Two former board leaders at CalOptima, the $1.5-billion health program for the county’s disabled, low-income and elderly residents, said Tuesday that Supervisor Janet Nguyen made factual errors or omissions in her first specific comments about a stinging grand jury report.
Former Board Chairman Ed Kacic and Vice Chairman Jim McAleer both criticized an opinion piece Nguyen wrote for Tuesday’s Orange County Register, saying her arguments omitted important facts or were wrong.
Nguyen has not answered reporters’ questions about the 15-page report since its release Friday, but she scheduled a news conference for 10 a.m. Wednesday to “set the record straight about CalOptima and the Grand Jury report.”
Her staff said reporters would be allowed to ask questions at the news conference.
The grand jury report, titled “CalOptima Burns While Majority of Supervisors Fiddle,” blamed leadership by Nguyen’s and inaction by a majority of the supervisors for damaging the health plan that covers more than 400,000 of the county’s most vulnerable residents, most of them children.
Supervisor Pat Bates and former Supervisor Bill Campbell voted with Nguyen in December 2011 to radically change how CalOptima's board of directors operates. Supervisors Shawn Nelson and John Moorlach vocally opposed and voted against changing the county's ordinance.
Nguyen is now the only county supervisor on the 11-member CalOptima board. The grand jury recommended that more supervisors be added and two top county executives removed.
Since the grand jury report landed last week, Supervisors Nelson, Moorlach and Todd Spitzer (who replaced the termed-out Campbell) have told Voice of OC that they believe all five supervisors should serve on the board.
In her opinion piece, Nguyen blasts the grand jury, saying the panel erred when it reported that lobbyists for the Hospital Association of Southern California (HASC) drafted a 2011 change in the CalOptima ordinance that, among other things, gave medical providers a stronger voice on the board of directors.
“The grand jury's claim that, in March 2011, a lobbyist rewrote the county ordinance that changed the composition of the CalOptima board is outright wrong,” Nguyen wrote. “The ordinance that changed the composition of the board was rewritten and approved in December 2011, with no lobbyist involvement.”
But in the weeks before the final Board of Supervisors actions in December, sources close to the issue say the proposed ordinance was reworked because the original version, made public in early October, drew so much criticism.
Kacic said that shortly before the proposed ordinance went before the supervisors on Oct. 4, HASC lobbyists Julie Puentes and Jim Lott told him and McAleer “in a face-to-face meeting” that the “draft had considerable input from HASC.”
Lott, HASC’s Los Angeles representative, wrote in an email last week: “For the record, please know that the policy of our company is to not comment on investigative reports and studies performed by government watchdog agencies.”
According to Nguyen’s campaign reports, in the nine months after the proposed ordinance change was made public, she raised about $50,000 from the health care industry, including a fundraiser that HASC helped organize.
In her opinion piece, Nguyen criticized previous CalOptima boards for approving the purchase of an office building near The Block in Orange for about $30 million while still having to pay as much as $1 million a year for four years for leases on their former empty offices.
Several of Nguyen’s complaints about the actions of prior boards appear to include her colleague, Supervisor John Moorlach, who was her predecessor on the CalOptima board.
Yet in a Voice of OC video Friday about the grand jury report, Moorlach said: “It [CalOptima] ran really well when I was there for four years. I can only have people judge the record as it is.”
Regarding the building purchase, McAleer said health organizations like CalOptima are required to maintain strong reserves so they can pay their debts if something goes wrong. The reserves can be in bank accounts, short-term investments or property.
He said when the new federal health plan was approved, the CalOptima board knew that, among other issues, there wasn’t enough parking for CalOptima’s consumers.
At the same time because of the poor economy, commercial property was selling at bargain rates. He said the board debated the pros and cons at public meetings and ultimately decided to buy their own building, even though they knew in the depressed commercial market it might be difficult to lease their old space. Even so, he said, the value of the new building gave CalOptima an overall financial edge.
The financial analysis showed it was “an excellent financial move for the organization,” he said.
Nguyen also raised issues that have been denied before by Kacic and others, including what she described as CalOptima spending “approximately $90,000 worth of staff time on non-Cal-Optima business.”
Kacic, as he has before, said the financial allegation is untrue. He said Nguyen didn’t mention that CalOptima received $12.4 million as a result of work done by the top leaders of county hospitals, working together through the Managed System of Care to find ways to cut health costs.
On another point, McAleer said Nguyen neglected to mention that CalOptima was in the middle of revising its procurement policy and fixing potential problems when she criticized former board members for renewing a public relations contract without competitive bids.
In her opinion piece, Nguyen again criticized the prior CalOptima board for awarding a pay increase to former CalOptima CEO Richard Chambers and allowing other employes to receive incentive increases.
Chambers’ pay, when he left in April, was $335,000 in base pay plus a car allowance, health and other benefits for a total of $550,000.
The new CEO, Michael Schrader, has less experience and is starting at $315,000 plus benefits. He also will be eligible for a performance-based increase, according to his contract.
McAleer said that because Chamber’s performance qualified him for the increase, CalOptima risked a lawsuit if it didn’t give it to him. Equally, he said, other top employes had incentive plans that had to be honored. Even so, he said, Nguyen didn’t want to give them the increases. At the time, the state and federal officials were cutting payments for health care.
Ironically, a few months ago CalOptima offered retention bonuses to key employees to encourage them to stay through January because at least 16 top or key executives left for private industry or other government positions after Nguyen began redoing the CalOptima board and, as McAleer said when he resigned from the board last spring, “micromanaging.”
The grand jury report warned that “political turmoil threatens the organization, jeopardizing its membership’s access to quality healthcare and potentially putting the entire entity at risk.”