CalOptima board member and former chairman Ed Kacic resigned Monday from the $1.4-billion county health plan for the poor and disabled, and among other issues, he raised questions about a five-month-long internal investigation into the board.
Kacic, in a letter delivered to Board of Supervisors Chairman John Moorlach, didn’t name names but asserted that “various forces over the past year have caused severe disruption to the organization and to its long term prospects, and to its Board of Directors and staff at all levels.”
He pointed to a major turnover in top staff, an inexperienced new board of directors and the two investigations into himself and a separate CalOptima board member who never has been publicly identified.
“Instead of conducting the inquiry into these complaints with the assistance of an independent outside law firm as had originally been undertaken by the compliance officer and approved by the CalOptima board of directors, the inquiry seems to have been taken inside the organization, with the internal counsel playing a significant role,” Kacic wrote.
He stated that the CalOptima board hasn’t been properly notified that the method of conducting the investigation has changed.
“Since I don’t believe in the propriety of asking individuals to investigate those to whom they ultimately report, I find this situation odd, at best,” Kacic wrote. He argued that allegations against board members should be subject to “objective inquiry” and “such accusations should neither be ignored nor covered up.”
As Kacic was turning in his board resignation, another CalOptima executive resigned from the agency: Zoë Vecchio, director of human resources and organizational development. Her resignation brings to at least 14 the number of top and middle-management leaders who have left CalOptima in less than a year. Vacancies include the chief executive officer and chief operating officer.
Orange County Supervisor Janet Nguyen, with the backing of a split Board of Supervisors, last fall remade the CalOptima board of directors, increasing the influence of health providers. Nguyen also represents the Board of Supervisors on the CalOptima board.
Moorlach said Monday he hadn’t talked to Kacic about his resignation but believed he quit out of “exasperation and frustration” with the way county officials “left him out there hanging.”
“I guess he’s reached the end of his limits,” said Moorlach. He said he had hoped Kacic would stay on the board and had wanted to talk to other supervisors at an upcoming meeting about extending Kacic’s term, which expires in September.
Nguyen, one of only two remaining CalOptima board members who has been on the board for more than a few months, wasn’t immediately available for comment.
Regarding the investigations, Compliance Officer Denise Corley told the CalOptima board in March that she had received two sets of accusations in February against an unnamed board member. One was an anonymous telephone call to the CalOptima hotline.
“Within 24 hours,” a second set of allegations against that same unnamed board member was made by a departing CalOptima employee in an exit interview, Corley told the board.
Corley said nothing like it 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.”
A CalOptima spokeswoman said Monday that that investigation still is under way.
Corley also told the board that a few days after the complaints were made about the unnamed board member, an anonymous letter accused Kacic of conflict of interest, alleging he “is using his position as chair and member of the CalOptima board to steer millions of dollars the agency funds to his foundation."
The reference in the letter is to the Irvine Health Foundation, of which Kacic is president. According to minutes of foundation board meetings, it agreed to help with a grant that could benefit CalOptima, but specifically spelled out the foundation wouldn’t receive any money. CalOptima still hasn’t finished its investigation of Kacic.
Kacic has consistently said there have been no improprieties regarding the foundation and denied the allegation. He said he welcomed the county's probe into the matter.
But county supervisors and CalOptima delayed for months. This month, the foundation’s lawyer sent the CalOptima board and the Board of Supervisors a strongly worded letter, demanding they halt the “scurrilous” allegations.
From the beginning, the investigation has had political undertones.
In March, the board voted to allow its in-house lawyer, Gary Crockett, to participate in discussions on the scope of work to be performed by an outside law firm that would conduct the investigation.
But the CalOptima board's then-vice chairman, Jim McAleer, said it was important to use a law firm for the actual investigation that has no connections to the county so that there wasn’t even the appearance that board members were influencing any investigation.
McAleer said Monday the goal was to “make sure that from the public lens it was completely clear, clean and aboveboard.”
Nguyen, meanwhile, has always objected to using a law firm with no connection to the county.
“You’ve been conducting business on behalf of this board without this board’s authorization,” she told McAleer in March. “This should have been brought to the board’s attention in a closed session item.”
She said the CalOptima board should have voted on whether to hire the outside firm for legal advice and Crockett should have been included in discussions.
“That would have been the process at the county Board of Supervisors,” she said. “Any allegation. Any complaints. That’s how we do public work.”
In his resignation letter, Kacic pointed to both the enormous loss of top and midlevel executives and the inexperience of the 11-member governing board.
“In short, the level of institutional memory within the senior levels of CalOptima is close to nonexistent,” he said. He warned the management issues need to be addressed, because in 2014 CalOptima is expected to add at least 100,000 more enrollees when the new national health plan goes into effect. It now serves more than 400,000 low-income, disabled and elderly county residents.
Vecchio’s resignation comes on the heels of acting Chief Executive Officer Michael Engelhard’s hiring last week by Ventura County’s Gold Coast Health Plan. The CalOptima board meets Thursday, and it’s not immediately clear who will fill in for Engelhard while the board searches for a permanent CEO.