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Failure to reach an agreement meant the provocative case would go to trial October 12 in Superior Court in front of the retired judge.  It would be a jury trial.

Just before and twice after the settlement process the Board of Supervisors met in closed session on the case - last Friday for 4 ½ hours.  Sources say the two sides moved closer to a settlement estimated as high as $1 million for the plaintiff - Jack Dempsey.  Dempsey claims Campanella attacked him sexually at an after-work office party in 1997 and said he would lose his job as administrative analyst at the County if he didn’t keep quiet about it. Dempsey has sought $2.2 million from the County because of lost earnings.

Campanella has denied any wrong doing and the County itself hired an investigator to look into the charges in 1998 when the suit was filed to determine if the County should defend, or for that matter, continue to retain Campanella.  The investigation suggested no wrong doing by Campanella and the County said they would fight the lawsuit filed about one year ago.

Now with the prospect of a media circus next week and the possibility of cutting their losses, it appears likely the County will settle the matter before the court date, say reliable sources.  Supervisor Steve Worthley says that “there may be an announcement Friday” October 8th.

This reporter attended the settlement hearing September 29 - the only observer in the courtroom.  The two sides appeared to move closer as they shuffled in and out of the judge’s chambers.  Dempsey’s attorney, Steve Pingle may have presented information to the other side that helped settle the matter.  On the other side, there are two interests represented - the County and Campanella, who faces personal damages in the case.  There is the fact that while both resist the lawsuit, the interests of Campanella and the County of Tulare are different and indeed the two may not see eye to eye on what happens next.

After the private settlement discussions on the 29th, the attorneys went into open court to talk about jury selection and other procedural matters for next week’s court case.  Pingle said they wanted to bring in an expert witness on Dempsey’s state of mind.

The case involves Dempsey who had worked with Campanella before in Marin County where Campanella held the top administrator job in the 1980s.  Campanella retired there after 20 years to take the CAO job in Tulare County in 1994.  Dempsey worked with Campanella until October of 1997 here.

Dempsey claims the incident that prompted the suit happened in September of 1997 at an office party.  He claims Campanella fondled him in the spa as the two sat with other staffers in a fellow employee’s back yard.  Dempsey says he rebuffed the moves but they continued.  Still, he followed Campanella to his home after the party where the sexual advances continued, he claims.  Dempsey claims Campanella threatened his job during this incident.

Pingle had said during last week’s open court session that they would try to demonstrate why Dempsey had not tried harder to fend off Campanella’s alleged advances.

If the matter is settled, it could be that the dollar amount of the settlement won’t be released despite the fact it involves public funds.  If the matter is settled it puts a cloud over the earlier assessment by the County investigation over the matter.

The other question for the County, will be who to support as interim CAO should Campanella step down. Tom Sherry, assistant CAO may fit the bill.

Whatever happened in this embarrassing incident at some party, the administrator Campanella is given high marks by Supervisors for his fiscal management of the County during some lean times.  He promoted the purchase of the Wausau building and the issuance of COPs that helped add new criminal justice facilities currently being constructed and added technological improvements.

On the other hand, observers give him low marks in the communication, public relations and openness arena.  “He’s not a very approachable guy,” says a County staffer.  Another described him as a “control person.”

Rumors of the departure of Campanella have swirled this week with the uncertainty over the direction of the County.  Still, Campanella appears to be unfazed by the controversy, coming to work this past week in a Hawaiian shirt that looked like he was beach combing rather than heading into his office at the same moment the Board of Supervisors was meeting in closed session in another part of the building struggling over just what to do about this brouhaha.

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Dear Board Members:

With the beginning of the Millennium, I will be approaching my 69th year on earth. I have worked for the government all except one year since 1960. My children are raised and we are supporting two of our grandchildren through college and beginning work. It is now time for us to put down the banner and spend some quiet time together.

I have been in Tulare County five years and, during that time, we have seen monumental changes in the way this county government works. Juvenille halls, boot camps, jails, courtrooms and office space have been built and except for the one half cent sales tax, all were within budget. I take great pride that, during my tenure, we have been able to achieve this constructin and maintain a high level of service to the public without shifting the burden to the tax payers.

The decision to voluntarily end my employment is not based on the allegations which have been made against me. I appreciate the support provided by the Board of Supervisors, follwoing the extensive investigation conducted on the County's behalf, which disputed the allegations of wrongful conduct. However, on the advice of my counsel, I have decided to avoid the cost and expenses associated with a lengthy trial, which will be covered daily by the press. The allegations alone have damaged my reputation and that of the County, even though the County's investigation proved otherwise. I will not subject my wife, family and the County to further apsersions, ridicule and innuendo.

This was an extremely difficult decision to make, and I look forward to continued support from my family and friends who know who I am and what I stand for.

I wish the good people of Tulare County well.

Sincerely,

Thomas F. Campanella

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Tulare County - The Valley Voice has been telling you for months now that a growing number of dairy cooperatives, mergers and joint ventures were setting the stage for a boom in dairy processing here with at least four huge manufacturing plants either under construction or in the siting stage in or nearby Tulare County.  Together they could require and process an extra 21 million lbs. of milk every day. Farm advisor Tom Shultz suggests an increase of 21 million lbs. of milk a day would require an additional 300,000 cows added to the 440,000 cows being milked in Tulare and Kings counties today.

Those projects and their likely locations include:

1. Land O Lakes already has the largest milk receiving facility in the U.S. in Tulare would add: a 6 million lb a day (milk volume) cheese and whey plant approved by the LOL board in late September and announced last week.
The location of the plant is “Tulare County or nearby,” says VP Alan Pierson who notes the company owns 36 acres and a 300,000 sq ft warehouse and cold storage building on Paige in Tulare.  But he says “we have other options” as well as a potential major partner - likely a big whey user.

Tulare is betting that the company with roots in town that stretch back to 1909 ( Dairyman’s joined the LOL co-op in 1998) will select Tulare.  One major factor is the fact that the city just ordered a new redevelopment zone added in town that includes this 36 acres meaning LOL could enjoy major tax benefits if they choose this location.  This will happen only if the County does not fight the city over this new redevelopment designation.  “There are those discussions going on” (with the County) says city manager Kevin Northcraft.  However, LOL may have in mind to erect a new cheese/whey plant “out in the country” even as far down 99 as Delano, say observers who note that these days the technology to process your own waste has come a long way.  How to dispose of sewer waste, good water, rail and proximity to the dairies are the big factors.

There is another factor on this that LOL may want the plant to be located away from other manufacturing facilities because it will be operated by an independent entity - not LOL, says Pierson.  That would mean any labor union would have to start over at the new facility - they estimate some 140 jobs.  “How to deal with the union is a huge factor,” says one source familiar with the situation.  DCCA is organized by the Teamsters.

The growth in the dairy business has been Tulare south to McFarland, says a CMP shipper and Dairyman’s (LOL) has fewer members down that way but may want to cultivate them.  Pierson says the 240 member group may grow and the 6 million lbs of milk will be mostly new milk.  They currently process some 12 million lbs a day.  The new plant will be operational by the end of the first quarter of 2001, says Pierson.

2. Leprino also plans a huge Mozzarella plant - the worlds largest such plant likely in one of four locations.  The sites include Visalia Industrial Park next to Sequoia Beverage, Goshen next to Cargill, Tulare on 55 acres at Blackstone and Continental and in Lemoore.  The Denver based, privately held company already has an older cheese plant in Lemoore but needs a state-of-the-art facility in California - the number one dairy state.
The state was in competition against Idaho for this new plant but most observers believe the new plant will be in the Golden State where milk production went up 8% over last year.

Announcement of the location for the new facility was expected by September 30th.  The speculation is that Goshen or Tulare are the top contenders - both with redevelopment districts to help write down the cost of a huge multi million investment - both with adequate sewer capacity, heavy rail access, good water and proximity to cows.  Lemoore has a problem with high electric conductivity confirms Regional Water Board staffer Jo Anne Kipps.  “The current Leprino plant is already in non compliance,” she says.  Lemoore is in the PG and E service territory and may be offering a better rate on power, says one source.  The remainder of locations are in SCE service territory.

In Goshen the city of Visalia and Goshen have joined forces since Goshen requires the city’s full cooperation to process the sewage discharge.  Visalia claims it has plenty of volume for the company’s discharge and says the closure of the olive plant here helps decrease the salt in Visalia’s waste water.
The job number for this plant are reported to be 300.  Leprino is a huge concern reportedly using 5% of the nation’s milk supply to make their cheese - so popular now as a low fat alternative and on Mexican and Italian foods - especially pizza.

Visalia city manager Steve Salomon says if Leprino chooses Goshen, the city would “work with” Goshen to amend the existing agreement to utilize Visalia’s sewer system because they would require additional capacity.  Earlier there was concern that since Visalia and Goshen are competitors for the same project that cooperation would be difficult to come by.  The city of Visalia and County of Tulare have knocked heads over a series of issues the past years including the direction of economic development.  This week a countywide task force worked to create a new start on that front.

Salomon says “even without Leprino, we may need to expand the city’s sewer capacity sooner than we thought anyway.”

3. Boswell plant: a slightly smaller facility in the planning stage reported in the September Valley Voice to be sited likely between Corcoran and Hanford along the rail line by an independent investor group.  The plant would utilize some of the milk expected by the siting of 5 new mega dairies nearby that could add 50,000 cows over time.  The plant is being engineered by Mead and Hunt who say they are waiting for the Boswell EIR process to work its way out.

4. CMP, Tipton’s expansion to nearly 6 million lbs a day - double its current capacity over the next year.  The butter powder plant was sited on farmland ant Rd. 120 and 99 in the early 90s and has grown as more CMP members have moved to the Valley from southern California.  Now the cooperative has joined two other Valley milk co-ops to form California Dairies controlling 40% of the state’s milk supply.
In addition to these ventures there is the Nestle and Haagen Dasz joint venture in the ice cream business.  Nestle is the world’s biggest food company.  That joint venture sources say, could spill over into this - California’s dairyshed.

The whey side of the cheese business is growing fast.  Liquid whey released as part of the cheese manufacturing was once considered a low value by-product that would likely go to animal feed.  But technology has allowed processors to retrieve the high enriched protein concentrate from whey that can be used in all sorts of nutritional products, even pharmaceuticals.  Whey is used in salad dressing, soup and sauces, bakery products, dairy desserts and prepared mixes.  Whey protein concentrate has gained favor in body building health drinks and is widely used to fortify food in Japan.

Farm advisor Tom Shultz says he wouldn’t be surprised if all the big cheese plants went into a rural area, likely along the 99 corridor, and spread their waste water out on farmland.  “People would have to drive a little further to go to work, but other problems would be easier for the cheesemakers.  The technology exists, some insist, to do proper filtration of waste water that can to be spread out over farmland as they do at the big CMP plant on 99 near Tipton.

But city manager Steve Salomon suggests the dairy processors might find it more advantageous to locate in a city to utilize the large volume of water a city sewer system generates to blend their waste water so they don’t have to pre-treat to a high level.

One thing, Shultz says, the companies want is access to a first class airport.  “That’s when the big cheese visits,” he notes.

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Already available at speciality stores around here and the Bay area and LA, Graves says a major contract with supermarket chain Save Mart, with 68 stores, will mean the cheese will be widely available.  In addition, the company expects, with the help of the California Milk Advisory Board, to enter the Arizona market soon, says Graves.

You can buy the cheese - called Mt. Whitney Brand, at Glicks and Urban Gourmet in Visalia.

Sequoia Cheese owns the old Knudsen (Arden) creamery in Tipton which they bought out of bankruptcy in 1994.  The company’s original plan was to make cheese as well as age and distribute out of the 42,000 sq ft plant.  But a bank commitment to the project fell through when the bank got caught up in a merger, says Graves, and the company came up with the present, more modest strategy.  That has the cheese being made in Los Banos at a speciality cheesemaker and shipped to Tipton for aging.

Graves says the current plan calls for the remodel of the Tipton plant to receive milk and make cheese in a year to 18 months.  In the meantime, marketing of the unique cheese can move forward.

Graves, who learned the dairy business when his family owned Real Fresh in Visalia, says Swiss cheese is now the number 4 cheese in the U.S. with almost none made in California until recently.  He says cheese is made into wheels or 40 lb blocks for sales and “ripened” in a 45 day aging process.

Graves and his fellow investors - mostly folks who were involved in Real Fresh before - believe “the California cheese industry could use the state’s wine industry as a model.”  Consumers for both products are often the same and enjoys other parallels - it’s a craft industry with an upscale, nurtured food product.  At the Tipton plant, next to Highway 99, there are plans for a visitor center adjacent the old plant that has a rich history for the County dairy industry in itself.  “They made ice cream in the 1920s,” says Graves.

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Tulare County - Tulare County’s booming dairy industry may have to kick in to a fund for rural road repair in the future.  The issue is surfacing in the next few weeks as the County releases a draft EIR on the expansion of dairy operations.  The County seeks to move its planned draft EIR process forward.  Earlier this year there was a settlement with the State Attorney General over environmental impacts that the surge in new dairies bring - a lawsuit that had in effect forced a moratorium on new applications for dairies here.

The road issue is “a real impact,” says chief planner George Finney who says the EIR will suggest “all the alternatives” and move on to a preferred alternative.  “It’s too early to tell if the alternative includes a surcharge for road maintenance,” he says although industry sources expect that is in the works.  Critics have said the dairy industry has been literally getting a free ride.  There are about 3,000 miles of roads in Tulare County.

Finney says the draft EIR could be as early as late October.  Creameries may be asked to kick in as well. Heavy milk trucks from the creameries visit the dairies along the huge network of narrow rural roads in the County, often twice a day and the County has more than once suggested a fee to help keep the potholes covered in the rural environs.  That idea has been met with criticism by the industry.

While many expect the EIR issue to affect the density of dairies and maintenance of adequate spacing, the explosion of dairies to the south and west part of the County has stretched the County’s road maintenance budget, say officials.  Now with record milk prices going into the dairyman’s pocket, it may be the right time for some sort of surcharge.  The fund could be a mixture of public, industry and dairy operation funds, some suggest.

Unlike most Tulare County commodities, the growth of the dairy industry into a billion dollar industry has been phenomenal in the past decade - the number one milk producing County in the U.S.

Just asking new dairies to contribute into a fund fun would leave the 240 other dairies without having to pay, however.  The number of dairies and new cows is expected to grow in the next few years with demand from three new cheese plants to go on line.  Cow numbers in the County - now 320,000 could grow quickly if high milk prices and strong demand of product help fuel the explosion.

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Visalia - Visalia-based Kaweah Sierra Medical Group faces tough financial challenges this year as do other groups across the state.  “Medical groups costs of doing business has gone steadily up while reimbursement has gone down,” explains Dr. Jim Foxe, a member of the Kaweah Sierra group.  The eight-member primary care group is currently “exploring our options,” says Dr. Foxe that include the break up of the joint practice.  Real estate sources say the building the medical group practices in may be available this January, but Dr. Foxe says no final decision by the group have been made.

“Whatever happens to the group, Foxe says the physicians there want people to know “our patients will be taken care of.”

Problems in Visalia mirror the struggle across the state outlined in a California Medical Association report in early September that said that “90% of California medical groups are teetering on the brink of insolvency.”  There have been 113 bankruptcy petitions in the last two years, it said, and two of the largest groups in the state both declared bankruptcy this year.

Like other medical groups in the 1990s, Kaweah Sierra took on big health plans - HMOs that sought to bring in physicians to take care of a pool of patients on a capitated or per head charge.  But capitation didn’t work out, says Dr. Foxe as KSMG ended any risk arrangement with HealthNet earlier this year.  Likewise the large Visalia Medical Group which had taken at risk contracts ended those as well, says administrator Bill Brouwer.

The risk is real.  Earlier this year KSMG learned they had paid Kaweah Delta Hospital about $100,000 in lab fees directly when the health plan California Care (Blue Cross) should have been billed to pay those costs.  KSMG had paid the per head fee whether anyone needed a lab test or not.  Now California Care says they can’t reimburse the medical group without prior billing from the hospital and the hospital says it would be too costly to go back over the 9 month period to figure out the billing.  Foxe says the billing was an administrative error but doesn’t think they are going to get the money back.  The group has sent a letter out to vendors they owed money to explaining their problem this summer.

Tension in medical groups comes when overhead continues to climb and specialists of the group who often make more per procedure feel they are paying more of the load than say family practice physicians, explains Foxe who does family practice himself.  In 1997 the specialists of KSMG split with the group over the issue.  Now they are in smaller two person offices or flying solo where they don’t have to pay a huge staff and administrator or pay for a large building.  Tulare District Hospital administrator Bob Montion says medical groups face the same challenge as health plans like Key Health face - spreading the costs over too few patients.  Locally originated Key Health will fold itself as of the end of this year.  Foxe says the KSMG at 8 members is too few to afford the hiring of another specialist - like an OB/GYN that would help the group gain patient volume to spread out that overhead.  “We haven’t had an increase in our fees since 1991,” he says.

The increasing cost of drugs that in some circumstances cut back the amount available for the physician, has a role to play too.

Lots of everyday medical practices is not a big money maker for physicians anymore.  In Tulare County a large volume of poor people and older people who use Medi-Cal and Medicare are each low reimbursement plans.  Reimbursement for Medicare in Tulare County is so low that all Medicare HMOs have pulled out of the County.

The local health care industry - medical groups and the hospitals have fewer “profit centers” where they can make up the cost of providing care for most procedures with specialists where reimbursement is higher.  Where there is opportunity like in skin care and plastic surgery groups like Visalia Medical are expanding as is Kaweah Delta’s cardiology “Center of Excellence.”  Foxe says specialists like pulmonologists  and orthopedics becoming “single speciality groups” in the future to have clout to tell the insurance companies what they must pay.

Low reimbursement may hurt the community in that “we might lose some good docs since they can make a lot more in the Bay Area or elsewhere,” says physician Bernie Rudis.  Foxe says he’s not going anywhere as are most docs he knows.  The area gets an influx of physicians in part because student docs serve five years through the National Health Service in order to relieve their student loans.

Foxe says “there’s plenty of patients for everybody.”  In his own case he joined a group because “I didn’t want to have to worry about billing and HMO paperwork.  I just wanted to practice medicine.”  Unfortunately when you don’t watch the business side you can get hurt, he laments.

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The above stories are the property of The Valley Voice Newspaper and may not be reprinted without explicit permission in writing from the publisher. 

October 6, 1999