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Daniel Garcia is the chief compliance officer of Kaiser Permanente, a sort of “chief investigator” for the organization. He was hired into that position, a position he helped create, in 2002. His history with Kaiser Permanente, however, dates back to 1992, when he first became a member of the organization’s Board of Directors. He continued to serve as an outside and independent director until he became chief compliance officer on February 1, 2002.

What is interesting about Mr. Garcia’s role at the organization is that he reports to the chief executive officer, George Halvorson and is also responsible for investigating Mr. Halvorson’s conduct. This reciprocal reporting relationship is not unique, however, and similar situations exist at many other organizations and companies. What is troubling, however, is the disturbing role Mr. Garcia played in hiring Mr. Halvorson, the significant resulting conflict of interest, and Mr. Garcia’s alarming history in Los Angeles politics, which is littered with serious allegations of corruption. In fact, it appears Mr. Garcia has never met a potential conflict of interest he didn’t like, but more on that in a moment…

When Mr. Halvorson was recently forced to address the mutual conflict of interest, he, again, mislead Kaiser Permanente employees by leaving out key details. Mr. Halvorson admitted that Mr. Garcia was “was on the committee that recommended that I be hired.” In fact, Mr. Garcia was the chair of the committee that hired Mr. Halvorson.

Mr. Halvorson went on to insist that “It’s…naïve, however, to say that Dan can’t subsequently do his job [as the chief of] compliance because of that prior committee role.” Mr. Halvorson insisted that he believes that demanding otherwise would mean that “any Board member on a search committee would be unable to make future decisions and judgments about people they had voted for in a search process.”

His straw man argument couldn’t be weaker. Here’s why…

It is extremely rare for an inside director to chair a search committee, let alone an inside director who also happens to be the chief compliance officer. A chief compliance officer should be be above reproach, and avoid even the appearance of a conflict of interest.

Dan Garcia was an outside director when he was appointed to chair the selection committee. However, when he later became the primary candidate for the position chief compliance officer (which would have changed his status to a non-independent director), he should have stepped aside as head of the search committee. He didn’t. Instead, he created an even more troubling situation: Mr. Garcia hired Mr. Halvorson, the man who would become his boss. Mr. Garcia did so under the pretense of still being an “independent director.” Mr. Halvorson, by then the (not yet announced, but designated) chief executive officer, turned around and approved Mr. Garcia’s appointment as chief compliance officer. Tit for tat?

Perhaps if Mr. Garcia had been qualified to become chief compliance officer, the conflict would be less obvious. Instead, Mr. Garcia had no executive-level compliance experience or healthcare experience. In fact, Mr. Garcia’s most recent executive position at that point had been as a real estate advisor for a movie studio. That apparently qualified Mr. Garcia to make well over $1,800,000 each year as Kaiser Permanente’s chief compliance officer.

Take a closer look at the timeline:

In July 2001, then-Kaiser Foundation Health Plan chief executive David Lawrence announced he would be retiring, and Mr. Garcia was selected by the board to be the independent director who would chair the search committee.

Over the following months, Mr. Garcia eventually became a candidate to become the organization’s new chief compliance officer.

By October 2001, Minnesota Attorney General Mike Hatch had announced he intended to launch an investigation into Mr. Halvorson and his then-employer, HealthPartners.

By January 2002, Mr. Halvorson had become the lead candidate for the position, meaning he likely began receiving briefings on the organization’s operations, and almost certainly began having input into any major decisions the organization was making, such as… The appointment of Mr. Garcia on February 1, 2002.

Mr. Halvorson’s appointment was then announced by Mr. Garcia on March 7, 2002, barely a month later.

Assuming Mr. Garcia wasn’t qualified for the position of chief compliance officer, perhaps his record as an attorney and politician alone would have been clean enough to assume he could be a sort of “chief ethics officer”? Sadly, no. From quietly recommending his future wife to a city position (without pointing out they had a relationship and while glossing over her previous conviction and short jail time for forgery), to serious allegations that he engaged in a “pay for play” relationship with Los Angeles real estate developer Ted Stein, to his troubling relationship with Leland Wong (who he subsequently was required to investigate at Kaiser Permanente), Mr. Garcia’s past is filled with allegations of conflicts of interest and abuse of power.

In a 2004 exposé, the Los Angeles Times highlighted Mr. Garcia’s lack of concern for avoiding conflicts of interest (let alone the appearance):

Under the City Charter, commissioners are required to disqualify themselves from voting on projects in which they have a conflict of interest or the appearance of a conflict. In a series of opinions dating back many years, the city attorney’s office has consistently held that a commissioner should withdraw ‘whenever the facts are such that the public might well question his objectivity.’ [...] But in voting on Stein’s zoning change, Garcia [voted to approve] the request.”

Mr. Garcia, who chaired the planning commission, voted to approve a string of other requests that Mr. Stein brought before the commission, without ever disclosing their past business relationship (until the Los Angeles Times came knocking).

It’s clear that Dan Garcia is neither qualified nor capable of serving as any sort of “chief compliance” or “chief ethics” officer. As a city politician, he time and time again resigned under the stench of corruption, moving from the planning commission to the police commission and finally the airport commission. By the time the Los Angeles Times did its exposé in 2004, Mr. Garcia was already firmly in place at Kaiser Permanente, protected by his boss (and the man he just happened to have hired), George Halvorson.

Making $1.8 million each year.

Tit for tat.

Former Minnesota Attorney General Mike Hatch made it clear to the Senate Finance Committee exactly what he thought of George Halvorson and his “leadership” at HealthPartners: the Attorney General said there was a complete “lack of accountability and proper stewardship.” He even alluded to Mr. Halvorson being a part of a group of “bad [executives]…who personally profit at the expense of…charitable organization[s] and [their] mission[s].” (See the recently uncovered transcript.)

When finally pushed to address the Attorney General’s investigation last year, in an email to all Kaiser Permanente employees, George Halvorson insisted that “no actions, no citations, no regulation violations, and no mandatory results of any kind” were imposed as the result of the Attorney General’s investigation.

I guess Mr. Halvorson doesn’t consider the lawsuit the Attorney General filed, and the resulting settlement an “action.”

As if lying to (or at least misleading) my colleagues at Kaiser Permanente wasn’t disgraceful enough, Mr. Halvorson and HealthPartners weren’t very honest with the IRS, either. Attorney General Hatch testified that Mr. Halvorson and HealthPartners “took steps to conceal…[executive] payments by mislabeling them, and…improperly omitted executives’ deferred compensation from the IRS [on its filings].”

Now, I wonder why Mr. Halvorson got the hell out of Dodge (or, in this case, Minnesota) when the Attorney General there launched his investigation?

Mr. Halvorson’s abuses were many, and you can’t help but laugh at more than a few. He had the not-for-profit pick up the tab for a personal Harley-Davidson book, which he labeled “business strategies research.” Interesting. Oh, and his personal Lean Cuisine microwaveable meals were deemed business “supplies.” Right.

Those transgressions were probably a wee bit cheaper than Halvorson’s $250,000 country and golf club memberships and his $50,000 season tickets to the Minnesota Vikings.

The Attorney General especially loved the luxurious “‘trade mission retreats’ to Brazil, Chile, and Ireland, though, [since] the organization only operates in Minnesota and western Wisconsin.” And he was absolutely tickled by the $9,000 of not-for-profit member money Mr. Halvorson spent “to travel to Australia to find out: ‘Are we pricing consumers out of health care?’” Indeed.

But the Attorney General saved his most direct criticism for HealthPartners’ rubber stamp board, which allowed Mr. Halvorson to do as he pleased: “…the HealthPartners board of directors not only failed to prevent these abuses, [it] actively participated in them.”

You’ve got to ask: Why did eight of Kaiser Permanente’s twelve independent board members resign or otherwise leave the board shortly after the Minnesota report was released? Mr. Halvorson has only said that “the full results of that audit were read in detail by our Board.” He had never disclosed that eight directors resigned at about the same time, leaving the organization with five simultaneously vacant seats at one point shortly after the audit was published.

I think it’s time California Attorney General Jerry Brown take a closer look at George Halvorson and his handpicked Kaiser Foundation Health Plan Board of Directors, don’t you?

This story was originally posted at justendeal.com.

In 2003, when Christine Cassel joined the Kaiser Foundation Health Plan Board of Directors, she was also selected to chair the Board’s Quality and Health Improvement Committee. Since she took over, there has been a continuous stream of serious lapses in the quality of clinical care at Kaiser Permanente. Despite significant concerns raised in the media regarding the seriously declining quality of care delivered to Kaiser Permanente members, Dr. Cassel has not publicly announced any sort of investigation into the issues, she has not released any report or plan for improvement, and she has yet to even issue a single public statement regarding any of the reported breakdowns in clinical care.

Earlier this year, we found out that Kaiser Permanente board members are making, on average, at least $124,000 for about 40 hours per year of work. Perhaps Dr. Cassel feels she just doesn’t get paid enough to bother dealing with the concerns of the nearly nine million Kaiser Permanente members she is supposed to be representing?

Dr. Cassel failed to hold Cliff Dodd accountable for questions regarding financial transactions with an outside company which he was also directing. Dr. Cassel failed to hold George Halvorson accountable for issues surrounding his fleecing of a not-for-profit healthcare organization in Minnesota. Dr. Cassel failed on each of these counts. At least she could do something about clinical quality, the one area for which she should care about, the one area which for she is undeniably responsible.

It’s time Dr. Cassel lived up to the responsibilities of her position, instead of just collecting her pay check and leaving Kaiser Permanente members holding the bag. Please consider emailing Dr. Cassel at ccassel@abim.org, or you can call her office directly at 215 446-3528.

This story was originally posted at justendeal.com.