The board for CalOptima, which provides publicly funded health coverage for nearly 900,000 needy Orange County residents, abruptly fired its entire in-house legal team of attorneys and support staff late last week. Some had been with the agency for more than 20 years, according to records.
The agency instead will rely on a contract with Sacramento firm Kennaday Leavitt for legal services.
The board approved a $1 million contract with that firm in November, for two outside attorneys to support CalOptima’s nine-member legal team, whose salaries totaled roughly $1.5 million. The agency said at the time that additional help was needed as demands for legal services increased. CalOptima now says the decision during a closed session meeting Thursday night to fire the in-house team was about “improved efficiency.”
The move comes amid increasing concerns about how the agency is operating under the direction of its board chair, Orange County Supervisor Andrew Do, with substantial turnover in key positions over the past two years while salary levels for newly created or replacement positions have jumped significantly.
The agency’s chief medical officer, executive director of quality initiatives, communications director and other key staff members all have left in recent months. The last chief executive officer stayed only a year, with an interim CEO in his place. And the salary for that job jumped in September from a minimum of $400,000 to at least $560,000.
Do could not be reached for comment Monday.
A CalOptima spokesperson didn’t respond to a request about these concerns or additional information on the legal team’s departure. She instead emailed a statement that said: “CalOptima has taken action to utilize external legal resources to improve efficiency of the agency in support of its mission and to better serve our members.”
CalOptima is the health care insurer for poor and disabled O.C. residents, a majority who qualify for Medi-Cal coverage. The agency has an annual budget of $3.7 billion and operates under the direction of an eight-member board of directors.
The board started discussing the idea of contracting for outside legal services in late 2020. Do led an ad hoc committee that formed Dec. 3, 2020, to consider getting help to “address the substantial and increasing demand for legal services.”
During its Sept. 2 meeting, the eight-member board unanimously voted to request proposals from outside law firms to “augment, and integrate with, the legal services currently provided by the agency’s employed and contracted lawyers,” according to a board report.
Two months later, at the Nov. 4 meeting, the board approved using up to $1.05 million in reserves to contract for a year with Kennaday Leavitt, which has attorneys specializing in health care law, for general counsel to “work with internal lawyers.” The contract includes two additional one-year extension options and covers two full-time attorneys at $70,000 per month plus up to $210,000 in business expenses.
When the request for proposals went out, it included a requirement that the firm must have its main office in the Southern California area. But that requirement was dropped when the committee came back to the board with a recommendation to contract with Kennaday Leavitt, with veteran healthcare attorney James Novello in the top post.
During the Dec. 20 meeting, the board met behind closed doors to discuss Kennaday Leavitt’s job performance. Then, on Thursday, Feb. 3, the agenda listed a closed-door session to discuss “public employee discipline/dismissal/release.” Following that meeting, a clerk reported the board had “approved the closed session item.” The Register learned all seven in-house attorneys plus a supporting paralegal and office staff member were let go.
Supervisor Doug Chaffee, who said he recently moved from alternate to full board member and has only attended a couple CalOptima meetings, said the process of changing the legal staff started before his tenure. But he said the current interim CEO, Michael Hunn, reviewed the situation “and concluded that it was not very efficient,” Chaffee said, so Hunn asked the board to “make an organizational change” to exclusively use the new outside counsel.
Chaffee said the dismissed legal staff will receive severance packages per the agency’s policy, but he didn’t have details on the amount. As to using a contracted firm instead of in-house staff for legal services, he said, “I think there is a cost savings; time will tell exactly how much.”
In recent years CalOptima has weathered its share of criticism. In 2013, the county’s Grand Jury raised flags about a wave of CalOptima staff departures and issues with leadership.
The agency seemed to have course-corrected, with little controversy for several years. But since Do took the helm of the agency, some local healthcare officials have started to criticize recent changes.
In December, a past chairman of CalOptima’s board raised concerns with the recent appointment of Do’s deputy chief of staff to a newly created position at the agency, pointing to the staffer’s lack of experience in the healthcare industry and starting salary of $282,000, the Voice of OC reported.
The month before that, the Hospital Association of Southern California expressed dismay that a majority of the OC Board of Supervisors ignored its recommendation on whom to appoint to a vacant CalOptima board seat, picking someone from Los Angeles County instead of someone with local experience, according to another Voice of OC story.
Source: OC Register