FHP Accused of Violating Agreement With State

A state agency is looking into allegations by Robert Gumbiner, the disgruntled former chairman of FHP International Corp., that the Santa Ana health maintenance organization is violating a state requirement that it keep an arms-length relationship with the nonprofit FHP Foundation.

Gumbiner filed his complaint earlier this week in a letter to Department of Corporations Commissioner Keith Paul Bishop. He alleges that FHP International has violated an agreement with the state to limit its presence on the Long Beach-based FHP Foundation’s board to no more than a third of the total membership.

Instead, Gumbiner said, four of the foundation’s nine board members also are members of the FHP International board. And one of the four, Joseph Prevratil, also is the paid, full-time executive director of the foundation.

Gumbiner, who founded FHP, has been at war with the organization since being eased out last year in a dispute with other executives over the direction of the health-care company.

A spokesman for FHP International said Thursday that the company has received a letter of inquiry from the Department of Corporations, is looking into the matter and would have no other comment.

Former Orange County supervisor Harriet Wieder, a member of the foundation board, confirmed Thursday that four foundation trustees also are FHP International board members. But one of them, Cal State Long Beach President Robert C. Maxson, was a member of the foundation’s board before being named to the corporation’s board, she said.

“I’m sure this will be an agenda item” when the foundation board holds its quarterly meeting Dec. 7, Wieder said. “The board has tried very hard to remain separate” from FHP International, she added.

Prevratil was attending an FHP International board of directors meeting Thursday and could not be reached for comment.

Gumbiner, who initially sent his complaint to the FHP Foundation several weeks ago, said Thursday he wrote to Bishop because the foundation never responded.

The foundation was created in 1985 when FHP converted from a nonprofit corporation to a for-profit corporation. As part of a deal struck with the state to help compensate for years of tax-free status, FHP contributed millions of dollars to fund the foundation and agreed that it would be a separate entity that would not be controlled by FHP.

The agreement with the state also required the foundation to make half of its grants to programs that provide health care for the poor. Gumbiner said in his letter that he believes the foundation “is breaching that contract,” but when pressed Thursday was unable to document the allegation.

“My concern,” Gumbiner wrote in his letter to Bishop, “is that . . . it now appears that FHP Inc. controls the management of the Foundation” through Prevratil, who is chairman of the FHP International board’s executive committee as well as a director and president and chief executive of the foundation.

“This whole arrangement is contrary to the original intent of the Department of Corporations in keeping the Foundation . . . independent of the public corporation that created it,” Gumbiner wrote.