A showdown over control of the health care plan for nearly 800,000 disabled, elderly and low-income Orange County residents intensified Tuesday, with county supervisors expanding their power at CalOptima and state legislators moving to block that effort.
On one side are three county supervisors – Andrew Do, Michelle Steel, and Shawn Nelson – who approved a last-minute proposal Tuesday to add all five supervisors to the CalOptima governing board instead of the current two supervisors.
With the growth of the health care industry and changes happening nationally, Do said the county Board of Supervisors “needs to have closer oversight” of CalOptima.
Do, who has been angry the CalOptima board didn’t elect him as its chairman, proposed the last-minute measure with Steel for supervisors to gain a controlling majority on the board.
In order to gain Nelson's vote and pass the measure, they agreed to reshape their proposal during the meeting Tuesday, to instead leave the current CalOptima board in place and add the three remaining supervisors.
The approved measure increases the board to 12 voting members, up from the current nine, and increases supervisors’ share of the board seats to just under half. A second, and final, vote to approve the measure is scheduled for July 25.
On the other side of the issue are the other two supervisors – Lisa Bartlett, who serves on the CalOptima with Do, and Todd Spitzer. Other opponents of changing the CalOptima board makeup include the Orange County Medical Association, local hospitals, health clinics, the Orange County Taxpayers Association, and a bipartisan group of all 15 state legislators on the Assembly Health Committee. The committee has 12 Democrats and three Republicans.
“Since the new CalOptima board was seated less than one year ago, they have addressed the challenges of a changing healthcare landscape with a high level of competence and experience in the field,” Bartlett wrote in a letter to her colleagues.
“Nothing egregious has occurred which would warrant any change on the current CalOptima Board of Directors.”
After hearing testimony on the issue, the Assembly Health Committee voted unanimously Tuesday to send to the Local Government Committee a bill that writes the current board structure – which has nine voting members, including two supervisors – into state law.
The bill, SB 4, was introduced by Sen. Tony Mendoza (D-Artesia). If it passes the full Assembly and Senate and is signed by Gov. Jerry Brown, it would take effect in January and keep intact the current board structure. Supervisors would lose their ability to change the structure.
The current board structure was created by Bartlett and Do last year, and the board members took office in August.
Mendoza, whose LA County-based district includes the OC city of Buena Park, told the committee his bill is intended to bring stability to CalOptima.
“Unfortunately, the CalOptima board has suffered a great deal of turnover and turmoil,” Mendoza said at Tuesday’s hearing in Sacramento.
“When I first looked at the bill I had some concerns,” said the health committee’s chairman, Assemblyman Jim Wood (D-Healdsburg). But he said he supported the bill after reviewing CalOptima’s history over the past six years.
That history includes a board takeover by a supervisor who was Do’s mentor, Janet Nguyen, that led to one of the most troubled periods in the health plan's history.
Before her 2011 takeover, CalOptima was considered one of the best-run county health plans in California. But Nguyen’s takeover, aided by the Hospital Association of Southern California (HASC), restructured the board to give Nguyen and the medical industry more power. At the same time, the national health industry was expanding dramatically and more than 15 top CalOptima executives left for other positions.
In 2014, near the end of her term, federal auditors said problems at CalOptima were so bad they were a “serious safety and health threat” to thousands of people who received health care through one of the plan's programs.
Auditors cited “widespread and systemic” failures, including denial of prescriptions, even when the drugs were covered by the plan. CalOptima also improperly refused to pay for emergency services, failed to pay medical providers on a timely basis, and numerous failures in handling appeals of denied coverage.
Nguyen was also accused by a county grand jury of improperly using her board restructuring to fundraise for her election campaign. She left the board in 2014 when she was elected to the state Senate.
Nguyen worked closely with Do as her chief of staff when she was a supervisor, and showed other county politicians how CalOptima can be a rich source of campaign funds.
During her term on its board she raised more than $100,000 from the medical industry, according to her campaign reports. And Do, who followed her as supervisor, raised a similar amount.
Do and Nguyen have since had a serious falling out and no longer are allies.
CalOptima spent the past few years fixing the problems that emerged during Nguyen’s tenure, and has tried to regain the reputation it lost.
The current board has nine voting members, mostly members of the medical industry – doctors and a former hospital CEO – plus two supervisors.
After the current board took office last August, Do said he wanted them to be more independent.
Do announced in February he wanted to become CalOptima’s board chairman. But when the vote took place the following month, he was rejected on a 6-3 vote. Do and Bartlett were two of the three votes for him.
This infuriated Do, who publicly accused the other board members of opposing him because of his Vietnamese-American ethnicity.
Then, this past Friday, he and Steel introduced the measure to reshape the board and give supervisors majority control. They placed it on the agenda for Tuesday’s supervisors meeting, at the last allowable time to add agenda items.
Their proposal called for removing current board members and replacing them with supervisors and their subordinates, which would have given the supervisors a majority of seven out of 11 seats.
It also would remove all of the current CalOptima board members who aren’t supervisors. If they wanted to stay on the board, they'd have to re-apply and be chosen by the supervisors to remain.
Over the weekend, an aide to Do responded to written questions about his effort, but did not answer whether he was acting because he was angry at being rejected for board chairman.
Steel and others argued that legislators, in opposing the effort, was trying to take away “local control."
Referring to the supervisors, Steel said: "We are the [ones who] know more about Orange County residents, what they need from CalOptima, more than actually Sacramento."
She added: "Most [of the] people that are working in Sacramento...think they know everything. And they don't."
The "local control" argument didn’t fly with Carolyn Cavecche, president and CEO of the Orange County Taxpayers Association. She testified in Sacramento Tuesday in support of Mendoza’s bill and reminded the Assembly committee that CalOptima’s $3.4 billion in annual funding comes from federal and state tax dollars.
“CalOptima needs stable oversight. Governmental local control has failed the citizens and residents of Orange County,” Cavecche said. She blamed the failures on “political posturing.”
Spitzer, meanwhile, repeatedly protested against Do and Steel’s effort and how quickly his colleagues were moving.
“I’m a little frustrated that this was put on the agenda [on] Friday,” Spitzer said.
“We cannot amend this on the fly from this dais,” he said of the substantial changes to the proposal to accommodate Nelson. He asked his colleagues to bring the item back in two weeks to allow meaningful input from the stakeholders who would be affected by the change.
With Spitzer and Bartlett adamantly opposing the effort, Nelson became the key vote.
He made it clear he didn’t want to remove existing board members or add supervisors’ subordinates. But he said all five supervisors should serve on the board, meaning the three who aren’t currently on it should be added.
“I do not want to be on this board, in fact I’d pay to not be on it,” Nelson said. But from a “duty” standpoint, he said, it demands the supervisors' attention.
Do and Steel agreed to Nelson's proposal, which they needed to do if they wanted to win his vote and add all five supervisors to the health agency's board.
The supervisors’ own attorney, however, warned them against approving such a significant re-write during Tuesday's meeting, and suggested doing so may violate transparency laws.
After supervisors made clear they wanted to approve it, County Counsel Leon Page told them the revised proposal was not before the board Tuesday. He said staff could prepare the changes and bring them back to the board for approval in the future.
But Steel and Nelson pushed back at Page, describing the changes as not that significant.
Nelson then asked Page if he’s “comfortable” with what’s being done.
Page let out an audible exhale. He then reiterated that “you are voting on something that is not before you.”
A state transparency law, the Ralph M. Brown Act, bans local govnment from taking actions that are not on an agenda that’s been publicly posted 72 hours ahead of time. Because of that, if supervisors want to make major changes to a proposed action, they have to bring it back for a vote at a future meeting.
Page made another point about what the supervisors were preparing to approve.
He noted the revised CalOptima proposal would create a board with an even number of voting members, 12. Governing boards typically have an odd number of members to avoid tie votes, he noted.
But Do, Steel, and Nelson moved forward. Do said the measure would be updated during the supervisors’ closed session lunch break and then brought back for a vote after lunch.
When it came up for a vote after lunch, the changes were so hastily written that the measure contained glaring typos.
One the typos, in a section of the proposed law about selecting board members, stated:
“The Health Care Agency shall present the Selection Panel’s recommendations to.”
The sentence ended without saying who was supposed to receive the recommendations. The supervisors fixed it on the dais to say the recommendations for applicants go to the Board of Supervisors.
The restructuring passed on a 3-1 vote, with Do, Steel and Nelson voting for it and Spitzer voting against it. Bartlett was absent, but made her opposition clear in her letter to her colleagues.
The second vote by supervisors on July 25 would make it final.
Nick Gerda covers county government and Santa Ana for Voice of OC. You can contact him at firstname.lastname@example.org.