The California Fair Political Practices Commission has launched investigations to determine if current and former health care district officials violated state conflict-of-interest laws, the Bay Citizen reports.
The investigations follow a financial review of state health care districts conducted last month by the Bay Citizen and California Watch (Gollan, Bay Citizen, 8/22).
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-profits 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.
Details of Financial Review
Last month, the review by the Bay Citizen and California Watch found that certain districts have approved millions of dollars in business deals with companies and not-for-profits that have ties to top district officials.
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 (California Healthline, 7/13).
Details of Current Investigations
Health district officials under investigation by the Fair Political Practices Commission are:
- Frank Burgess, a former board member of the San Gorgonio Memorial Healthcare District in Riverside County;
- Arthur Faro, a board member of the Sequoia Healthcare District in Redwood City; and
- Gerald Shefren, a board member of the Sequoia Healthcare District.
According to the Bay Citizen and California Watch, Burgess attempted to influence members of the San Gorgonio Memorial Hospital board before they voted to hire a company that replaced a moving and storage firm co-owned by Burgess and his son.
In addition, the Bay Citizen and California Watch reported that Faro held stock in two banks with district ties and that Shefren voted to approve a grant to a not-for-profit where his wife worked.
Response to Investigations
Burgess denied any wrongdoing, saying that his actions did not involve "any conflict or dishonesty." He added, "If handing out a pamphlet that shows the pros and cons of my company, and that's a conflict of interest, then I did it."
Shefren said that he has not yet received a letter sent last week by the commission notifying him that he is under investigation and cannot comment on the investigation.
Faro could not be reached for comment, according to the Bay Citizen.
Gary Winuk, chief of the commission's enforcement division, said that the group is reviewing documents to determine whether to launch investigations of:
- Nancy Farber, CEO of the Washington Hospital Healthcare System in Fremont; and
- Michael Wallace, president of the Washington Township Health Care District board in Alameda County (Bay Citizen, 8/22).