Tahoe Forest hospital: Attorney sees no conflict of interest
August 6, 2014
TRUCKEE, Calif. — While the hospital board is conducting an internal investigation regarding conflict of interest policies, some residents want a larger authority to step in.
"I would just like to ask you to put our CEO on administrative leave and have the state come in and do an investigation on several topics," Truckee resident Ruth Cross told Tahoe Forest Hospital District directors at their July 22 meeting. "… I think the board has to take some responsibility for what's happening and allow somebody from the state level to come in and do an investigation."
Other residents have offered similar suggestions by way of emails to the Sierra Sun, Facebook posts and other commentary in the days after Moonshine Ink's July 11 report that raised examples of a potential conflict of interest with TFHD CEO Bob Schapper, and the hospital's involvement with Medical Practice Solutions Inc., a company operated by his wife, Marsha Schapper.
Regardless of any action stemming from an internal review, the Nevada County District Attorney, California Attorney General and California Fair Political Practices Commission all have jurisdiction to investigate contractual conflict of interest violations, under the state's 1090 code law.
"The (hospital) board's findings are irrelevant to a criminal investigation," said Nevada County DA Cliff Newell. "Any findings from a non-law enforcement agency would simply be considered information."
When asked if the DA's office is looking into the matter with Schapper and his wife's medical company, Newell said: "I don't talk about whether I'm going to investigate or not a particular issue."
On Thursday, a spokesperson for the state attorney general's office said: "We would have to decline to comment at this point," when asked if the office is looking into the matter.
The hospital district first contracted with MPS in February 2003, according to previous reports, and over the course of more than seven years, the company was paid roughly $915,000 for its services.
California Secretary of State documents show Bob Schapper was listed as the company's chief financial officer in 2003 and 2013.
In seeking a response, the Sun asked Schapper the following question via email on Monday (attempts to speak with Schapper in person were not granted by hospital administration):
"At last week's board meeting, one member of the public called for you to be put on administrative leave, and for the state to do an investigation. What's your outlook for holding the CEO position with TFHD? Do you feel a comment/request from the public like this is warranted?"
The following statement credited to Schapper was emailed to the Sun by Paige Nebeker Thomason, TFHD director of marketing and communications, on Tuesday: "This was politically motivated. It is absolutely unwarranted. My performance evaluations over the years have been outstanding."
Attempts to get Schapper or the hospital to elaborate on his comment were unsuccessful.
Code 1090 states: "Members of the legislature, state, county, district, judicial district, and city officers or employees shall not be financially interested in any contract made by them in their official capacity, or by any body or board of which they are members."
"As has been disclosed many times over the years, I have been a participant in name only in Medical Practice Solutions," Schapper said in a statement provided to the Sun. "I am not an active participant in the corporation. When Marsha filed the corporate documents, she wanted me to be listed, which is not at all unusual … I was listed on paper, but factually had no involvement."
Randy Riddle, whose focus includes ethics laws, including conflict of interest matters, was recently hired by Schapper's personal attorney.
Riddle, a partner with San Francisco-based Renne Sloan Holtzman Sakai, said he conducted an analysis on whether a 1090 violation occurred.
"I concluded there was no violation," he said, considering Schapper was not involved in the making of the MPS contract.
A violation of 1090, a felony, could result in a possible state prison sentence, removal of office or assessed fines, Newell said.
In recent history, the DA's office has prosecuted only one 1090 violation, a 2003 case resulting in the accused having to repay "the money that was wrongfully obtained," Newell said.
Another California code applicable to a conflict of interest is 87100, which is a provision of the California Political Reform Act, Newell said. While FPPC enforces the provisions of the Political Reform Act, the DA and AG can prosecute violations.
The code states: "No public official at any level of state or local government shall make, participate in making or in any way attempt to use his official position to influence a governmental decision in which he knows or has reason to know he has a financial interest."
When asked if he included 87100 in his analysis, Riddle said he did not. However, he said his legal opinion for 1090 would apply to 87100.
"To the best of my knowledge, Bob Schapper was not involved in any way in negotiating or approving the MPS contract, recommending it to the district or influencing in any way the decision of the district to enter into a contract," TFHD director Roger Kahn said in an interview with the Sun.
A violation of 87100, a misdemeanor, could result in jail time, probation or fines.
When asked if media reports raising potential conflict of interest concerns will have any impact on the hospital district and the care it provides to the public, Schapper said, "Absolutely not."
"We are an outstanding, high performing, high quality institution with great leadership, great staff and great doctors, and an army of community leaders and volunteers who feel as passionately about our health system as I do as CEO," he said in a provided statement.