The California attorney general's office has begun auditing the major charitable funds spun off by the for-profit conversions of the state's largest HMOs.
Deputy Attorney General James Schwartz said the audits began in February and are expected to last for several months.
"It's a routine series of audits to make sure that the expenditures are consistent with the mission of the trusts," said Schwartz, who oversees many of the conversions of not-for-profit healthcare corporations in the state.
He added that the half-dozen largest trusts would be examined.
Schwartz said a media inquiry about the trusts' expenditures -which have included grants for arts and minority empowerment programs-prompted him to look into the matter. By state law, the trusts are required to make grants consistent with their mission of improving the health of the surrounding community.
"We're cooperating fully" with the investigation, said Richard Ruvelson, treasurer and director of finance for the Woodland Hills-based California Endowment, one of two charitable trusts created in 1996 by the spinoff of for-profit WellPoint Health Networks by Blue Cross of California. Ruvelson declined further comment.
Since 1984, five trusts have been established through HMO conversions, with about $3.7 billion in assets. More than 90% of those assets are held by California Endowment and Oakland-based California Health Care Foundation, also established as part of the WellPoint spinoff.