Health Care Districts’ Business Deals Could Violate State Law
California health care districts have approved millions of dollars in business deals with companies and not-for-profits that have ties to top district officials, according to a financial review by the Bay Citizen and California Watch, the Bay Citizen reports.
The review examined contracts, tax filings, vendor payments and financial disclosures filed from 2006 to 2011. Investigators looked at 22 of the state's 74 health care districts.
The districts -- which manage hospitals and nursing homes -- oversee more than $4 billion annually in public and private funds from taxpayers, hospital revenues and various investments.
State law prohibits public officials from voting on transactions with companies or not-for-profitsÂ in which they have a financial stake. That includes transactions affecting a spouse's income.
The conflict-of-interest laws also prohibit public boards and commissions from entering into deals that could benefit a member financially, even if that member abstains from participating in the decision.
Penalties for violating such laws can include fines, voided decisions and felony prosecution.
The review identified eight questionable health care district transactions involving millions of dollars, some of which appeared to violate conflict-of-interest laws.
Some of the deals advanced the interests of financial institutions in which district officials held stock, while others included payments to firms owned by family members of district officials.
Questions Raised About District Oversight
The findings raise questionsÂ about whether oversight of the state's health care districts is adequate.Â
Local agency formation commissions, the Legislature's county-level watchdogs, are responsible for monitoring the districts, but such oversight is often incomplete, according to the Bay Citizen.
For example, the commissions in Kern and Riverside counties have never conducted a review of the Kern Valley and San Gorgonio health care districts.
Jessica Levinson -- an associate clinical professor at Loyola Law School in Los Angeles -- said health care districts need "some sort of checks to know what these officials are up to." She added, "If you are a public official, all you should be doing is serving the public, not yourself or your spouse" (Gollan/Mieszkowski, Bay Citizen, 7/13).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.