An investigation into Tahoe Forest Hospital CEO Bob Schapper’s potential conflict of interest with his wife’s medical company is being conducted by the hospital’s board of directors. The hospital, Schapper, and the board have all responded publicly to the possible legal violation that was revealed by Moonshine Ink, but it is unclear whether the Nevada County district attorney will take legal action on the matter.

At its July 11 special meeting, the same day Moonshine Ink published its investigative articles on Tahoe Forest Hospital, the Tahoe Forest Hospital District Board of Directors revealed that it had been investigating the possible conflict of interest between Schapper, his wife Marsha Schapper, and her company Medical Practice Solutions for several months. The board has met in closed session twice since the revelations were made public to discuss Bob Schapper’s performance, but no action has been taken. The board has said it will respond publicly in Moonshine Ink’s next printed edition on Aug. 8.

“The board of directors initiated an active review of the district’s conflict of interest policies two months ago. At this time, there are no findings to report and subsequently no actions to take,” the board stated in a press release on July 23. “When we have all of the information and our review is complete, the board will make public the results of the review as well as corrective actions planned, if any are needed.”

The statement also states that the district’s reserves are “very strong” and that it expects to “exceed earnings budget for fiscal year ending June 30, 2014, with earnings of about 2 percent despite a weak winter season, as operating expenses were successfully reduced to meet diminished needs.”

Several members of the public attended the hospital board’s July 22 regular meeting, expressing concern over the way the district is managed, while some called for a state investigation.

“I would like to ask you to put our CEO on administrative leave and have the state come in and do an investigation on several topics,” Truckee resident Ruth Cross told the board. “I think this board has to take some responsibility on what is happening and allow someone from the state level to come in and do an investigation.”

Truckee resident Jamie Cole praised the hospital’s medical and support staff, but said the hospital administration and board of directors have taken the public hospital in the wrong direction.

“The administration and the board seems to have lost touch with the community’s needs,” said Cole. “I strongly suggest that the board of directors start doing their job or step down.”

Nevada County District Attorney Cliff Newell told Moonshine Ink that his office had received several calls regarding Tahoe Forest Hospital, but would not disclose if his office was pursuing an investigation. Newell said doing so would “cloud” any investigation. The California Attorney General’s office said it would return Moonshine Ink’s inquiries later this week.

In its investigations, Moonshine Ink revealed that public documents tied Bob Schapper directly to Medical Practice Solutions, a company headed by his wife that contracted with Tahoe Forest Hospital for more than seven years at a total price tag of $915,000. A Moonshine Ink review of the paper trail of Marsha Schapper’s company showed that Tahoe Forest Hospital CEO Bob Schapper was listed as the company’s chief financial officer in both 2003 and 2013, and claimed to be joint owner of the company in 2000. Past and current board members said Bob Schapper did not disclose his ties to the company to the board. Marsha Schapper was also hired as the hospital’s head of multi-specialty clinics for three and a half years. California law prohibits special district employees from having any influence over a contract in which they have financial interest.

Bob Schapper penned a six-page open letter, which is published on the Tahoe Forest Hospital website and on Moonshine Ink’s website, in response to Moonshine’s articles.

“TFHS did not have the internal expertise in managed care contract negotiation and health clinic administration prior to the hiring of Marsha Schapper,” Bob Schapper stated in his letter. “Marsha Schapper possesses extensive experience in both of these professional areas, and served in these roles for 10 years. With the oversight and repeated approvals of our publicly elected board of directors, Marsha’s firm, Medical Practice Solutions, was first hired as a consultant, and eventually, on advice of human resource counsel, she was brought on as an employee.”

Although Schapper explains the hiring of his wife, he does not explain his connection to Medical Practice Solutions in the letter.

~ David Bunker contributed to this report.