After former County Supervisor Andrew Do pleaded guilty to accepting bribes in exchange for arranging multi-million dollar contracts, leaders of Orange County’s health plan for the poor brought in auditors to see if he did the same thing while he served on their board for over a decade.
But in a recent report, auditors from the Ankura Consulting Group wrote they could not find conclusive proof Do improperly sent money to other organizations during his time at CalOptima, noting the agency didn’t give them many records to review.
“We discovered early on that CalOptima lacks a consistent and comprehensive categorization of its expenditures, which would enable us to identify the purpose of each expenditure,” auditors wrote.
The agency is working to change that according to an unsigned statement issued by the agency’s spokesperson, which noted staff are making changes on how they track money.
“The issue is not that CalOptima Health did not track its finances well enough. But rather, over the years, CalOptima Health recorded its expenditures using different forms of categorization based on the organization’s operational structure and initiatives,” staff wrote.
The staff noted the changes “could have occurred,” due to various things like departments reorganizing or new special projects needing different types of spending.
“These variances resulted in expenditures being recorded in alignment with the larger initiatives rather than consistently grouped specifically by the individual purpose of the expenditure,” CalOptima staff wrote in an unsigned statement responding to questions from Voice of OC.
It’s the second and seemingly final audit from the agency aimed at Do after a probe released last year found no evidence that Do interfered in a failed property deal that cost the agency $460,000, with auditors again citing a lack of records for that investigation.
Read: CalOptima Probe Finds $460,000 Lost on Failed Real Estate Deal
As part of that probe, lawyers from the firm Bird & Marella noted they lacked subpoena power or the ability to interview staff under oath.
They also weren’t able to find records of several closed door discussions, forcing them to rely on eyewitness accounts from two to three years ago.
Lawyers noted there were various points where CalOptima staff ignored policies around disclosing closed door conversations to the public and failed to properly handle a multi-million dollar property sale.
What Did the Auditors Investigate?
In an eight-page summary released last week, auditors from Ankura noted that most of the documents they requested never came through, and that they didn’t interview anybody who worked for the agency as part of their review.
It’s unclear how much CalOptima spent on this audit and the previous one.
When asked about costs, staff noted the effort cost $280,000 for the “CalOptima Health Expenditure Review Summary,” but it’s unclear if that covered both or only one audit.
They did not review any contracts that “would require an extensive review by CalOptima staff to determine whether the vendor met certain specifications.”
That included contracts surrounding pharmacy benefit managers, medical review organizations, health delegates, healthcare advisory or real estate consultants, software vendors or contracts with outside lawyers.
Auditors did not speak to staff, according to the unsigned statement.
“Ankura was asked to focus on reviewing the materials rather than conducting specific interviews with CalOptima Health employees related to those expenditures,” staff wrote.
Auditors also did not look at any investigations that didn’t involve spending, including HR matters or discussions of the agency’s financial statements or strategic plans.
Instead, auditors focused their investigation on money sent to any “federal and state legislative advocacy as well as communication firms,” along with grants to nonprofits and funds for “community events and activities,” along with a review of some of Do’s emails to staff.
But once they started requesting records around those contracts, they weren’t able to get everything they wanted.
“The availability of requested documentation to us varied across the types of expenditures and specific programs,” auditors wrote. “In many instances, requested documentation was not provided to us due, in part, to staff turnover or lack of comprehensive record keeping, particularly for earlier parts of the period of interest.”
“The scope of our engagement did not include interviews with CalOptima staff, board members, or third parties.”
Auditors recommended having CalOptima staff review contracts and events to make sure that board members are doing enough disclosure for both contracts and other community events, a recommendation the agency’s staff are implementing according to a press release.
In their unsigned statement, staff also noted they did not plan to release the full findings of the audit – only a summary.
“The board’s intent was to release only relevant information related to the matters involving public funds in which former Supervisor Do may have exercised undue influence, while limiting information and identities that were ancillary and lacked nexus to the report’s stated goal,” staff wrote.
County supervisors generally would not speak to Voice of OC questions about the auditors’ statements regarding the difficulties of tracking expenses at CalOptima.
Supervisors Don Wagner and Janet Nguyen did not respond to requests for comment.
Supervisor Katrina Foley said on Monday afternoon she had not read the report.
Supervisor Vicente Sarmiento, who’s also the current chair of CalOptima’s board, didn’t speak to the questions raised by auditors about lack of access to records but praised the report and pointed to reforms the agency is making moving forward.
“While this review was not required, we acted proactively to reinforce transparency and oversight,” Sarmiento wrote in a Thursday statement. “We will continue to build on these measures to further strengthen policies, procedures, and accountability moving forward.”
County Supervisor Doug Chaffee, who sat on CalOptima’s board when they launched the review, said this second audit was the end of the matter for him.
“The independent audit confirms there was no fraud at CalOptima during Andrew Do’s tenure,” Chaffee wrote in a Thursday statement. “With these findings, we can put this matter behind us and remain focused on delivering quality health care services to the residents who depend on CalOptima every day.”
Yet CalOptima has not released the full audit, and in the eight-page summary that was released, auditors highlighted that their review had limitations.
Auditors noted they didn’t find instances where Do directed funds to specific organizations or that intended services weren’t provided or that funds were spent on Do’s exclusive benefit.
“Ankura did not identify instances where Do improperly directed CalOptima funds to specific organizations,” they continued. “We also did not identify situations where intended services were not provided or where funds were expended for Do’s exclusive benefit.”
Yet they also highlighted that the lack of records they were able to analyze and the staff turnover at CalOptima limited the depth of their analysis.
“Based on the information available to Ankura through the approach described above, Do appears to have participated in certain discussions and votes with the CalOptima BOD (Board of Directors) related to organizations with which he had or may have potentially had relationships without proper disclosure of his potential conflicts of interest.”