Health Care Districts

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Millions in Health Care District Deals Involve Firms with Ties to Officials

Jennifer Gollan and Katharine Mieszkowski, The Bay Citizen

Board of directors president Michael Wallace at the district board meeting held at Washington Hospital in Fremont, CA Monday May 21st, 2012. (MichaelShort: California Watch)

Michael Wallace, president of the Washington Township Health Care District board which does business with Fremont Bank, is also the chairman of the board of the Bank. (Michael Short: California Watch)

A financial review of more than 20 health care districts in California found millions of dollars in transactions involving companies and nonprofits with ties to top district officials.

The findings raise questions about the adequacy of state and local scrutiny of the taxpayer-funded districts, which operate nursing homes and hospitals, distribute grants to health programs and manage their own real estate portfolios. The elected boards that run California health care districts oversee more than $4 billion annually in public and private funds from sources including state and local taxpayers, investments, real estate holdings and, in some cases, hospital revenues.

In one example, since 1990, Michael Wallace has served on the board of directors of the Washington Township Health Care District – which banks with Fremont Bank and, over the past decade, has paid the Alameda County-based financial institution more than $1.2 million in fees.

Some of the transactions uncovered … underscore the often opaque and cozy relationships between public officials and contractors.

During that same period, Wallace has held various leadership roles at Fremont Bank and is now its board chairman.  As recently as last year, his salary as chairman was more than $100,000, and he held more than $1 million of stock in the bank’s parent company.

In a statement issued through the district, Wallace defended his actions, saying he has followed legal requirements. “I did not participate in the district’s selection of Fremont Bank in 2001 and abstained from the board’s vote,” the statement said. Continue reading