Clinic Board’s Racial Balance Criticized : Pacoima: The amount Northeast Valley Health Corp. spends on travel also drew fire from the federal Department of Health and Human Services.

A health corporation serving the San Fernando Valley’s poor could lose thousands of dollars in aid because its racially diverse board of directors is not representative of the largely Latino community it serves, according to federal officials.

The federal Department of Health and Human Services is also criticizing Northeast Valley Health Corp. in Pacoima for allocating a “totally unreasonable” amount of money for travel--as much as $40,000 in one year--by the 18-member board of directors.

Failure to clear up the problems could result in the loss of federal money supporting health-care programs, reducing services to the poor, according to several officials. “It would certainly limit the number of people we could see,” Executive Director Bob Smith said.

Documents describing the criticism over the makeup of the board and its spending habits were obtained by The Times under the Freedom of Information Act.

“Board has maintained a structure and recruitment process which precludes the formation of a board which would mirror the community ethnic makeup,” said C. Ray Maddox, director of the Division of Health Services Delivery for Region 7 in Kansas City, Mo., in an Oct. 16 memo.

Northeast Valley operates clinics in Pacoima and San Fernando on an annual $8-million budget and serves 35,000 patients each year.

Smith agreed in an interview that the organization has been at loggerheads with the federal government and admitted that the board has had difficulties in the past.

“The previous director said the board was paralyzed to the point of not allowing the growth of the organization,” said Smith, who was hired in October.

But he said the board “has made tremendous progress” recently. It is doing its best to address the concerns raised by the federal government while still serving poor patients, he said.

“There is a tremendous need here,” he said, noting that the patient load at the San Fernando clinic grew 32% in the last year alone.

The conflict over the board of directors does not involve the quality of the medical services being offered at the two clinics. A federal review said the agency “appears to provide all required and supplemental services.” Competent medical personnel are on duty and there were no noted deficiencies in patient care.

But critics say a core group of board members held office so long that they regarded themselves as a private club that could travel where they wanted and sometimes used taxpayer grants in questionable ways. On one occasion, the board sent as many as eight board members to the same conference thousands of miles away.

It also dispatched $2,000 for earthquake relief in San Francisco, Oakland and Watsonville in 1989. Critics said that while donating to earthquake victims is laudable, the money was intended to be used to meet the health care needs of local poor people.

As a result, changing the board has become a key goal of federal regulators, according to the documents obtained by The Times.

The issue has become a rallying point for some board members, who argue that the hidden motive behind forcing wholesale changes on the board is a plan to weaken the agency by forcing skilled board members to be replaced by novices.

“When you take the top people off the board and put on a lot of people with no experience, you know what is happening,” said board President Edward Kussman, a retired builder who has been on the board for 19 years.

The corporation was launched in 1972 under the old Office of Economic Opportunity. Today, it operates on a budget derived from a variety of federal, state and county funding sources.

It receives $3.5 million from the federal health services department to pay for patient care and to provide services to homeless people, $2 million from the state of California to administer a nutritional program for mothers and children, and $230,000 from the county of Los Angeles to administer an alcoholism project.

Northeast Valley employs 175 people, including eight physicians.

Designed from the first to reach out to poor people in minority communities, Northeast Valley functioned for many years with a quota-style governing board that designated six seats for whites, six for blacks and six for Latinos.

Kussman said the original plan was to open clinics that would serve each ethnic group and, to that end, clinics were opened in Pacoima and San Fernando.

There was also a plan to build a clinic in Sunland-Tujunga for whites, he said, but it was never built.

The quota policy was also reflected in board travel, according to several people close to the issue. When there were conventions to be attended, each group sometimes lobbied to send two members. Eight members attended a Sept. 9, 1990, conference in Cincinnati, according to documents obtained by The Times.

Other expenses questioned by the government included allowing board members to bring a guest at project expense to a training retreat in Laughlin, Nev., a gambling resort.

An unspecified amount of money was spent to hold a March 9-14, 1990, party in Washington. Three separate donations totaling $2,000 were made in the name of earthquake relief.

All these expenses were listed by the government as possible “unallowable and/or unreasonable expenditures.”

“I might disagree with the number of people they took, but it was a board decision,” said Lou Garcia, the executive director in charge until Smith took over last year. “The number of people that went was maybe excessive.”

But Smith, who previously worked 13 years with the Watts Health Foundation, a large program with a $100-million budget, said it is not uncommon for health centers to send several members to important conferences.

“Few send less than two people,” he said. “And an organization like Watts walks in with a contingent of 12.”

“It’s not crazy stuff going on,” he said.

Smith said the only remaining controversy between Northeast Valley and the federal government is the question over the makeup of the board.

“In several important respects,” said a review of Northeast Valley conducted by the regional health services office in San Francisco last year, the organization’s by-laws “appear to be substantially directed at preserving the six member black/Latino/Anglo racial/ethnic caucuses which were authorized 20 years ago by the Office of Economic Opportunity, and which have apparently continued unabated.”

“As board positions become vacant they appear to be filled along strict racial/ethnic lines,” the government noted.

Over the years, however, the ethnic makeup of the population of the northeast Valley has shifted. While at the time the organization was formed, the population was more than 70% white, it has grown increasingly Latino. The present users of the clinics are 65% female, and 82% are under 35 years of age.

At the time the federal government first raised questions about the makeup of the board last year, however, 64% of the board was male and half were 50 or older.

The government also noted that at least four members had been serving on the board for 19 years.

Earlier this year, the board took steps to address the concerns of the government. Several longtime board members resigned and were replaced in March. Now, the board is split nearly equally, with nine Latino board members, eight black and one Semitic, as the last person prefers to be identified, Smith said.

That change, however, has not satisfied the federal government, which argues that regulations require a majority of the board to reflect the overall user population, which is 90% Latino.

It also has not satisfied the Concilio of Chicano Affairs in Sun Valley, which is made up of educators and Latino community leaders. In a Feb. 25 letter to federal regulators, the concilio accused Kussman of trying to “stack the board” to avoid complying with government regulations.

The concilio has asked that Kussman, who is black, be forced to resign, something that the federal regulators are also pushing for.

But Kussman has elicited letters of support from congressional representatives such as Howard L. Berman (D-Panorama City) and Maxine Waters (D-Los Angeles).

He said the effort to force long-term members to leave the board is part of “an attempt to eliminate many blacks.”

Kussman lashed out at the concilio. “For 18 years, we had a system and, all of a sudden, they now feel it should be a Latino board. Several of us feel we have made an attempt to level the field so that everybody would have an equal opportunity. But the feeling among Latinos is that they should be able to take over the board.”

Kussman also said he thinks that the federal crackdown on the program is part of a plan by Dr. Louis Sullivan, secretary of the Department of Health and Human Services. “I think he’s carrying out the same thing that Reagan tried to do, when he was President, to the Legal Services Corporation.”

While President, Reagan appointed conservative members to the board of directors of Legal Services, which provides lawyers to the poor, and unsuccessfully tried to cut funds for the organization.

Garcia, executive director for 18 years before resigning last year, said he can sympathize with present board members, who held positions for many years and then suddenly were confronted with demands for a wholesale house-cleaning. “For 15 years, the federal government never said anything,” he said.

Observers said the federal government recently undertook a thorough review of the program under the eye of a new monitor. While the monitor refused to be interviewed, sources close to the program say this person and other regulators became troubled by what they saw when they looked closely at the activities of the board over the years.

“There was an impression this board was focused on travel and banquets,” one observer said. The regulators felt that the board had become self-perpetuating and a law unto itself.

“There is something wrong with a selection process where all the members are selected year after year for 20 years,” said one critic, who asked not to be identified. This critic said similar concerns are being raised in other regions where boards of directors have held office for extended periods of time.

While the regulators accept the fact that there has been some change in board membership recently at Northeast Valley, it appears that they are convinced more must be done. At the least, they feel that Kussman must leave and that more Latinos should be brought on board, according to sources.

But Kussman has not left yet. He seemed philosophical about the possibility of being removed from the board.

“I’ve done my time and served my community,” he said. “I could very easily get off the board. But it’s wrong to do this to the black community.”