State may audit Renton hospital's spending

The state Auditor's Office is considering an audit of Valley Medical Center as the Renton hospital prepares to defend itself against charges that it misspent tax money to promote ballot measures in 2005 and 2006.

Valley Medical Center — part of King County's Public Hospital District No. 1 — spent public money to pay for research, consultants, direct mailings and surveys to sway voter opinion on a tax-levy increase and a proposed annexation, according to a report issued last month by the state Public Disclosure Commission.

Under state law, public entities cannot spend tax dollars to campaign.

The district's levy passed in 2005. But the attempt to annex 25,000 households from the greater Maple Valley area went down in one of the worst ballot defeats in state history. A staggering 94 percent voted against it in May 2006.

The commission will hold a hearing in September to review the findings.

Meanwhile, the Auditor's Office is deciding what type of audit to pursue, spokeswoman Mindy Chambers said Wednesday.

"We're evaluating it. We don't want to duplicate the [commission's] work," Chambers said. "That would be a waste of citizen dollars."

This week, hospital officials defended their actions, calling the allegations "flawed."

"We really feel there was a gigantic misunderstanding," said Barbara Mitchell, administrator of organizational development. "We routinely communicate within our district to residents ... and we very routinely survey them and send out information about our services.

"It's frankly sad for us to be suggested that we're doing things in error."

Consultant hired

The commission hasn't determined exactly how much taxpayer money the district spent to push for the ballot measures, said Lori Anderson, commission spokeswoman.

That's because some of the spending for research was legitimate, she said. But, she added, the misspent dollars were in the "tens of thousands."

Among other findings, the commission's report states Rich Roodman, president and chief executive officer of Valley Medical, used public money to hire Sidewalk Strategies, a California consulting firm, at a cost of $15,000 a month from September 2004 to June 14, 2006, to:

• Provide the hospital district with campaign advice to ensure the district's 2005 tax levy and 2006 annexation proposal would pass.

• Coordinate questionnaires and focus groups and design survey questions to support the ballot measures.

• Manage political committees that favored the levy and proposed annexation.

Hospital officials wanted to annex the area because data showed more and more patients from that region use Valley Medical, and they contended that those who use the hospital should pay taxes to support it. Taxes generated from the annexation would have gone toward opening a new urgent-care clinic in Maple Valley.

The district hired Sidewalk Strategies "to help the district communicate with our residents more effectively" about the ballot measures, Mitchell said. And along the way, the district followed attorneys' advice on how it could spend its money, she said.

"If we made mistakes, we want people to understand that we did things with the review of legal counsel and other experts," Mitchell said. "We certainly would never knowingly violate the spirit or substance of the law."

Mayor's complaint

The commission's investigation was prompted in May 2006 by a complaint from Maple Valley Mayor Laure Iddings. She alleged that Valley Medical officials used about $250,000 in public funds to support the annexation through direct mailings and telephone polls to test receptiveness to the proposition, according to the report.

Iddings said her radar went off last year when she received a call from a person taking a survey, asking if she would favor the annexation if certain community leaders supported it — her name being among those listed.

Mitchell said she's looking forward to the hearing in September to respond to the commission's allegations. A date has not been confirmed.

A five-member panel of commissioners will act as the judge in the hearing. If the panel finds the district at fault, it can impose a maximum penalty of $4,200, Anderson said.

If commissioners think the penalty should be higher, they can ask the state attorney general to file a civil lawsuit in Thurston County Superior Court, she said.

Sonia Krishnan: 206-515-5546 or skrishnan@seattletimes.com