Maverick County Hospital District Board Governance Problems Persist
By: Jose G. Landa, Eagle Pass Business Journal, Inc. Copyright 2015
The Maverick County Hospital District Board of Directors (MCHD) have a serious Board Governance problem as self-appointed Acting Chairman Juan Manuel Farias fails to follow the District’s state enabling statute and Bylaws regarding the filling of the Board Officer position of President after the sudden resignation of former Board President Joaquin L. Rodriguez in May of 2015 and fails to place agenda items requested by fellow Board members seeking the lawful filling of the vacant Board President position, preferring to spend tens of thousands of taxpayers dollars to seek an unnecessary Attorney General Opinion legally crafted to substantiate and justify his rogue power grab of the Board’s Presidency.
Board member Ricardo E. Calderon has requested Farias and his fellow Board members to place on the agenda the item calling for the Election of President of the Board on three different occasions but Farias has denied these requests. Calderon first requested the election of a Board President be placed on the agenda to Farias in June of 2015 for the June 30, 2015 Board meeting. Farias denied the request and instead placed on the agenda an item calling for the “automatic appointment of Vice Chairman to Chairman.” Farias is the Board’s Vice Chairman, although the state statute does not provide for a Vice President or Vice Chairman position. Farias’ bid to have himself appointed “automatically” to Chairman was foiled by the Board instead choosing to request an unnecessary Attorney General Opinion to determine if the Board is governed by its state enabling statute or its Bylaws. In the interim, Farias has self-appointed himself Acting Chairman of the Board without any formal Board vote.
Calderon requested a second and third time to have placed on the agenda the Election of a Board President to Farias and the Board in July 2015, as well as requesting that the Board elect a Meeting Chairman at each meeting until a Board President is elected, to hire a special counsel to do the Attorney General Opinion request instead of the District’s General Counsel Brin & Brin, and to rescind the Board’s request for the unnecessary Attorney General Opinion Both of these additional requests have been denied by Farias, who instead chose to place an agenda item calling for an “Update on Automatic Appointment of Vice Chairman to Chairman.”
Calderon noted that fellow Board member Dr. Ronald Hixson had concurred with his agenda items request and that was 50% (2 of 4) of the Board members requesting that these items be placed on their July 28, 2015 Board meeting, but of course Farias denied placing these agenda item requests.
At the Board’s July 28, 2015 meeting, General Counsel Joshua Nieto of Brin & Brin advised the MCHD Board that his law firm is proceeding with the Board’s request to seek an Attorney General Opinion and stated “I have contacted Representative Poncho Nevarez’s office and I spoke with his counsel and I sent in a draft of questions and those questions are as follows: We are asking to seek clarification as to the following questions: No.1 Is the Vice Chair- person position valid? No.2 If the Vice Chair position is valid, did the Vice Chair-person automatically become the Chairperson upon Chairperson Rodriguez’s resignation and acceptance of that resignation? The third question is: Does the Vice Chairman continue as the acting Chairperson until the Board appoints a new Chairperson or until the expiration of the resigned Chairperson’s term?.” Obviously, Brin & Brin’s careful drafting of the questions sought to be posed to the Attorney General for an Opinion are designed to justify and substantiate Farias’ “automatic” appointment to Chairman and contrary to what the Board actually decided to ask the Attorney General at their June 30th meeting.
Legal Counsel Nieto advised the Board that they (Brin & Brin) had reviewed the statute and had found that it does not say anything that conflicts with the bylaws or the bylaws don’t say anything.
Nieto noted that they (Brin & Brin) will be contacted before the end of the week and that hopefully they (Representative Poncho Nevarez) will accept the request to try to get an Attorney General Opinion as requested by the MCHD Board.
Nieto added “We do have what we have found, but I do have opinions but I don’t have authority for that so that’s why we are at the AG’s office.”
Board member Calderon asked Nieto to present to the Board what his law firm’s findings are on this issue.
Nieto noted that the MCHD was created on July 17, 1965 and that since the onset of the first meeting held in 1965, the Board position of Vice President (VP) had been included despite the state statute does not provide for it, except only the president, treasurer and secretary.
Nieto noted “You are correct, Mr. Calderon on the statute.” Nieto acknowledged that the state statute which created the MCHD does not provide for a Board Officer position of Vice- President.
“Another question that might be asked, if you look at the statute, it specifically does not say VP. It doesn’t allow it, it specifically says, president, secretary and treasurer, at some point we combined the secretary and treasurer and that may well be another question,” said Nieto. Nieto referred to the fact that the state statute requires two different Board Officer positions of Secretary and Treasurer, but the Bylaws amended in February 2012 calls for one Board Officer position combining Secretary and Treasurer, violating the state statute.
“That might be another violation?” replied Calderon.
“Correct,” answered Nieto.
“Directly to the point, Is the Vice-Chairperson position valid? The enabling statute authorizes the Board to elect from among its members a president, secretary and treasurer at the first meeting after each directors election. Now, although the code does not specifically authorize the election of a Vice-Chairperson, it also does not withhold authority to elect such a position,” argued Nieto.
Nieto noted that other hospital districts do have a Vice-President or Vice-Chairperson.
Board member Juan Manuel Farias asked Nieto if that meant that the MCHD could add the position of Vice-President or Vice-Chairman as a Board Officer position.
“I think, we’ll go with the Bylaws, on the other hand, specifically authorize the position of Vice-Chairperson. Under Section 5.1 Officers, We have done so certainly since 1967 on our bylaws,’ said Nieto.
But Board member Calderon asked Nieto if the MCHD state statute provides for a Vice-President or Vice-Chairman Officer Position. “Not in the state statute?” asked Calderon.
“Not in the state statute, you are correct,” replied Nieto to Calderon.
Calderon raised the issue that the reason he had requested the appointment of a special counsel to do the Attorney General Opinion request is that the law firm of Brin & Brin may have a potential conflict of interest since attorney Celeste Lira had given the MCHD Board an opinion at their June 30th meeting stating that the Vice-Chairman (Farias) automatically was appointed to Chairman, which the Board chose not to follow that legal opinion and instead chose to seek an Attorney General Opinion to determine whether the state statute or Bylaws govern whether there is a valid Vice-President or Vice-Chairman position. Calderon noted that since Brin & Brin had given their legal opinion they might have a conflict of interest as they may not be neutral in researching and pursuing an Attorney General Opinion as they would seek to find legal arguments which would justify and substantiate their legal opinion to the Board, which the Board did not approve or accept.
Calderon raised the issue that the Hospital District’s state statute and Bylaws clearly provide the legal answers and process on filling a Board Officer Position such as President and does not require that tens of thousands of taxpayers dollars be spent on an unnecessary Attorney General Opinion. Calderon noted that the MCHD Board just needed to follow the state statute and Bylaws to fill the Board Officer position of President. Calderon noted that the state statute clearly does not provide for the Board Officer position of Vice-President or Vice-President, thus Board member Farias cannot be Vice-Chairman even though the Bylaws include such a position. Calderon noted that a state statute supersedes any entity’s Bylaws because it is state law and the Bylaws are not. Calderon added that Section 5.3 of the Bylaws clearly provide an established procedure for filling the vacancy of a Board Officer position of President, that an Election by a majority vote among the Board members be held at a Board meeting to elect a new President to fill the vacancy of former Board President Joaquin L. Rodriguez. Calderon added if the Board would just follow their existing state statute and Bylaws, it is unnecessary to spend tens of thousands of dollars in legal fees seeking an Attorney General Opinion.
As a matter of fact, legal counsel Joshua Nieto agreed with Calderon that it was unnecessary to spend tens of thousands of dollars in legal fees seeking an Attorney General Opinion if the Board would just follow their state statute, bylaws, and precedent.
“Isn’t it true, that a state statute supersedes any entity’s bylaws?” asked Calderon to Nieto.
“Yes, I agree with you. I think the problem that we have here is that we have nothing that says that you cannot have a VP. We have other hospital districts that we know that do have a VP,” said Nieto.
“Our state statute does not provide for a Vice President, even if this board may have illegally had a VP for the past 50 or so years. The bottom line is the state statute does not provide for a VP,” said Calderon.
“I see your point,” said Nieto.
“The questions that you are posing to the AG are not what was approved by this board. Mr. Duran made the motion and he said I want an AG opinion to say as to what are we governed by-the state statute or the bylaws. That was his motion….You can’t be researching this, you’re partisan, you have a conflict of interest under the Professional Code of Responsibility. You have rendered a legal opinion and now you’re asking the AG. So what you and your firm are doing is being partisan, you can’t be neutral and represent the entire board. What is happening here is you are representing only a select part of the board of directors,’ said Calderon. Calderon noted that the best solution would be to appoint a special counsel who is neutral and has not rendered legal opinions already being challenged before the Attorney General.
“Look at our bylaws. It says when there is a Board Officer Vacancy all it has to do is be filled by the board of directors and a majority vote. Why don’t we do that? Why do we have to be spending $15,000 to $30,000….We are spending when our answers are in the state statute and our bylaws. We can take care of this, just put it on the agenda. Let’s vote on it,” said Calderon.
“I want to put on the record that I had four agenda items denied,” said Calderon.
“Disregard that,” replied Farias.
“Mr. Calderon, I agree with you. I don’t think we need to go get an AG opinion. I think if we rely on precedent and we rely on the statute that’s says that we cannot have a Vice President but does say that we can run our business the way that we see fit to meet our needs and we get it done. I think you are right. I think that whoever is and there is a vote and the majority wins and that we move on….,” said Nieto.
A request for an Attorney General Opinion may take up to six or more months before an opinion is rendered to the MCHD Board. An Attorney General Opinion will only delay the simple solution already provided for in the state statute and Bylaws in filling the vacant Board President position and cost between $15,000 to $30,000 in legal fees at the expense of Maverick County taxpayers and continuing the Board’s Governance problems.
