Senior state hospitals official cleared of wrongdoing, will retire

SAN FRANCISCO — The chief deputy director of the California Department of State Hospitals has been cleared of wrongdoing in a sexual harassment and discrimination investigation but has decided to retire, state officials have confirmed.

Kathy Gaither was placed on paid administrative leave on July 15 -- within a week of her belated state Senate confirmation -- while allegations by at least two subordinates were probed by an outside law firm.

The firm’s investigation was focused complaints of alleged sexual harassment and discrimination.

Health and Human Services Agency Secretary Diana Dooley, who oversees the hospitals department, said in a statement Thursday that the claims were “found to be unsubstantiated.” She said Gaither in 2011 had “selflessly interrupted her retirement to help oversee the development of the new department and her commitment and hard work have helped to create a solid foundation on which to build.”

Dooley also announced late last week that the agency was launching a search for a permanent director and new chief deputy director for the streamlined department, which has been overseen by interim director Cliff Allenby since it was carved out of the now-dissolved Department of Mental Health. Gaither has been responsible for the department’s day-to-day operations.

The department is responsible for the operation of five state mental hospitals that largely treat people accused or convicted of crimes committed due to their illness, as well as three prison-based programs for mentally ill inmates.

The Times reported last month that before subordinates came forward with the recent allegations numerous high-level staff members had complained to Allenby and agency officials about Gaither’s management style, describing it as retaliatory and damaging to morale and decision-making.

One May complaint reviewed by The Times expressed “serious concern” about “a pattern of behavior” exhibited by Gaither, including “rude,” “disrespectful” and “punitive” treatment of subordinates who attempted to educate her about the complex legal and clinical issues the facilities must navigate.

That and other similar complaints were not part of the formal investigation.

More than a dozen members of the management team have left since Gaither, who spent years at the Department of Finance, came on board.

In a note to staff on Thursday, Gaither said she was “pleased to be exonerated” but had “made the decision to retire after more than 37 years in public service.” “I am honored to have served in the department for the past two years, and I leave with the knowledge that ... the department is on its way to becoming a modern forensic hospital system,” she wrote.

She noted that she had balanced the operating budget and introduced “many new projects and policies that will vastly improve employee and patient safety.”

Gaither’s departure comes at a sensitive time for the department, which is emerging from years of federal oversight at four of its hospitals. During that period, violence rose and treatment eroded in key areas, according to a Times investigation published last year.

Meanwhile, the department’s prison-based programs are now the focus of increased federal court scrutiny under a separate case.

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Twitter @leeromney

lee.romney@latimes.com