Orange County leaders finalized a settlement on October 5 to assume control of two mental health campuses, concluding a multi-year legal dispute with Mind OC, the nonprofit partner that previously collaborated with the county on the Be Well OC initiative.
The agreement transfers operational authority for the Orange facility, situated near the 57 Freeway, and a recently completed Irvine facility, to the County Health Care Agency. The Irvine campus, though construction was finished months ago, had remained unopened due to the litigation surrounding property ownership.
Mind OC initiated legal action in 2024, alleging the county violated a ground lease and executed a "hostile takeover" of the Orange facility. In response, county lawyers filed a cross-complaint earlier this year, asserting that Mind OC breached numerous lease terms and improperly retained millions of dollars. The settlement means neither side's allegations were decided in court, as both parties agreed to drop the litigation.
Under the terms of the settlement, Orange County will permit Mind OC to retain approximately $2.1 million from a disputed fund. Both parties also agreed not to disparage one another publicly. The transition of operational responsibilities is slated to occur over roughly 90 days. During this period, Mind OC is required to hand over all necessary assets for campus operations and assign all existing sub-leases to the county, effectively ending its role in healthcare management for these sites. A key condition of the settlement also stipulates that county auditors will not initiate any new investigations into Mind OC.
The resolution facilitates the opening of the Irvine facility, which had been delayed by the ownership dispute. The Orange campus commenced operations in 2021, with the county contributing over $16 million to its construction and Mind OC organizing a $12 million donation. Mind OC was initially responsible for managing construction and property for both centers, paying $1 annually for the buildings under a lease agreement designed to reduce costs. The initial vision for Mind OC was to operate both campuses as a "one stop shop" for mental health care, accommodating both private insurance and Medicare patients, a vision county leaders stated never fully materialized.
The partnership faced challenges after a county audit identified "systemic problems" with Mind OC's billing practices and raised questions regarding its contractors. Subsequently, supervisors withdrew most of the committed funding and sought to disassociate Mind OC from patient care responsibilities.
On Tuesday, both Mind OC and Orange County released statements endorsing the transition. OC Board of Supervisors Chairman Doug Chaffee commented that the agreement "reflects a mutual understanding that our missions may now be supported through separate operational pathways." Dr. Richard Afable, chairman of Mind OC’s board of directors, addressed the nonprofit's future without these flagship projects, affirming that its mission to strengthen Orange County’s behavioral health system through public and private partnerships remains unchanged, and that it anticipates serving residents in new ways and continuing system navigation services. Afable also participated in a joint statement with the county, commending the settlement.
The conclusion of this lawsuit coincides with some Orange County cities opting to contract with other nonprofits for mental health services, moving away from Mind OC for programs such as social workers for homeless individuals. Mind OC's CEO, Phillip Franks, declined requests for an interview.
