Failed health group planning to start new network for doctors. (Up Front).

The board of failed Latino Health Care is in negotiations to start a similar doctors network, even as the group's demise has sparked civil litigation and a police investigation.

The board of the independent practice association has begun talks with hospitals and health insurers and has received a positive response about starting a new network that would be composed of many of the same doctors, said Dr. Robert Karns, chairman of the IPA board when it failed.

"We are going to try and pick up the pieces. We are hoping to rev up again' he said. "This is a concept that should work."

The seven-year-old Long Beach company went out of business early last month owing doctors, hospitals and others an estimated $5 million or more amid a financial dispute between the IPA and its management corporation, which provides administrative services to the IPA under contract.

Karns and other IPA board members accuse Jose Gonzalez, a company founder and chief executive of the management company, of failing to fully inform them of the company's true financial condition. Doctors feared that insurance company payments for medical services were being diverted by the management corporation to a failing clinic in Chula Vista instead of being passed through to the doctors.

Long Beach police began an investigation based on the accusations, seizing documents and convincing a Long Beach Superior Court judge in November to freeze the company's bank accounts. The company was then no longer able to operate.

Gonzalez has said the company was faltering because of several other business setbacks the board was fully informed about. He has the backing of one board member, and at a hearing on Dec. 16, Superior Court Judge Bradford Andrews agreed to lift the freeze, in effect sending the dispute to civil court, even as police continue to conduct a criminal investigation.

The IPA received a temporary restraining order on Dec. 18 in Los Angeles Superior Court preventing Gonzalez from accessing the remaining money in the company's accounts without the signature of a representative of the IPA.

Gonzalez referred comments on the matter to Robert O'Keefe, a management consultant brought in by Gonzalez last year to help restructure the faltering firm.

O'Keefe said Gonzalez might have made bad decisions, but he reiterated no money was misappropriated or actions taken without the board's knowledge. He said Gonzalez feels that he has been defamed in the dispute and plans to file his own legal actions as a result.