Hospital insurance contract in doubt due to possible conflict of interest | Benito Link





Editor’s Note: This article has been updated to include comments from Shelton Insurance owner Andrew Shelton.

The San Benito Health District Board meeting on June 22 The meeting was a chaotic confrontation involving members of the public, board members and nurses from Hazel Hawkins Hospital. Nine community members, along with nurses and doctors, were often applauded by others in the room as they questioned the board’s ability to govern and denounced conflicts of interest and lack of transparency in the hiring of the interim chief executive officer of the Mary Casillas hospital and contractors.

The harshest rhetoric occurred after Hazel Hawkins’ CFO Mark Robinson reported on the recommendation to renew a contract with Sun Life Stop-Loss Coverage for one year at an annual premium of $1.8 million. Robinson explained that the hospital was self-insured and the policy would provide medical coverage for employees who become critically ill.

It was at this time that director Richard Shelton recused himself and left the room because his company, Shelton Insurance, is the broker for the contract with Sun Life. What at first appeared to be a normal procedural move quickly heated up.

Resident Elia Salinas paraphrased a description in the California Code of Regulations, Title 2, subsection 87, on nepotism as any individual who sits on a board who gains financially is illegal.

Any board member who chooses to vote and approve it [another] Board members’ financial gains are also subject to lawsuits, he said. That’s exactly what I just heard. Shelton has a conflict with this. As [is] also allowed by the lawyer [Heidi Quinn] also submit a bid for it?

After stating that the board had to start over, he said: And mind you, go ahead and approve it, I dare you, because I will follow you.

Resident Rob Bernosky said he was shocked and urged two directors to tell Quinn to explain why it’s legal for you guys to enter into a deal that directly benefits a director.

If you don’t, I will write a letter to the state attorney general and ask him to explain it, he said.

Registered Nurse Diane Beck, a representative of the California Nurses Association, agreed that Shelton being part of their insurance was a conflict of interest.

RN Diane Beck said: “Shelton was part of our insurance and we couldn’t believe it because it’s a damn conflict of interest.” Photo by John Chadwell.

We have to object because he’s on our board and he’s going to benefit, and you guys want to take money away from our benefits, he said. You are all benefiting from this staff who work every day caring for our community and you are telling me right now that they will benefit from us. This is ridiculous.

Devon Pack, the new board manager, asked Robinson how long Shelton’s company had been involved in hospital insurance.

Director Devon Pack wanted the $1.8 million insurance policy terminated so the board could consider other offers. Photo by John Chadwell.

As far as I can remember, Robinson responded, adding that Shelton did not personally bring him the contract with Sun Life, even though the company, which is made up of him and his son, did. He said the deal was with Sun Life and not Shelton’s company. However, he did not face any fees that Shelton had received or would receive under the contract.

Shelton was elected to the board in November 2020. His term ends in 2024.

I think this is a good deal, Robinson said. This is what we do year after year and we do it to protect the district, but I will follow your lead wherever I go.

Pack asked how many bids were submitted. Robinson said there were five or six too high, but added they were all from the same broker. Pack suggested that the board review all offers.

I think it would be good for public transparency to see the full range of offerings, Pack said.

Andrew Shelton told BenitoLink that he bought the agency, which has had Hazel Hawkins as a client of 15 years, from his father in January 2020. He added that Rick does not deal with or benefit from Hazel Hawkins financially and that they had talked with legal counsel about what Rick could and could not do before running for public office.

Under the Fair Political Practices Act, if a decision is likely to have a financial impact or effect on any of the above interests, an official is barred from the government decision if the following two conditions are met:

  • The financial impact or effect is foreseeable e
  • The financial impact or effect is significant enough to be considered material

In general, a financial impact or effect is presumed to be both foreseeable and material if the financial interest is explicitly or directly involved in the decision, states the FPPC on its website. A financial interest is explicitly involved in the decision whenever the interest is a named party or the subject of a governmental decision before the officer or the officer’s agency.

The meeting turned into a kerfuffle when Board Chair Jeri Hernandez suggested postponing the resolution for discussion at a later date. At this point Salinas chimed in, saying Hernandez had to give a certain date, and Bernosky said, So you want a motion to file it, right?

Hernandez started saying there might be a special meeting and someone and shouted, “You need a motion.” Pack moved to table the termination at the next regular meeting in July, but Robinson said the contract would expire on July 1.

Robinson said he would call the insurance company to see if he could get an extension, but said it would be difficult to do so, adding, “There’s a chance we’ll be shorted until we fix it.”

Ultimately, the board did not choose a date, and Quinn said a decision had to be made before the next regular board meeting, scheduled for July 27.

It has to be earlier, so wrap yourself up. Otherwise, we won’t be covered, she said.

Transparency questions

Salinas said the hiring and promotion of Mary Casillas, first as chief operating officer (COO) then as interim CEO is an example of a gross lack of transparency and nepotism on the part of the board.

He said Casillas, as a board member, was part of the panel that was interviewing candidates for the COO/ambulatory services position.

Then, all of a sudden, Mary Casillas resigns and there is no public notice of her being named on the agenda, except in the minutes a month later, after she had already assumed office, Salinas said.

He continued: This is nepotism, which is against the California Constitution. A board that approves a former board member’s position within 30 days of resigning as a director who was hired.

He said it happened again when Casillas was named interim CEO.

On Oct. 27, during the regular board meeting, the contract to hire Mary Casillas as interim CEO is there again, without naming her, Salinas said. Nor is the contract publicly available.

He continued, What was the legal advice you were given to give Mary Casillas, a board member who interviewed candidates and then turns around and gives herself the job? You gave it to him. Don’t you wonder about your judgment and actions?

There was no response from the Health District prior to publication to BenitoLink’s request for comment regarding Salinas’ claims.

Rob Bernosky has accused the board of directors of hiding the amounts that were paid to the consultancy E. Riley. Photo by John Chadwell.

Additionally, Bernosky accused the board of withholding amounts that were paid to consulting firm E. Riley, which the hospital hired to help with its financial emergency, under the guise of attorney-client privilege. She said that when she received the documents she requested regarding the company, they were heavily redacted.

Hospital board orders administration to mediate with nurses union | Benito Link

You pay exorbitant fees to consultants and yourself and don’t think the public won’t notice? Bernosky asked. Stop treating us like you can just ignore us, because we are not leaving.

The board of directors is not paid, according to its statute.

Registered Nurse Ariana Sanchez said, “Instead of praising this nurse, you’ve chosen to criticize and make it appear to nurses that their salaries are too high or that it’s their fault they put a hospital in financial turmoil.” Photo by John Chadwell.

Registered Nurse Ariana Sanchez referenced BenitoLink’s article listing the top 10 highest paid hospital employees. She noted that the article stated that the third highest paid employee was a staff nurse who received $388,717.

She said what wasn’t included in the article was that this nurse worked 3,559 hours that year. Sanchez said a full-time nurse typically works 1,872 hours a year with no overtime or extra hours in three 12-hour shifts.

This nurse worked nearly the same amount of hours as two full-time employees, Sanchez said.

She continued, instead of praising this nurse, you have chosen to criticize and make it appear to nurses that their salaries are too high or that it is their fault that they put a hospital in financial crisis. Shame on you all.

She added that the narrative implying that nurses were earning too much from the administration is incorrect.

Someone has to hold the administration accountable, Sanchez said. Hazel Hawkins’ nurses will not be silenced.

Related stories of BenitoLink

Nurses union affirms no-confidence vote in San Benito health district board | Benito Link

Nurses say Hazel Hawkins’ staffing levels put patients at risk | Benito Link

Emotions run high when the nurses go on strike; hospital denies allegations of understaffing | Benito Link

Hazel Hawkins hospital board approves letter to protect union nurses | Benito Link

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