Part 3 of Reporter Doug Sovern’s KCBS Cover Story Series – Healthy San Francisco

SAN FRANCISCO (KCBS) – Dozens of San Francisco restaurants accused of overcharging customers to cover employees’ health care have less than two months left to clear their names or face prosecution.

The City Attorney’s Office has identified 93 restaurants suspected of taking in more than they paid out when they added a Healthy San Francisco surcharge to the bottom of customers’ bills.

So far, one restaurant has been exonerated. Fifty others remain under investigation.

“We are giving everybody the opportunity to come in and make their case or to make a partial repayment, and we will prosecute those last remaining holdouts,” said City Attorney Dennis Herrera.

KCBS’ Doug Sovern Reports:

Many of those restaurants insist the Healthy San Francisco law as written was badly flawed, a position even Mayor Ed Lee has conceded may be right.

Lee said the list of restaurants under investigation should never have been made public because publishing it also damaged the reputations of innocent eateries.

Bay Area foodies have described a sense of betrayal at learning the surcharge for something they supported, employee health care, may have been misspent.

“They’re not to be blamed if they’re just following the law,” Mayor Lee said.

The one restaurant cleared, Firefly, believed its seasoned bookkeeper had been doing exactly that when it made the city attorney’s list, said owner Brad Levy.

“The way it was written, the instructions we have as far as implementing it, were so complicated that it was a real struggle to figure out exactly what it was we were supposed to be doing,” Levy said.

The discrepancy arose because Firefly was in fact holding the Healthy San Francisco money in accounts for workers who had not filed claims to use the funds.

San Francisco shouldn’t lose sight of the motivation for the law in the first place, said Mayor Lee , to provide universal health care for everyone who lives or works in the city.

“The goal was to get more people covered,” Lee said.

Herrera said the vast majority of restaurants have had no trouble complying with the terms of Healthy San Francisco, and he’s giving the rest until April 10 to prove they’re following the law.

Like most restaurants, Firefly got rid of its surcharge, a move Levy said pushed up prices on the menu and squeezed his bottom line.

“Profits go down, and we just try to survive,” Levy said.

Supervisor David Campos admitted that no one envisioned menu surcharges when the law was passed, which led him to propose amending the law. He said it may need to be changed even more.

“What happens with legislation is sometimes there are things that you may not have thought about, and sometimes you have to go back and tweak it and close loopholes that may have been created inadvertently,” Campos said.

The author of the original law, Tom Ammiano, rejects the restaurants’ contention that his law is to blame for the accounting discrepancies.

“They got caught with their hand in the cookie jar and now they have to pay the consequences,” Ammiano said.

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