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Compensation of Healthcare District Directors

Original post made by Jack Hickey, Woodside: Emerald Hills, on Mar 4, 2014

***************Compensation of Healthcare District Directors*************
_____A recent action increasing compensation of Sequoia Healthcare District(SHD) Directors puts them in the crosshairs of public scrutiny. Can “sitting” directors increase their own compensation? What constitutes “compensation”?
_____SHD Policy 15.1 States “Directors shall receive no fee for attending meetings of the District Board of Directors.”(limited by state law to $100 per meeting). Instead, the District pays up to $1,200 per month for directors health insurance premiums. That’s equivalent to $2,400 for each regularly scheduled meeting. And, newly elected directors will get $3,000 per meeting!

**********Directors vote themselves a $300 per month increase!***********

_____On December 5, 2012, SHD approved an increase of $300 per month for Directors health insurance premiums. Directors Kane, Faro and Griffin were the only yes votes. Applicability to current Board members was subject to legal review by District Counsel. The following day, Counsel sent a memo to CEO Michelson, stating: “The answer is not entirely clear, but I think it can be done.” and, “It is well settled that changes in compensation may not be imposed during the current terms of the elected officials who vote on the adjustment.”
On January 30th, President Griffin was reimbursed $6,000 for healthcare premiums covering January through April. In the first half of 2013, Directors Kane, Faro and Griffin each received $1,800 in increased benefits for which they voted.
_____Counsel’s memo suggests that “…health care benefits are not considered ‘compensation’ for most purposes“…, and, “… in the case of directors of a healthcare district, ‘compensation’ means the stipend for attending meetings.” Counsel also cites 80 Ops. Cal. Atty. Gen. “… increases or decreases in premiums payable under a health insurance plan that is provided to employees, officers, and the mayor could take effect during the term of office, since these adjustments are not subject to the Council's discretion…” The Board’s subsequent “discretionary” action(below) at their June meeting, puts the lie to that argument.

***************Board says no to increase for “sitting directors”*********

_____When I first received a copy of the memo in mid-April, I challenged the District’s action. I advised President Shefren that: “It is my opinion that, if pursued, a Writ of Mandate would issue to remedy the situation by delaying the increased subsidy for board member health insurance until the next elected directors are seated.” After reconsidering, Counsel placed the issue on the June 5, 2013 meeting agenda. The Board acted to reset the benefit for sitting Directors to it’s previous level of $1,200 per month effective July 1, 2013. The Board then discussed the issue of “payback” for benefits already received but took no action.

*Boards failure to act on “payback” creates “gift” of $1,800 to 3 Directors*

_____A statement in the minutes of the June 5, 2013 meeting reads “Directors who received additional benefits based on the increase between January-June 2013 will not be required to repay those amounts as the increase was voted on based on the best available information at the time.”
_____At the very next meeting, I challenged the inclusion of that statement in the minutes. That statement was not an action of the Board. And, “…the best available information at the time…” was contained in Counsel’s memo. The District never distributed Counsel’s memo to the public or the Board of Directors. Challenge denied, I made a Motion to Reconsider the action taken at the June meeting so that the “payback” issue could be resolved. Directors Kane Faro and Griffin, who had benefited from the increase, did not offer a second to my motion. When President Shefren, who’s original motion called for “payback”, did not second my motion, the motion died.
By failing to take action on “payback”, the Board created an $1,800 “gift” to each of the 3 Directors.

*********What are the responsibilities of Directors?**********

_____Originally, SHD was responsible for the construction, operation and maintenance of Sequoia Hospital, with hundreds of employees. Property taxes were assessed for funding, and the hospital was expected to become self-supporting. When voters approved the sale of Sequoia Hospital in 1996, the Hospital District morphed into a Healthcare District.
Unbeknownst to most property owners, taxes continue to flow into the District. The District assumed a new, philanthropic role, unintended by voters who created the District in 1946, or by voters in the 1996 election. Two Civil Grand Juries said as much.
_____Today, with no hospital, and District taxpayer assets still at their disposal, the majority of Board members function like Directors of a private Foundation. They have delegated most operations to a $192,800 per year CEO, with his staff of 1 fulltime and 3 part time employees.

*****Documentation can be found at: Web Link

Jack Hickey has been an elected Director of the Sequoia Healthcare District for 11 years, and has been a resident of Emerald Hills since 1965.

Comments (5)

Like this comment
Posted by Darwin Patnode
a resident of another community
on Mar 4, 2014 at 4:03 pm

Why am I not surprised that the Sequoia Healthcare District directors voted to give themselves needless and expensive health care benefits even though they "work" only a few hours per month? After all, the mere existence of this board is a ripoff of taxpayers. Didn't the county grand jury say that?

Like this comment
Posted by Michael G. Stogner
a resident of another community
on Mar 4, 2014 at 5:26 pm

Didn't the county grand jury say that? Yes it did.
What needs to be understood by the Taxpayers is that we need more than the Grand Jury. We need Elected Officials that respect and pay attention to the Grand Jury. Currently we don't have that and a GJ is No Threat to them at all. The only requirement is that they respond in writing within a certain amount of days. No enforcement mechanism, the SHCD is a perfect example the 5 member board of Directors responded to the Grand Jury like this,

"We decline to do so at this time."

Like this comment
Posted by Peter Carpenter
a resident of Atherton: Lindenwood
on Mar 4, 2014 at 5:29 pm

Peter Carpenter is a registered user.

It is up to the citizens to get concerned individuals to run for the SHCD to join Jack in abolishing this entity.

Like this comment
Posted by Jack Hickey
a resident of Woodside: Emerald Hills
on Aug 22, 2014 at 5:27 pm

At our August 6, 2014 board meeting, a motion was made by Director Faro to adopt Policy changes. I asked the maker of the motion(Faro) if he would accept an amendment to the Policy to pay a stipend(typically $100) for meeting attendance instead of the $1,500 insurance premium reimbursement. I cited the Peninsula Healthcare District which has such a policy. Faro denied my request.

Like this comment
Posted by Jack Hickey
a resident of Woodside: Emerald Hills
on Aug 24, 2014 at 4:16 pm

I asked the maker of the motion(Faro) if he would accept an amendment to the Policy to pay a stipend(typically $100) for meeting attendance instead of the $1,500 insurance premium reimbursement.

CORRECTION: that should have said "...$1,500 PER MONTH insurance premium reimbursement."

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