The CalOptima board of directors Thursday appointed four of its members to work with staff on a response to a grand jury report alleging that since late 2011 Orange County Supervisor Janet Nguyen has been allowed to execute a series of political power plays that have damaged the health plan serving more than 400,000 elderly, poor and disabled county residents.

Both the CalOptima board and the Board of Supervisors must respond to the grand jury by the end of April.

The four are CalOptima Vice Chairman Lee Penrose, president and CEO of St. Jude Medical Center in Fullerton; Dr. Samara Cardenas, a member of the board of directors of the Children’s Hospital of Orange County Physicians Network; Ellen Ahn, executive director of Korean Community Services in Buena Park, a nonprofit that offers health and social services to Korean immigrants and others; and Peter Agarwal, vice president of Citizens Business Bank in Brea.

In its report, titled “CalOptima Burns While Majority of Supervisors Fiddle,” the grand jury concluded that “political turmoil threatens the organization, jeopardizing its membership’s access to quality healthcare and potentially putting the entire entity at risk.”

Following the Jan. 24 grand jury report, a majority of the five supervisors indicated they support changes to the CalOptima board that, among other things, would add more supervisors as members. That was one of the grand jury recommendations.

In December 2011, Nguyen engineered a restructuring of the board to give health care providers a stronger voice in the organization that operates with $1.5 billion in state and federal funds. Among the grand jury’s harshest accusations is that Nguyen allowed lobbyists from the Hospital Association of Southern California (HASC) to help write the ordinance amendment that restructured the board.

She is the only supervisor who sits on the 11-member board and raised about $50,000 in campaign donations from the health care industry between the time she introduced the amendment and the June 2012 primary election, when she easily won re-election.

Nguyen has fought back against the grand jury report, saying, among other things, that the grand jury did not interview her at any point during its investigation

She also hotly disputed the report’s account of how the restructuring occurred, saying the panel had a fundamental misunderstanding of the role of HASC lobbyists played in drafting the original amendment and another in April 2012. She called the report’s characterization “outright wrong.”

“The lobbyists did not help to write the amendment that changed the composition of the CalOptima board,” Nguyen said during a Jan. 31 press conference.

Other accounts and records, however, show that HASC lobbyists were involved in the drafting of the December ordinance change.

Former CalOptima board Chairman Ed Kacic said he and other board members were caught by surprise by the ordinance change, which went before the Board of Supervisors without prior public comment. But, he said, HASC lobbyists Julie Puentes and Jim Lott told him and CalOptima board Vice Chairman Jim McAleer “in a face-to-face meeting” just before the supervisors’ first vote that the “draft had considerable input from HASC.”

HASC has declined to comment on the grand jury report. Lobbyist Jim Lott wrote in an email the day the grand jury report was released: “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.”

Other issues raised by the grand jury include:

  • 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.’ ” Sixteen top executives, including the CEO, chief financial officer, chief medical officer and chief operating officer, have left CalOptima since Nguyen began remaking its board of directors.
  • “Member organizations have expressed fear of retaliation if they do not support certain [unnamed] causes or candidates and the Board of Supervisors majority has not attempted to curtail or dispel these fears.”
  • An unidentified CalOptima board member privately stopped staff from hiring an outside law firm to investigate allegations against four board members, even though the board had voted unanimously to hire the firm.
  • “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.”
  • A majority of the five supervisors “failed to take an active role in preserving [CalOptima as] an entity playing a vital role in the healthcare needs of the County’s young, disabled, low income and senior residents.” It also blamed a majority of the supervisors for allowing the top CalOptima executives to leave.
  • The decision by the current CalOptima board to seek a total of $90,321 from two former board chairmen — Ed Kacic and Michael Stephens — “had all the earmarks of retribution by the retooled Board of Directors against the Chairmen for fervently opposing the ordinance change.”
  • “Supervisors should change the CalOptima board of directors to include more than one supervisor and remove the two county employes, 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. All five supervisors serve on the Orange County Transportation Authority board even though it handles less taxpayer money than CalOptima.

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