California Medical Board President Under Fire Over Business Deal Following Sexual Misconduct Vote

by Jenny Gold of Kaiser Health News for Healthcare Finance

Dev GnanaDev was part of panel that voted to reinstate doctor’s license after sexual misconduct finding, then sought donation from his relatives.

The president of the Medical Board of California is facing questions from critics about a business deal he struck after the board decided to reinstate the license of a doctor who engaged in sexual misconduct with patients.

In 2012, Dr. Dev GnanaDev, new to the board and not yet president, was part of a disciplinary panel that voted to reinstate Dr. Hari Reddy. The Victorville family physician had lost his license in 2003 after the board found he had engaged in sexual misconduct with four female patients, including a minor.

About a year after the 2012 vote, GnanaDev sought a donation from one of Reddy’s relatives to start a new medical school in California’s Inland Empire, GnanaDev confirmed. Dr. Prem Reddy, Reddy’s brother-in-law, agreed to put $40 million into the nonprofit venture.

Prem Reddy is founder and CEO of Prime Healthcare, which operates 44 hospitals in 14 states, including the medical center where Hari Reddy now works.

The new medical school, California University of Science and Medicine, is scheduled to open in 2018. GnanaDev is the president; Prem Reddy, chairman of the board.

GnanaDev declined to say how he voted in Hari Reddy’s case, citing board policy. The medical board said the vote tally and how each board member voted is not public information.

The sequence of events has led a pair of vocal board critics, Marian Hollingsworth and Eric Andrist, to question whether there was a relationship between GnanaDev’s vote and the subsequent medical school donation.

Hollingsworth and Andrist called for an investigation Monday at legislative oversight hearing to review the performance of the medical board. In a report they submitted to legislators, which was broadly critical of the board, they detailed the Hari Reddy case and demanded the board be transparent about the vote.

“This smacks of conflict of interest,” Hollingsworth told the Joint Sunset Review Oversight Hearing, which is held every four years. “Please help reorganize this agency so that exceptions and conflicts do not get in the way of protecting California consumers from truly dangerous doctors.”

State Sen. Jerry Hill (D-San Mateo) called the events, as described to him by a reporter, “alarming.” Hill, who is chairman of the Senate committee that took part in the oversight hearing, was contacted before the hearing and had been previously unaware of the circumstances.

“It certainly is worth looking at to see if there is a conflict that presented itself,” Hill said, adding that the board’s voting information should be public and “readily accessible.”

GnanaDev and Prem Reddy both deny any connection between Hari Reddy’s case and the medical school.

“I don’t know why someone thinks there was a conflict here. It’s just mind-boggling,” GnanaDev said in an interview.

At the time of the 2012 vote on Hari Reddy’s license, GnanaDev said he wasn’t even considering starting a medical school yet and knew Prem Reddy only in passing. He did know Hari Reddy, because Reddy had been a resident at Arrowhead Regional Medical Center in San Bernardino County, where GnanaDev was chief of surgery. But he said he followed protocol and disclosed that to the board before the vote.

GnanaDev said that when he later decided to start the school, it was out of a desire to contribute to an underserved community.  He filed paperwork to incorporate the school in August 2012. He asked several wealthy donors for funding but came up short. “Then someone mentioned that Prem Reddy was thinking of starting a medical school, and why don’t you guys get together?”

GnanaDev said he approached Reddy for a donation in the spring of 2013. During his meetings with Prem Reddy, GnanaDev said the subject of Hari Reddy’s medical license never came up.

Elizabeth Nikels, a spokeswoman for Prime Healthcare and Prem Reddy, said any implication that the medical school had anything to do with Hari Reddy’s medical license was “outrageous.” She added that Prem Reddy was not aware of GnanaDev’s role on the medical board until discussions for the medical school were well underway.

“Dr. Reddy’s selfless commitment to education and health care is the only reason for his sizable endowment to establish the medical school in San Bernardino County,” she said. “Any suggestions to the contrary are completely untrue and unfounded.”

Hari Reddy did not respond to multiple requests for comment by telephone and email.

Hari Reddy has long worked for facilities run by his brother-in law’s company. At the time the sexual misconduct took place, he was working at the Desert Valley Medical Group, a Prime Healthcare facility. After his license was revoked, he worked for Desert Valley Medical Group as a clerk and in other jobs that did not involve patient care, according to the medical board. And he is currently a hospitalist, a doctor who cares for hospitalized patients, at Desert Valley Hospital. (Hari Reddy is married to Prem Reddy’s sister; the couple happens to have same surname.)

The case against Hari Reddy is detailed in board documents. According to the findings of administrative law judge in 2003, Hari Reddy repeatedly called an 18-year-old patient at home and made sexually explicit comments; he attempted to kiss a 16-year-old patient; he “cupped each of [a third patient’s] breasts with his hand”; and in the case of a fourth patient, he placed a stethoscope on her nipple, leaned against her and asked seductively, “Is there anything else I can do for you?”

The incidents led to Hari Reddy’s arrest and conviction on one count of misdemeanor battery — a conviction he successfully sought to have dismissed in 2005.

Hari Reddy’s license was revoked by the medical board in 2003. After seeking unsuccessfully to have it reinstated in 2008, Reddy asked again three years later. This time, an administrative law judge concluded that it was safe for him to practice, provided he be closely supervised for three years.

In February 2012, the case came before the medical board’s five-member disciplinary panel, which makes final decisions on behalf of the board. It was GnanaDev’s first time on the panel, as he had just been appointed to the board by Gov. Jerry Brown. The panel voted to reinstate Hari Reddy’s license, and increased the time of his administrative probation to seven years.

Although the board would not say how GnanaDev voted, he did not recuse himself. The panel required a quorum of four doctors, and with the absence of the panel’s usual fifth member, everyone had to participate for a vote to occur.

Andrist, the board critic, said he was bothered not just by the lack of transparency in the vote and the potential conflict of interest but the substance of the decision itself. “That doctor was dangerous…What mother would want to take her daughter to see him?”

Referring to everything that troubled him about the case, he said:  “If this is happening with one doctor, who’s to say it isn’t happening with other doctors?”