More Grand Jury CalOptima Reports Expected by June

The Orange County grand jury is planning two more reports on CalOptima, the county’s health plan for disabled, low-income and elderly residents, whose oversight by the Board of Supervisors was the subject of a highly critical report last month, CalOptima CEO Michael Schrader said Thursday.

Schrader, who took over as CalOptima’s chief executive officer in December, told a meeting of about 50 Orange County legislative and congressional aides, lobbyists and reporters that he received a call from the “lead juror” after the Jan. 25 release of the grand jury report.

Schrader said the lead juror told him a second grand jury report on CalOptima is planned for March and a third before the grand jury’s one-year term ends June 30. It’s not known what issues will be covered, and Schrader didn’t give the name of the lead juror.

Schrader said, however, that he was told the grand jury didn’t want CalOptima staff to “weigh in” as part of the agency’s required response to the January report.

That report, titled “CalOptima Burns While Majority of Board of Supervisors Fiddles,” asserted that “political turmoil threatens the organization, jeopardizing its membership’s access to quality healthcare and potentially putting the entire entity at risk.”

CalOptima operates with $1.5 billion in federal and state funds to ensure medical care is provided to more than 400,000 county residents, most of them children.

Both the five-member Board of Supervisors and the board of CalOptima are required to respond to the grand jury findings by the end of April.

Last week, the CalOptima board appointed four of its 10 members to work with the agency’s staff on drafting a response. But after Schrader’s announcement about the grand jury not wanting staff input, it wasn’t immediately clear how CalOptima board members planned to write their report and what would be done to ensure staff wasn’t involved.

Among other things, the grand jury stated that “several current CalOptima Board members and recent hires lack the healthcare experience to understand the complexity of CalOptima as proven by their comments and questions during CalOptima Board meetings."

Schrader told the quarterly legislative lunch that the grand jury report was “really about the governance of CalOptima and not about the operations of CalOptima.”

Among its recommendations, the grand jury urged county supervisors to appoint more than one of its members to the CalOptima board. Currently, only Supervisor Janet Nguyen serves on the board. She engineered a complete restructuring of the CalOptima board that left it, as the grand jury noted, with no member who served longer than 20 months and most who have been there less than a year.

CalOptima is gearing up for major changes and new programs as part of the new federal health law that goes into effect next year.

"Supervisors should change the CalOptima board of directors to include more than one supervisor and remove the two county employees, the directors of the Health Care and Social Services Agencies. Employees have to report to the county’s CEO and are too likely to be intimidated by a supervisor," the report declared.

A majority of the five supervisors indicated they support changes to the CalOptima board that, among other things, would add more supervisors as members.

In the wake of Nguyen’s changes and related upheaval, 16 top and key executives left CalOptima for jobs in private industry or with other government organizations. According to the grand jury, a “CalOptima board member [Nguyen] and two CalOptima [staff] lawyers have been disruptive and created an atmosphere that according to current and former CalOptima employees is ‘unsafe for senior executives.' "

Schrader said Thursday he’s close to hiring a new medical director.

After the meeting, Schrader said the “lead juror” didn’t tell him what the two additional reports were likely to cover.

Campaign contributions raised from CalOptima contractors were part of the last report, including a fundraiser for Nguyen hosted by an executive of Integrated Healthcare Holdings Inc., a hospital chain that contracts with CalOptima. Julie Puentes, county lobbyist for the Hospital Association of Southern California (HASC), helped with the fundraiser after she helped Nguyen make changes to the ordinance regulating the CalOptima board, according to the grand jury and interviews with former CalOptima board executives.

Nguyen has denied any HASC involvement in the ordinance change. A HASC spokesman has said the organization doesn’t comment “on investigative reports and studies performed by government watchdog agencies.”

HASC also was implicated in the grand jury report in connection with an anonymous letter that circulated last winter and was used by Nguyen, former Supervisor Bill Campbell and Supervisor Pat Bates against then-CalOptima Board Chairman Ed Kacic. While saying they wanted to find out whether accusations in the letter were accurate, the board delayed Kacic’s official reappointment. The board then delayed for weeks investigation of the accusations.

Puentes attended the legislative briefing Thursday. When asked by a reporter whether she had been interviewed by the grand jury, she declined to comment, citing HASC policy.

One issue that surfaced last year but wasn’t addressed in the January grand jury report is the result of a compliance investigation of an unnamed board member other than Kacic.

The CalOptima board voted March 23, 2012, to have its in-house lawyer, Gary Crockett, define the scope of the investigation that in turn would be conducted by an outside law firm.

At the time, Denise Corley, CalOptima director of compliance, said nothing like the accusations against the unnamed board member had ever happened before. The allegations, she told the board, covered “lots of different kinds of complaints involving conflicts of interest and Brown Act violations and things like that.”

In an Aug. 3, 2012, letter to Kacic, Nguyen stated the complaints involving a board member’s conduct were checked, and “no merit was found that required further investigation.” No other details have ever been made public.

Please contact Tracy Wood directly at twood@voiceofoc.org and follow her on Twitter: twitter.com/tracyVOC.

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