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California DOC’s Former Healthcare Receiver Overpaid Staff Benefits by $218,790

A February 2008 “disbursement review” report by California’s Inspector General (IG) revealed that the state’s former federal court-appointed prison healthcare Receiver, Robert Sillen, had expended hundreds of thousands of dollars in questionable expenses for travel, in-lieu employee benefits and other costs during his first 15 months of operation.

The IG report found that the Receiver’s office had paid 64% of its staff more than $100,000 annually, with 12 employees each taking home over $225,000. Sillen was paid $775,000 before being let go by federal Judge Thelton E. Henderson in January 2008 and replaced by J. Clark Kelso, whose annual salary is a more reasonable $224,000. [See: PLN, July 2008, p.30].

Kelso moved quickly to reduce staffing and close Sillen’s San Jose offices. The number of the highest paid employees in the Receiver’s office was reduced from 12 to 8. Overpayments made in lieu of benefits (e.g., medical, pensions, etc.) were discontinued.

The IG reported that even when full benefits were finally established, the in-lieu payments had continued unabated – in essence double-paying $218,790 in such expenses. The report also uncovered unsubstantiated expense vouchers, including a $740 dinner tab at a Sacramento steakhouse and $13,000 for gift bags for nurses during Nurses’ Appreciation Week. Other questionable costs included $12,000 in employee meal and lodging claims. A consultant who was allowed a $125-per-day meal allowance exceeded that amount by $7,200.

Kelso reported to Judge Henderson that the Receiver’s annual office expenditures were being cut by 22%, or $4 million. Regardless, Assemblyman Todd Spitzer, who heads the state legislature’s prison oversight committee, called for the return of the overpayments. Failing that, “the U.S. Attorney should go after those employees for double-dipping,” Spitzer opined.

Fair enough. But shouldn’t Spitzer likewise demand that the political committee for California’s Proposition 9 ballot initiative (“Marsy’s Law,” which was approved by voters in November 2008 and triples lifer parole denials to a presumptive 15-year set-off) return the $4.9 million it received from Spitzer’s close ally, billionaire Henry Nicholas III, who was indicted on corruption charges? Nicholas’ fortunes have been linked to an alleged $2.2 billion in stock fraud at his firm, Broadcom, which makes that money equally tainted. [See: PLN, May 2009, p.12].

Nor has Kelso’s tenure as Receiver been without controversy, including the firings of three top officials, including John Hagar, Kelso’s chief of staff, and excessive salaries paid to California prison medical staff. [See: PLN, Oct. 2009, p.20].

Sources: Office of the Inspector General, California Prison Health Care Receivership, Review of Disbursements April 2006 through June 2007; San Francisco Bay View

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