State Auditors Descend on CalOptima

CalOptima Board

CalOptima board members listen to a briefing about a scathing federal audit in February. (Photo by: Nick Gerda/Voice of OC)

California’s Department of Health Care Services will begin its own special review Monday of potential problems at CalOptima, Orange County’s health plan for low-income, disabled and elderly residents.

The review comes after a severely critical federal audit report last month that cited a potentially “serious threat to the health and safety” of participants in CalOptima’s 16,000-member OneCare program for low-income, elderly residents. Federal officials ordered CalOptima to halt new enrollments in OneCare and immediately fix the worst problems.

The audit is on the agenda of Thursday's meeting of CalOptima board of directors.

When the federal audit report was released Jan. 24, state officials announced they would also conduct a full audit of the way CalOptima handles Medi-Cal, the California program for the federal Medicaid health program for those with low incomes. That audit is scheduled to begin later this year.

But Wednesday, health officials in Sacramento notified CalOptima they would begin a “focused review” next week of programs identified in the federal audit.

That review, which is expected to take about a week, will be handled by auditors and medical reviewers, but the results won’t be publicly available until they have been analyzed in the following weeks.

“If there are corrective actions, the plan will be notified and a corrective action plan will be implemented,” wrote Carol Sloan,  public information officer for Department of Health Care Services, in an email.

In the meantime, two county supervisors Wednesday questioned why they were denied access to an internal CalOptima board of directors report that concluded the agency’s two in-house lawyers wrongly accused former CalOptima executives of misconduct.

The lawyers leveled the unfounded charges because they thought they were about to be fired, according to the 2011 report by the Costa Mesa-based Theodora Oringher law firm, which was obtained by Voice of OC.

Supervisor John Moorlach, adding to comments he made during Tuesday’s supervisors’ meeting, said in 2012 he had one of his aides contact CalOptima to get the Theodora Oringher report, but, he said, the aide was told by CalOptima Chief Counsel Gary Crockett that Moorlach couldn’t have it. Only CalOptima board members could see it, the aide was told.

Last year, said Moorlach, he publicly asked during a supervisors meeting for the Theodora Oringher report but was told later by Mark Refowitz, head of the county’s Health Care Agency and chairman of the board of CalOptima: “Negative. You can’t have it.”

Similarly, Supervisor Todd Spitzer said Wednesday he asked Refowitz this week for the Theodora Oringher report, but Refowitz told him access was restricted to only those who were on the CalOptima board of directors at the time the report was delivered in late 2011.

Not true, said Ed Kacic, who was chairman of the CalOptima board at the time the Theodora Oringher reports were delivered. Kacic said that when new members, including Refowitz, came on the CalOptima board in early 2012, he asked Todd Theodora whether he could give them the report.

At the time, the CalOptima board was implementing the report’s recommendations, including hiring an outside general counsel and contracting with a firm to do an assessment of CalOptima. CalOptima managers also were upgrading the status of the compliance officer.

Kacic said he thought it was important for all new board members to know why the steps were taking place.

In a cover note to new board members and former Supervisor Bill Campbell, who was the new alternate, Kacic wrote that "the CalOptima Board retained Theodora Oringher to conduct an inquiry into various matters. For your information and reference, and per Theodora Ohringer's instructions I have included a copy of the final report for your information.”

Kacic said he sent it to Refowitz twice, because Refowitz told him he deleted the first copy without reading it.

Refowitz declined to be interviewed about the Theodora Oringher report.

Supervisor Janet Nguyen went to county counsel Nick Chrisos in late 2011 when she wanted to distribute a portion of the same report to at least some other supervisors.

Theodora told Kacic that he, Chrisos and District Attorney Tony Rackauckas held a conference call and decided it was proper for Nguyen to distribute it to other supervisors. The CalOptima board, which also is a county agency under the Board of Supervisors, still could maintain the confidentiality of the report, Kacic said Theodora told him.

Nguyen took control of CalOptima after a controversial December 2011 vote by herself, Supervisors Pat Bates and Bill Campbell that put Nguyen in a position to remake the CalOptima board of directors, heightening representation for the health industry and county agencies on the board.

Supervisors Moorlach and Shawn Nelson both voted against the proposal and were vocally opposed to changing CalOptima’s governing ordinance.

Internal upheaval within CalOptima, fueled, according to the Theodora report, by the toxic relationship between top managers and the agency’s lawyers, was later heightened after Nguyen’s efforts to appoint new board members.

In the wake of the upheaval, nearly two dozen top and key executives left for jobs in private industry or other government agencies.

Supervisors signaled Tuesday they would move to blunt Nguyen’s influence over the health plan that serves about 470,000 county residents, most of them children.

The management vacancies and lack of leadership at CalOptima after Nguyen’s takeover contributed to administrative lapses and played a role in the outcome of the federal audit, CalOptima CEO Michael Schrader told the Board of Supervisors.

“That turmoil definitely had an impact in terms of operational focus,” Schrader said.

Correction: A previous version of this article incorrectly stated that discussion of the federal audit of the OneCare program is not on Thursday's CalOptima board of directors agenda. Discussion of the audit is on the agenda.

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