Friday, July 10, 2009

Klein Warns Stem Cell Directors on CIRM Reform Proposal

Recommendations for sweeping changes in the $3 billion California stem cell agency come before its directors next Thursday, although the agency's chairman has warned that support of some of the proposals would violate the directors' oath of office.

In an email to directors June 30, Robert Klein said five of the recommendations by the Little Hoover Commission, the state's good government agency, would be unconstitutional if enacted through the normal legislative process.

Klein wrote,

"As members of the board, we took an oath to uphold Prop. 71 and could not support these changes."

CIRM Vice Chairman Art Torres, who co-authored the memo, scheduled a meeting July 16 of the directors' Legislative Subcommittee to discuss the Hoover report. The board has not taken an official position on the study, but CIRM issued a press release last month that threatened a lawsuit should the legislature and the governor enact many of the recommendations without a vote of the people.

In response to a question from the California Stem Cell Report, Stuart Drown, executive director of the Little Hoover Commission, said neither he nor his predecessor could recall a time when a state agency had threatened a lawsuit in connection with Hoover recommendations.

The five purportedly unconstitutional recommendations would:

  • Reduce the size of the unwieldy board from 29 to 15
  • Reduce board member terms to four years following expiration of current members' terms, which run from six to eight years
  • Eliminate the current dual CEO structure that has proved divisive in the past
  • Allow the board to select its own chairman and vice chairman instead of having to accept nominations from state politicians
  • Give the governor authority to appoint 11 of the reconstituted board's 15 members. (Presumably Klein would also oppose as unconstitutional a plan to require that four independent persons be placed on the board, although he did not mention it in his June 30 email. The board is currently dominated by representatives of institutions that receive grants.)

In an interview earlier this week at CIRM headquarters, Torres, newly appointed chairman of the Legislative Subcommittee, declined to discuss the specific recommendations. He said he wanted to hear first from members of the CIRM board. He said whatever action the subcommittee takes would go before the full board, presumably in August.

Klein's contention that support of changes would violate directors' oath of office is based on two memos from attorneys. One came from the board's outside counsel. The other came from a Sacramento law firm hired by Klein's private stem cell lobbying group. That firm also has a $50,000 annual lobbying contract with CIRM.

The Hoover Commission took note of the memos from the two law firms, but said the question remains legally open.

Yesterday, Daniel Hancock, former president of Shapell Industries and chairman of the Little Hoover Commission, wrote an op-ed piece in The Sacramento Bee defending the recommendations.

He said,

"As CIRM exits its startup phase, it is unclear whether the founding leaders on the governing board can objectively evaluate the best course for CIRM's future, including the crucial question of whether it should exist beyond its initially intended 10 years. Given that the longer-than-normal terms on the governing board limit turnover, current board members – whose organizations have received 80 percent of the research and facilities grants – may lack the independent perspective required to determine when CIRM's contributions to stem cell science have peaked."

Hancock, however, also said the report is designed to "start discussion."

He cited an article by one CIRM director, published on the California Stem Cell Report, as "encouraging." Jeff Sheehy wrote that he would like the Hoover study to be perceived as "the beginning of a dialogue about governance structures that results in the strengthening and institutionalization of CIRM and sets it on a path toward a long and fruitful existence."

The Hoover Commission report has received little attention in the mainstream media, which has increasingly limited resources because of the news industry's financial problems. But Alex Philippidis of BioRegion News wrote a lengthy piece on the subject on Tuesday.

He quoted Don Gibbons, chief communications officer for CIRM, as saying that changes proposed by Hoover Commission could "waste" time. Philippidis wrote,

"He(Gibbons) cited the 2007 reorganization of California's Department of Public Health, which at least one local news report blamed for a delay in payments to area shelters for victims of domestic violence."

Philippidis reported that Gibbons said a court challenge to the Hoover proposals "would not come from the agency, but most likely from a board member set to lose his or her seat, or patient advocates who have defended CIRM and the ICOC(the CIRM board), saying their value in helping research institutions leverage private donations outweighed any concerns over conflicts of interest raised by Little Hoover."

Philippidis also quoted a state higher education official, Charles Reed, who warned that giving the governor more appointment power would politicize the agency. The president of the UC system currently appoints two members of the 29-person CIRM board. The UC system also has another five appointees on the panel. California politicans appoint the remaining 22.

The meeting of Legislative Subcommittee will be conducted via teleconference with locations throughout the state from which the public can participate. They include San Francisco, Healdsburg, La Jolla(2), Palo Alto and Elk Grove. Specific addresses can be found on the agenda.

(Editor's note: Based on incorrect information from the BioRegion News article, earlier versions this item erroneously connected Charles Reed to the UC system. )

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  1. The statement that CIRM threatened a lawsuit in response to the Little Hoover Commission report is inaccurate. It apparently arises from a press release provided to reporters upon request that stated that the question of whether the Legislature could accomplish some of the Little Hoover Commission's recommendations without a new ballot measure could result in litigation. The press release did not attribute the statement to Bob and it merely echoed a point that the Little Hoover Commission itself made in its report:

    "[T]the courts have not provided clear guidance as to what constitutes a 'permissible clarification' that 'furthers the purpose of the grant and loan programs.' Efforts to amend laws created by ballot measures often are subject to dispute, which can end up in litigation and must be resolved on a case-by-case basis on whether the intended change furthers the purpose of the initiative."

    In his communications with the Little Hoover Commission, Bob has emphasized that seven million California voters approved of CIRM's structure and that California's courts have validated it after a trial and appeal. He has also noted that, as Senator Florez pointed out in a letter he sent to the Little Hoover Commission, the voters recently rejected the Legislature's efforts to amend Propositions 10 and 63. He has not discussed litigation.

    Vice Chair Art Torres, whom Bob has asked to chair the Legislative Subcommittee, has scheduled a meeting of the Subcommittee on July 16 to discuss the report.

    Amy Adams
    CIRM Communications Manager

  2. Re CIRM, lawsuits and the Hoover Commission: CIRM’s Amy Adams said yesterday that it is inaccurate to say that CIRM has threatened a lawsuit if some of the Hoover Commission’s recommendations are enacted legislatively.

    We welcome clarification of CIRM’s position which we first reported 15 days ago. However, we stand by our characterization, realizing that others may differ in their interpretation.

    CIRM’s latest statement carries implications that go beyond accuracy. It can be interpreted as CIRM throttling back on its initial adversarial reaction to the Hoover Commission report. Or the statement could reflect some directors’ dissatisfaction with a position that was taken without consultation with the full board.

    In any case, it is extremely unlikely that a lawsuit – most likely filed by a CIRM surrogate -- would prevail if CIRM directors were publicly to endorse the recommendations in question as enhancing the agency’s mission.

    By staking out an early and hard stance on the Hoover report, the agency has put its own directors in the uncomfortable position of having to repudiate last month’s press release and statements by its chairman, Robert Klein, IF – and that is a big if – they believe some other position is more appropriate.

    For those of you who want to mull this over more, here is the sequence of the key events.

    On June 26, we published the text of the CIRM press release offered as reaction to the Hoover report. The press release has never been posted on the CIRM Web site.
    The second paragraph of the news release said:

    “The agency believes that many of the recommendations made by the commission are based on an incomplete understanding of the agency’s operation and are so sweeping they would require another ballot initiative to amend Proposition 71, which created the agency. If enacted by the Legislature and signed by the governor the recommendations would dramatically disrupt and delay the agency’s push to achieve its mission of delivering therapies to patients. In addition, any attempt to enact the changes through legislation rather than by a vote of the people would likely result in a court challenge, which would be costly and time consuming.”

    On June 27, we carried an item that said the above language in the news release basically threatened a lawsuit. On Friday July 10, we wrote again that CIRM threatened a lawsuit.

    On June 27, we pointed out that it is unlikely that CIRM would directly file a lawsuit but that it could likely find friendly surrogates to do the job.

    In a July 6 piece carried by BioRegion News, Don Gibbons, chief communications officer for CIRM, was reported as saying that a court challenge to the Hoover proposals "would not come from the agency, but most likely from a board member set to lose his or her seat, or patient advocates who have defended CIRM and the ICOC(the CIRM board), saying their value in helping research institutions leverage private donations outweighed any concerns over conflicts of interest raised by Little Hoover."

  3. Anonymous11:09 PM

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