you the money,” she wrote in the email.

Hiring a convicted felon for “business-related concerns”

O’Brien also tells 12 News she made poor business decisions.

“A short time later (after the computer problems) I was diagnosed with cancer and while undergoing chemotherapy I made some poor decisions with regard to hiring management and financial assistance,” O’Brien wrote in her statement to 12 News.

A cancer diagnosis is also referenced in a March 15th email in which O’Brien wrote she wanted to “clear up rumors” and said she would be starting cancer treatment.

“I do have cancer and it has progressed more rapidly than originally expected,” she wrote.

O’Brien listed in the email other medical, personal and financial struggles involving her family. She added that she had secured a contract with “an extremely qualified IT/Web developer” to work on issues facing the company, she wrote.

In a follow-up email dated March 24, O’Brien said she could “hand out a percentage of the checks” but that it “would depend on when the state makes a deposit.”

Then on April 17, O’Brien announced to therapists they should direct some “business-related concerns” to Jack Mitrey, manager of a consulting firm, Circle Consulting LLC.

“Please give Jack and Circle Consultants a warm welcome and provide them with all the support they need as they carry out my plans to make H2T (Head To Toe) better,” she wrote.

Mitrey and O’Brien, formerly engaged, have a history together that dates back more than a decade, according to court records. There would seem to have been reasons not to trust Mitrey with financial matters.

The 50-year-old entrepreneur was convicted of felony theft in 2001, according to court records in King County, Washington. Mitrey was later convicted of mail and wire fraud in 2006 for an attempted scheme to steal nearly $1 million from a previous employer, according the U.S. District Court in the Southern District of Ohio.

In respect to that 2006 conviction, Mitrey had been employed by American Electric Power (AEP) in Ohio and worked in the company’s credit risk department. He had inside knowledge that AEP owed $963,000 to another company named Direct Coal. In 2004 Mitrey, using two aliases, opened a bank account and registered a new company in Arizona under the identical corporate name of Direct Coal, according to court records.

Mitrey then attempted to request invoices to AEP under the guise of Direct Coal for the money owed. After receiving an initial payment of $9,000, an internal red flag surfaced at Wells Fargo Bank and the account was frozen, according to court records. Mitrey sought advice from an attorney and turned himself into authorities. He “disclosed everything he knew” to the U.S. Attorney’s Office in Phoenix, records show.

A July 2006 criminal pre-sentencing report identifies Mitrey’s fiancée as Bridget O’Brien and states that together the two started the business KIIDS with the purpose of providing local school districts with access to speech, occupational and physical therapies. Mitrey requested that if he is imprisoned, he be allowed to serve time in or near Arizona so that he could be close to O’Brien and family members.

Mitrey was sentenced to two years in prison and two years probation.

By 2011, O’Brien and Mitrey ended up as opponents in civil court regarding Head To Toe Therapy. Mitrey accused O’Brien of not fulfilling a business agreement with the company. According to the complaint, both sides claimed the other owed them money. O’Brien accused Mitrey of transferring money from Head To Toe into his personal account. Mitrey and another business partner accused O’Brien of embezzling money into an escrow account and other corporations under O’Brien’s name. The case was eventually settled out of court and no criminal prosecutions resulted from the accusations made.

O’Brien and Mitrey once again clashed in court in 2015, this time over the purchase of a house in Scottsdale. O’Brien accused Mitrey of breaking into the property. The legal dispute dragged on for several months before it was settled out of court.

It’s unclear what caused O’Brien to once again trust Mitrey as a business associate, and why she would give the convicted felon who she once accused of stealing from Head To Toe the charge to shepherd the same company through tough times.

12 News spoke with an attorney who has represented Mitrey, Nicolas Cornelius, by phone in an attempt to discuss Mitrey’s criminal past and his actions at Head To Toe and KIIDS. Mitrey and his attorney have not responded requests for interviews. 12 News also left phone messages for Mitrey.

O’Brien’s attorney provided a response to Mitrey’s 2006 conviction.

“Bridget and our office have been informed by Jack Mitrey that he took the fall for actions of his brother,” Phoenix attorney John Ryan said in a separate statement to 12 News.

12 News asked O’Brien and her attorney if they are aware of any wrongdoing by Mitrey involving Head to Toe Therapy during the company’s recent financial struggles.

“We believe this is an improper question and assumes that one bad decision would lead to others. Regardless, there is no evidence that Mr. Mitrey did anything improper,” Ryan wrote. He said O’Brien was not an employee of Head To Toe Therapy and provided consulting services for the company from April through September.

According to state records, Mitrey has been involved with other businesses in Arizona. Since 2007, Mitrey has registered five companies and one nonprofit with the Arizona Corporation Commission, including a rug company and a nonprofit called Arizona New Hope. Two flooring companies registered by Mitrey remain active today, according to commission records. Mitrey is listed as the manager but not the owner of Circle Consulting.

“Social workers don’t have $10,000 to go hire an attorney to fight this”

After Mitrey began work as a consultant for Head To Toe Therapy in April, he fielded inquiries from therapists, according to emails.

According to a May 28th email, Mitrey responded to Therapist Assistant Holly Jimmerson’s email who was inquiring about her lack of pay. Jimmerson tells 12 News that as of last week, she is still owed $6,675 for uncompensated work with Head To Toe Therapy during the months of May, June and July.

In the May 28th email to Jimmerson, Mitrey stated that he was out of the country. Mitrey CC’d another employee, office manager Mary Spotleson and requested her “to do everything” she could to pay Jimmerson within a few days.

Earlier this month, Jimmerson stood outside Head To Toe Therapy’s Phoenix building on a Sunday morning in protest of the company. She was joined by Downs, the speech language pathologist. The two held a canvas sign that read, “Shame On Head To Toe. Owner Refuses To Pay.”

Jimmerson said she has hired an attorney to serve a demand letter to O’Brien, but she has not received a response. She claims there are more therapists who have not come forward about money owed to them.

“Social workers don’t have $10,000 to go hire an attorney to fight this," she said. "So they give up and walk away."

O’Brien disputes the idea there are a lot of therapists owed money. Earlier this month, O'Brien's attorney told 12 News in an email that those owed money amounted to “two or three therapists who have failed to provide all of the mandatory information pursuant to the terms of their contract and pursuant to their obligations under their license."

O'Brien echoed her attorney in the Oct. 5th statement she sent to 12 News. “There were a handful of therapists who received late payments. To date, all but a few have been compensated,” she wrote. “We are working hard to change a few to none. In a number of instances, payment was slow due to contractors filling out incomplete paperwork.”

O’Brien said the company has since made changes to policies and procedures to ensure paperwork is filled out properly because the state or insurance providers do not reimburse the company if data is improperly submitted.

“Again, we are trying to streamline these issues with the state for the benefit of all,” O’Brien wrote.

“A financial fraud scheme”

Even when therapists were given checks, there were problems. A June 8th email from Mitrey to employees appeared to be in response to communication from therapists who complained their checks were being denied at banks.

Mitrey explained that accounts belonging to both Head To Toe and O’Brien had fallen victim to a “financial fraud scheme.”

“If you have a check please hold it, it will be easier to exchange the check you have for a live check late next week,” the email stated.

On June 12, another email from Mitrey refers to the company having a “short term cash crunch” and states that O’Brien was selling a house to “help reimburse therapists.”

The email claimed O'Brien “had all her personal funds frozen” and also made references to her cancer treatment. He wrote that O’Brien committed to three “short term, hard money loans… in order to make payroll and therapist reimbursements.” Mitrey then described a series of events involving reimbursement checks that bounced and the freezing of the company’s accounts and O'Brien's personal assets.

The following day, an email titled “From Bridget” sent to company employees stated that “all H2T (Head To Toe) funds and my personal funds have been wrongly taken and while the funds will be returned to me this will take weeks for lawyers to sort out.”

The email also states, “I understand everyone has bills to pay. So here is a short-term solution for this Friday: Today or tomorrow, send me an email… and tell me how much you need to have on Friday, not what you would like to have. But what you would need to pay your most urgent expenses.”

Later, Mitrey sent an email referencing fraud as well, stating that Head To Toe was not receiving funds from private insurances carriers “as these funds are being diverted to the US Marshall in NYC, which does not help us today but is better than the funds being taken from H2T accounts by the loan sharks in NYC.”

In response to that claim, O’Brien’s attorney told 12 News: “It is unfortunate that Jack Mitrey sent emails about a topic he was not well versed in. The issue from New York ‘loans’ has been resolved. A levy was issued by the NYC Marshal which improperly drained Bridget’s personal and her children’s accounts.”

Blaming DDD for nonpayments

Starting in July, the blame began to shift toward Department of Economic Service's Division of Developmental Disabilities. According to a July 6th email, Mitrey claimed that an error in DDD’s billing system related to the end of the fiscal year was the reason for delayed reimbursements. He wrote the error came “without notice to us or any other provider.”

A spokesperson for the DDD disputes that claim.

“It is not correct that DDD reimbursements to contractors ceased June 29 without notice,” DDD spokesperson Brett Bezio wrote in a statement to 12 News. He says DDD notified all vendors on two separate occasions in advance of the close of the fiscal year.

“Additionally, Head to Toe contacted the DDD Customer Service Center and told them that their bank accounts had been compromised and DDD should not send any payments to the bank account on file. DDD was subsequently able to work with Head to Toe to ensure payment was received,” said Bezio.

A week later on July 13th, Mitrey sent another email that blamed DDD for further delays and said there was a problem with the DDD’s billing system.

“Head To Toe is still waiting on reimbursement from DDD,” he wrote.

By comparison, a payment log provided to 12 News from the DDD shows between June 21 and July 20, more than $400,0000 in payments were made to Head To Toe, including payments made on July 11, July 17 and July 19.

Finally, a July 15th email went out to therapists that was supposedly written by O’Brien and forwarded by Mitrey.

The email reiterated the chain of events over the previous months and added that there was a new problem: A lack of proper paperwork from contractors had resulted in Head To Toe Therapy owing the state money.

“Some of you had not turned in soap notes or progress reports for many months and others were missing credentials so while H2T was reimbursing you, H2T could not be reimbursed for your services,” the email stated.

The email, allegedly written in first-person by O’Brien, goes on to discuss her cancer diagnosis. It states she is going through chemotherapy. “My health insurance carrier is declining to pay for my treatment saying it is a pre-existing condition and no bank will lend me money because I can’t get a life insurance policy,” the email states. “Before going into surgery I wanted to make sure everyone would be reimbursed so I made the worst mistake of my life and borrowed money from loan sharks in NYC.”

The email also states that DDD’s billing system was not ready for the new year and the company was reimbursed at 5 percent of what the company submitted.

“I can’t begin to explain how badly I feel for all of you, you put your faith in me and I let each of you down,” the email states.

The email goes on to provide instructions to contractors for where they should send emails if they are owed money for the month of June.

O’Brien’s attorney disputes that email was ever written by O’Brien.

“Bridget did not make the statement to the contractors. Jack Mitrey sent the email claiming to be speaking on behalf of Bridget. Once again, this is a statement that should not have been made to contractors but is not factually incorrect. It is not the reason for the cash flow issue,” said O'Brien's attorney John Ryan in an email to 12 News.

School district says Head To Toe was not paying them either

A June 27th email from Mitrey makes a reference to a new “community center” in the Florence Unified School District. According to the email, Mitrey personally handed a check to a representative of the district.

“As of now I am waiting for the center to be opened,” Mitrey said.

An attachment to the email contains a photo of a check for $17,320 paid to the order of the school district.

12 News contacted the Florence Unified School District about the payment. The district tells 12 News the purpose of the check was to pay off a debt, not to open a “community center," as the email from Mitrey stated.

Head To Toe Therapy leased three classrooms from the district during the 2017 school year, said Richard Franco, Director of Public Relations for the Florence Unified School District. The lease expired June 30th and Head To Toe Therapy was delinquent on past payments. The district was forced to “lock out” Head To Toe Therapy from the campus because it owed the $17,320 balance, Franco said.

According to Franco, a representative from Head To Toe Therapy “gave several excuses” as to why the company couldn't pay the money and at one point said a check was lost in the mail. Eventually Franco said the district sent a finance specialist to Head To Toe Therapy’s office to ensure he was personally paid the balance owed.

12 News asked O’Brien about the payment to the school district.

“This check was for rent payment and had nothing to do with money owed to therapists,” Ryan said in an email to 12 News.

Complaints from therapists and families

Dozens of reviews logged on Yelp and Google in recent months have a common theme: Parents complain they can’t schedule an appointment or they show up for scheduled appointments only to learn there is no therapist available to see them.

“The therapist who was coming for my son called me and told me that she is not working for Head To Toe anymore because they didn't pay her… Because of them my son is not getting speech therapy,” states one June 2018 review.

“They are not being scheduled when they should be,” said Kori King, a speech and language pathologist assistant who stopped working at Head To Toe Therapy in July. “And that can incredibly impact their progress, especially when these children have Down Syndrome or Autism.”

King said she is still owed $2,025 for work provided.

According to the Division of Developmental Disabilities, families who were referred to Head To Toe Therapy have other options.

“DDD is driven by the member’s choice, with the option to switch vendors available at any time,” said Bezio. “If a member or family would like to change vendors, they have the right to reach out to their DDD support coordinator and request a transfer of their authorized units (or hours) to another vendor.”

Consequences for vendors of DES that don’t comply

According to the Arizona Attorney General’s Office, state investigators within that office and Department of Economic Service have authority to examine cases in which vendors are accused of not paying contractors state funds that are owed to them. Theoretically speaking, an investigation could rise to the level of criminal wrongdoing if there is evidence of theft or a violation of Arizona’s “fraudulent schemes and practices” law. Prosecution is decided on a case-by-case basis depending on the specific conduct of the people involved, said a representative of the Attorney General’s Office.

Bezio said after incidents are investigated by DDD’s Monitoring & Quality Assurance Unit, the information is forwarded to DDD Contract Actions team and an inquiry meeting then takes place.

“Formal contract action will then be issued, if appropriate,” Bezio said.

Therapists who left the company say they don’t have evidence of purposeful wrongdoing by anyone at the company. But they said they hope DES gets more answers as to what happened at the clinic. One reason is because the clinic used to be a positive environment for so many families, said one therapist.

“It just comes down to transparency,” she said. “That is the word of the day. We just want transparency. We have reached out so many times by texts, phone calls, emails… it’s just excuse after excuse as to why we weren't getting our money.”

12 News producer Ariel Salk contributed to this story.