Orange County’s health director is drawing conflict of interest questions, as he recommends hiring a contractor he advises on the side, for over half a million dollars in county work – all without competitive bidding.

Dr. Clayton Chau also doesn’t disclose his advisory board position with contractor Advance OC in his recommendation that the county hire the vendor for $600,000 in no-bid work, up for approval Tuesday.

Chau should, at minimum, be transparent about his relationship with the contractor – Advance OC – if not recuse himself entirely from recommending them for county work, said Tracy Westen, a government ethics expert who formerly headed the Center for Governmental Studies.

“I would certainly recuse myself. That’s a clear conflict of interest,” said Westen.

“It’s certainly something that should be disclosed,” he added.

Chau declined to answer questions for this article, telling a reporter last week that he was in a meeting and deferring comment to a Health Care Agency spokesperson.

A statement provided days later by the spokesperson said Chau and the other advisory board members don’t make decisions at Advance OC, but rather provide “technical assistance” to the vendor.

§

Advance OC relies on Chau and its other advisory board members for expertise on new features for the contractor’s services, which focus on building online maps of health data that highlights which communities are being underserved.

“His particular role is to give us a sense, from a public health perspective, how different features would be interwoven into our platform,” said Katie Kalvoda, the founder and CEO of Advance OC, in an interview.

“We come to them when we have questions about different things, and we lean on them for their experience and expertise,” she said, adding that advisory board members don’t have any voting power in how Advance OC is run.

But Chau’s advisory position with the contractor should lead him to step away from any involvement in his recommendations as county official for them to get contracts, according to Westen.

The lack of competitive bidding for the $600,000 contract, he added, “doesn’t make the case any better.”

“The public is entitled to know that their officials are making the best possible decisions, free of personal bias,” Westen said.

“They deserve to know they’re getting the best government possible,” he said.

It’s not the first time Chau has faced conflicts of interest concerns.

§

He was fined by state authorities back in 2014 for failing to disclose lucrative drug company speaking fees when he worked as a top psychiatrist at the county Health Care Agency he now leads.

He received $84,250 in apparent violation of an agency policy against accepting such payments, according to a 2013 Voice of OC investigation that revealed the payments.

As for why there was no competitive bidding for Advance OC’s original contract last year and the upcoming proposed one, Chau’s office said the first contract came as they were “looking for rapid solutions to understanding community needs related to COVID testing and other related COVID responses.”

The new, $600,000 proposed contract – funded by a federal CDC grant – would build on that work, Chau’s office said, adding “there is insufficient time to work with a new vendor.”

The new conflict concerns come amid reports that supervisors’ Chairman Andrew Do is trying to move Chau over to CalOptima, the county’s multi-billion-dollar public health insurance for low-income, disabled and elderly residents.

Do and Chau haven’t returned messages asking if there’s any truth to those reports.

Advance OC was less than a year old when it got its first no-bid county contract in July 2020, to develop an online map showing health and quality of life disparities across Orange County.

The recommendation to hire Advance OC for that work was made not by the health agency but by a politician – Do – who in turn publicly credited Chau for spearheading the effort and getting Do on board.

“I completely bought in. And so, I want to thank Dr. Chau for taking the lead on that,” Do said just before voting for Advance OC’s original $385,000 contract.

In his report justifying the first contract, Do said it would allow the county to map out social equity data – without noting the county already was paying for a separate social equity data initiative underway, known as Orange County’s Healthier Together.

The new $600,000 proposed contract up for approval Tuesday is being recommended by Chau without any competitive bidding on whether Advance OC is the best vendor for the work.

§

The Advance OC contracts have triggered questions about why the county is paying Advance OC $102,000 to become complaint with the health privacy law HIPAA – when the county’s standard practice reportedly is to expect its contractors to already be HIPAA compliant without extra payment.

Advance OC’s CEO said the county was expecting them to have enhanced security beyond the usual HIPAA requirements.

“The HIPAA compliance that is required of us is a lot more detailed in scope, because we’re handling sensitive information. And it was to accomodate for those more intensive requirements,” Kalvoda said.

Asked if they’re handling individually-identifiable information, Kalvoda said no, but that data will be presented on “a community based platform, so we have to make sure that we have high trust security measures in place…because it’s a public asset.”

Chau’s office said the original contract was based on public data that didn’t require HIPAA-level security.

But that security later became necessary “when we determined we needed to see COVID cases and deaths across the county in conjunction with the Social Progress Index data in order to develop targeted COVID responses,” Chau’s office wrote in the statement.

The statement was attributed to Hieu Nguyen, director of the Office of Population Health and Equity, and Karin Kalk director of the Office of Project Management and Quality Improvement.

Questions also have emerged about whether the county’s hiring of Advance OC has duplicated much of the work taxpayers were already paying $66,000 a year for under the Healthier Together initiative, which has much of the same information as the Advance OC map.

Chau’s office said the Advance OC map – known as the OC Equity Map – provides more detail and features.

“The design, content and interactive capability of the OC Equity Map allows users to see layers of data and gain deeper understanding of the complexity of issues that a given community may be experiencing,” said the statement.

“Additionally, the OC Equity Map can be overlayed with other data elements, including COVID-19 data and health outcomes, to show the relationship between social progress and health outcomes within a community/neighborhood.”

§

Kalvoda said the Healthier Together initiative actually was inspired by Advance OC’s mapping effort.

“The two maps that they show on their website…came after us,” Kalvoda said.

“After they saw what we did and they felt clearly like being sort of left behind in the trend of equity mapping, they attempted to do something that was at the surface level very similar,” but not as detailed, she added.

As for there being no competitive bidding, Kalvoda said the CDC grant that’s funding the effort allows the county the option of expanding on existing partnerships it has.

“I can’t speak to the county’s approach to this, but I believe the CDC grant that they were given allows for them to make decisions about having particular partners that have already contributed to the process, or have something specific to offer,” she said.

Concerns have been growing about turmoil high up at the county Health Care Agency, including an unprecedented turnover in leadership during the pandemic – with the top three officials and several other executives departing suddenly.

Earlier this month, Voice of OC reported one of Chau’s top deputies, Margaret Bredehoft, was investigated this summer as part of an internal investigation, with officials so far declining to say what the inquiry found.

The confirmation came in response to a Voice of OC records request for any substantiated allegations against Bredehoft related to discriminatory hiring practices, retaliation and hostile workplace.

Bredehoft declined to comment when reached by phone earlier this month.

Nick Gerda covers county government for Voice of OC. You can contact him at ngerda@voiceofoc.org.

Since you've made it this far,

You are obviously connected to your community and value good journalism. As an independent and local nonprofit, our news is accessible to all, regardless of what they can afford. Our newsroom centers on Orange County’s civic and cultural life, not ad-driven clickbait. Our reporters hold powerful interests accountable to protect your quality of life. But it’s not free to produce. It depends on donors like you.

BREAKING TEXT ALERTS

Subscribe today to receive Voice of OC’s breaking news text messages (free beyond your standard messaging rates).

Join the conversation: In lieu of comments, we encourage readers to engage with us across a variety of mediums. Join our Facebook discussion. Message us via our website or staff page. Send us a secure tip. Share your thoughts in a community opinion piece.