Supervisors Tackle CalOptima Mess

Janet Nguyen - CalOptima Audit 2

Supervisor Janet Nguyen listens as her colleagues discuss a scathing audit of CalOptima. (Photo by: Nick Gerda/Voice of OC)

Sandwiched between the burgeoning backdrop of California’s hottest legislative race and a recent scathing federal audit of their health care plan for the poor and elderly, Orange County’s all-Republican board of supervisors today will consider reversing course on a controversial 2011 ordinance that gave their colleague, Supervisor Janet Nguyen, a unique leadership role over the $1.5-billion county health care agency known as CalOptima.

Nguyen is competing against former Democratic Assemblyman Jose Solorio for the 34th State Senate District seat in what is expected to be one of the state’s most expensive and pivotal election contests for Sacramento’s Democratic supermajority.

On Monday, Orange County Democratic Party Chairman Henry Vandermeir issued a terse news release calling on supervisors to remove Nguyen from the 11-member CalOptima board following last month’s critical federal audit.

Republican party leaders also have been reportedly making private phone calls to county supervisors calling on them to stand tight with Nguyen in the name of party unity.

Supervisors’ Chairman Shawn Nelson, who called for the review, said he’s ignoring the politics.

“I could care less about that stuff,” said Nelson.

Nelson did take issue with the Democratic Party asserting itself on the issue out of the blue, blasting Vandermeir’s release as inappropriate.

“This is about providing services to people,” said Nelson. “This isn’t about politics.”

“Fanning the flames of that right now is the last thing we need,” Nelson said.

Upon securing an appointment to the CalOptima board in 2011, Nguyen spearheaded an offensive to revise the agency’s governing ordinance, publicly attacking its top executives and presiding over an exodus of top-level managers.

During that same period, Nguyen raised nearly $100,000 from the medical industry and rewrote CalOptima’s ordinance to increase their influence on the governing board while weakening community representation.

Nelson and Supervisor John Moorlach both vocally opposed the 2011 ordinance change, which was ultimately approved on a 3-2 vote with the support of then Supervisor Bill Campbell and Pat Bates.

The agency has been mired in controversy ever since.

A 2013 county grand jury issued a harshly critical report of Nguyen’s handling of CalOptima.

That was followed by an investigation from the state’s Fair Political Practices Commission, which set in motion a full campaign finance investigation of all county supervisors with the exception of Supervisor Todd Spitzer, who was not on the board at the time.

Most recently, a local district attorney probe found no criminal wrongdoing after looking over Nguyen’s CalOptima dealings and issued a rare public letter on the matter.

The FPPC probe remains ongoing.

But after federal auditors released an audit last month detailing serious problems at CalOptima, Nelson reasserted himself on the issue, announcing that he would propose the 2011 ordinance be reconsidered publicly.

Bates, who is running uncontested this year for the 36th State Senate District seat, and Nguyen have both publicly stated they believe that all the concerns about Nguyen’s influence on CalOptima are political grandstanding, both by their board peers and political campaign foes.

Bates did not return a call seeking comment.

While Nguyen declined to be interviewed by Voice of OC for this article, she defended her stewardship of the agency in a recent email newsletter:

When I first joined the CalOptima Board of Directors in March 2011, I found issues that required immediate attention.

Specifically, the Board of Directors gave $250,000 worth of bonuses to top executives just minutes after discussing imposing $5 to $100 co-payments on low-income patients. They also paid $1 million a year for office space that remained vacant because they were already committed to a 4-year lease when they purchased a $30.2 million office building. They then went on to spend $6.6 million to lease and remodel a building that was assessed at $1.1 million. Outside legal counsel was also being hired without the approval of the full Board. This mismanagement of public funds was coupled with poor contracting practices, which among other things, led to 40% of CalOptima’s vendors being paid without a contract.

As a steward of taxpayer dollars, I acted immediately to reform CalOptima by authoring an amendment to CalOptima’s ordinance to guarantee broader stakeholder representation on the Board of Directors. This was done to increase oversight and assure that the voices of all stakeholders would be heard. The new Board of Directors and I worked diligently and fixed known problems with contracting policies and procedures.

Supervisor John Moorlach, who was the Board of Supervisors’ appointee to the board before Nguyen and oversaw the period she criticizes, responded to a Voice of OC query about his views on CalOptima by saying he’s looking forward to Tuesday’s discussion, adding supervisors “have a real opportunity to give it [CalOptima] some good discussion.”

Supervisor Todd Spitzer has been ringing alarm bells on CalOptima for some time and recently called for increasing the number of supervisors sitting on the CalOptima board.

Spitzer has recently argued that Bates, a former social worker and Nguyen's staunchest CalOptima ally, be placed on the health plan's board.

While Nguyen has historically counted on Spitzer’s support on CalOptima matters, the federal audit seems to have shaken his confidence in her.

Last month, Spitzer publicly criticized Nguyen from the supervisors’ dais for blocking health care officials from offering him information on the critical federal audit on CalOptima as the county’s alternate member.

Possibly the biggest challenge for Tuesday’s discussion will be addressing the historic disinterest of county supervisors to sit on the $1.5-billion health care agency serving the poor and the elderly.

At several junctures in recent years, no county supervisor other than Nguyen has expressed any interest in sitting on the CalOptima board.

That seems to be changing.

“We need more eyes involved from the Board of Supervisors involved in that issue,” said Nelson on Monday. We have a responsibility to get it right, and we’re going to.”

Proposed CalOptima Board Changes

Supervisors have formally placed on their agenda for discussion on Tuesday four ways to modify the current CalOptima board of directors.

In 2011, supervisors completely reorganized the existing CalOptima board, tilting control to the health care industry and county government. Only one seat was designated for a representative of county residents who rely on the health plan.

That seat was left vacant for two years.

This time, supervisors will consider several options, including adding all five members to the CalOptima board, removing the ability of the heads of the county Health Care and Social Services agencies to vote but keeping them on the board and adding just one more supervisor to the board.

It’s unclear what, if any, changes will be made to the public member on the panel.

Currently Nguyen is the only supervisor obn the CalOptima board, and she’s at the end of her two-year term. Spitzer is the alternate.

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