MISSION STATEMENT AD HOC COMMITTEE CLINICA SIERRA VISTA
An Ad Hoc Committee was appointed by the Foreperson of the 2004-2005 Kern County Grand Jury to investigate the operations of the Clinica Sierra Vista, a nonprofit Corporation incorporated in the State of California. The goal of the Committee was to search for answers to questions raised by members of the public and the media concerning the administration of the Clinica Sierra Vista. The mission of this Committee was to suggest possible solutions to problems that were considered to be significant errors or omissions. The following report is the recommendation of the Ad Hoc Committee.
CLINICA SIERRA VISTA
PURPOSE OF INQUIRY: An Ad Hoc committee may be appointed by the Grand Jury to study any County function pursuant to Penal Code section 925 in that County contracts with Clinica Sierra Vista provide for County oversight and audits to the extent of such contracts for services. An Ad Hoc Committee of the 2004-2005 Kern County Grand Jury was assigned to review complaints about the operations of the Clinica Sierra Vista (Clinica), a nonprofit corporation incorporated in the State of California. The complaints were lodged with the Grand Jury after articles were published by the Bakersfield Californian concerning the raise in salary for the Chief Executive Officer of the Corporation. PROCESS: Eight members of the Grand Jury were selected to serve on this Committee. The Committee visited four County of Kern departments and interviewed five county employees. In addition two members of the Clinica staff and six past or present Clinica Board members were interviewed. Information was also obtained from news media articles, web sites, copies of previous audits of the corporate accounts, and other documents obtained from various sources, including among others the Articles of Incorporation, Bylaws and the Financial Policies of the Corporation. BACKGROUND: The Clinica Sierra Vista was originally incorporated as the Kern County Liberation Movement Health Committee, Inc. The Articles of Incorporation were filed with the State of California Secretary of State on August 4, 1970. In 1975 the name was changed to the Clinica Sierra Vista. On August 26, 1975, the Clinica de los Campesinos, incorporated on December 14, 1971, changed its name to Clinica Sierra Vista. On April 27, 1994, Clinica Sierra Vista, referred to as the Survivor, and Community Health Centers of Kern County, referred to as the Disappearing Corporation, merged. Clinica operates 14 medical clinics and two dental clinics in nine cities in Kern and Inyo Counties with funds obtained from the Federal, State, and County (Kern, Inyo, and Mono) governments as well as private funding. It serves a geographically dispersed, lowmoderate-fixed income, ethnically diverse, frontier-rural-urban-homeless patient population. It has grown to be one of the largest comprehensive migrant/community health care systems in the State of California with a staff of approximately 600 and a yearly budget of over $35 million.
Clinica provides high quality, comprehensive primary and preventative health care to populations of Kern and Inyo Counties regardless of ability to pay. Clinica provides comprehensive primary medical care, dental services and behavioral health service (both adult and children). Clinical support programs such as cancer detection, diabetes, family planning, medical nutrition therapy, as well as services provided to the homeless population are provided. The Women, Infants and Children (WIC) program operates 21 locations throughout Kern County, which is the 10th largest in the State of California. FINDINGS: 1. The Committee finds that the Clinica provides a necessary and good service to the population of Kern County who do not have access to adequate health care. In the absence of the Chief Executive Officer (due to illness) the appointed Interim Executive Officer appears to be qualified to perform the duties of an executive officer. The existing Board of Directors is comprised of 11 members of a possible 15. Board members serve for a term of three years and can be elected by the Board to serve additional terms. There is no limit to the number of terms a member can serve. A plurality of the Board members must be Consumer Members (users of regular health care provided by the Clinica) and the balance are Community Members selected for their expertise in relevant subject matters such as local government, finance and banking, legal affairs, and other commercial and industrial concerns or social services within the community. The criteria used to select the Consumer Members is that they be broadly representative of the p eople served by the Corporation in terms of factors such as ethnicity, race, background, sex, occupation, and economic status. No consideration is given to education and/or related experience requirements. There is an apparent lack of Board oversight which appears to be a direct result of the composition of the Board. The committee found that adequate training of Board members as required by the Corporation Bylaws is not being fulfilled. The composition of the Board is such that they are not qualified to oversee a $35 million budget. As a result of apparent lack of oversight by the Board, the CEO of Clinica has complete and total control over the operations of the Corporation and effectively has to answer to no one.
The Bylaws of the Corporation require the Board to appoint one of its members as Treasurer of the Corporation. Not enough emphasis has been given to the requirements for the position. The Bylaws and Financial Policies of the Corporation are not in agreement with each other. As the result of the differences noted in item 11, it is apparent that there are different policies followed by the staff in issuing corporate checks. The Corporate Financial Policy states that an auditor of the Clinica records be retained for no longer that three years unless a qualified auditor is not available. The present auditor is from outside Kern County and is currently working on the audit for the fifth year or more. The Corporate Bylaws definition of Consumer Members is too narrow. Board members are paid a nominal sum for services and receive mileage for trips to Board meetings. After reviewing the Corporate Bylaws and Financial Policies it has been determined that it is within the scope and authority of the Board to grant raises to the Clinica staff. An Opinion No. 01-504 dated October 24, 2001, given by the State of California Attorney General Bill Lockyer states “We conclude that a grand jury may not hire an expert for the purpose of investigating a nonprofit corporation established by or operated on behalf of a public entity”. As a result of this opinion, this Ad Hoc Committee of the 2004-2005 Kern County Grand Jury has been restricted in the scope of its investigation into the complaints received about the operations of Clinica.
COMMENTS: 1. The Committee believes that there should be a limited number of terms that can be served by the Clinica Board members. Too many terms can lead to complacency and a tendency to ignore modern techniques and methods of management as they emerge. Without a minimal educational and/or experience background Board members are ill equipped to oversee the operations of a corporation of this size. As a result members may not be able to make an independent judgement on subject matters and thus feel obligated to approve all resolutions presented. The Committee believes that Clinica should have more specific requirements and qualifications for Board members. An example of such deficiencies in requirements and
qualification of Board members is the appointment of the present Treasurer of Clinica. This position is held by a young woman enrolled at California State University Bakersfield with a major in Criminal Justice and a minor in Psychology. The Committee believes these do not meet requirements for a Treasurer who oversees an annual budget of over $35 million. 3. There are discrepancies between the Bylaws and the Financial Policies of the corporation. The Committee believes this has led to a lack of conformity in procedures for disbursement of funds. It was noted that in the absence of the Treasurer the Clinica uses a rubber stamp of the Treasurer’s signature, a violation of the Bylaws and Financial Policies. A policy does not appear to be in place setting the amount of expenditure that can be made by department heads or purchasing agent before it has to be approved by the Board. The Committee believes the Bylaws and Financial Policies should be brought up to date and conform to each other. Some of the Board members that have been appointed do not attend board meetings. This lack of attendance is due to several factors one of which is the distance they would have to travel. Further, some of the Board members have not been supplied with copies of the Bylaws and Financial Policies or given the required training for directorship as set out in the Bylaws. These oversights should be corrected. The Committee is of the opinion that at least 51% of the Board members should be qualified professional people including but not limited to medical staff and Kern County officials or persons appointed by Kern County officials. Because the Bylaws and State of California statutes require that at least 51% of Board members be Consumer members the definition of such Consumer members must be interpreted differently or redefined to assure competent Consumer members are appointed to the Board. Greater care must also be taken in the selection of Community members to assure competent and professional discharge of duties. The apparent lack of oversight by the Board results in t e CEO having complete h control over the operations of the Corporation and thus the CEO effectively answers to no one. Even though the CEO actions may be legal the potential for unethical behavior and/or actions is still present. The Committee is of the opinion that Kern County, as a provider of tax dollars to the Clinica, is a Consumer member. Over the past few years Kern County has uncovered some nonprofit corporations that have abused funds provided to them by Kern County and failed to adequately protect the Public’s money.
RECOMMENDATIONS: TO CLINICA SIERRA VISTA: 1. The Clinica Sierra Vista Board members are appointed for a term of three years and terms may be extended for an indefinite number of times. It is recommended that the number of terms a Board member can serve be limited to three consecutive ones. The Clinica Sierra Vista should revise the definition of Consumer Members to include qualified professional people such as medical staff and Kern County officials or person(s) appointed by Kern County officials. The Clinica Sierra Vista should have more specific requirements qualifications for Board members, both Consumer and Community members. and
At least 51% of Board members should be business/professional people from residents of Kern County. Appointed Board members must have the ability to attend all meetings. The bylaws and financial policies must be revised to conform to each other. Greater care should be given to the selection of the Corporation’s auditor. Clinica Sierra Vista should post a copy of this report in their offices.
5. 6. 7. 8.
TO KERN COUNTY BOARD OF SUPERVISORS: 1. The Board of Supervisors should include in future contracts with nonprofit corporations receiving County funds a provision for appointing a Kern County official or a person recommended by Kern County officials to the organization’s boards. The Board of Supervisors bring to the attention of the State of California Senators and Assemblymen from Kern County that Section 933.6 of the Penal Code should be amended to make provision for the hiring of outside experts by Grand Juries to aid these Grand Juries in investigations of nonprofit corporations receiving county funds. The Board of Supervisors should post a copy of this report where it would be available for public viewing.
Note: Present and past Kern County Grand Jury Final Reports and Responses can be accessed at the County Library and on the Kern County Grand Jury web-site: www.co.kern.ca.us/grand jury.
RESPONSE REQUIRED FROM :
WITHIN 90 DAYS TO PRESIDING JUDGE KERN COUNTY SUPERIOR COURT 1415 TRUXTUN AVENUE BAKERSFIELD, CA 93301
Kern County Board of Supervisors Response to Grand Jury Final Report CLINICA SIERRA VISTA Recommendation: The Board of Supervisors should include in future contracts with nonprofit corporations receiving County funds a provision for appointing a Kern County official or a person recommended by Kern County officials to the organization's board. Response to Recommendation: While there is no legal barrier to a County official serving on the board of an entity which contracts with the County, there would exist the perception of a conflict of interest. This same perception of a conflict of interest would be present with a person appointed by a County official. Also noted is the difficulty of locating individuals that would have an interest in serving in such a capacity. Recommendation: The Board of Supervisors bring to the attention of the State of California Senators and Assemblymen from Kern County that Section 933.6 of the Penal Code should be amended to make provision for the hiring of outside experts by Grand Juries to aid these Grand Juries in investigation of nonprofit corporations receiving county funds. Response to Recommendation: The appropriate avenue for the Grand Jury to pursue statutory changes is through the California Grand Jurors' Association. Also, as an independent entity, the Grand Jury may also directly contact members of the State Legislature.