HEALTH OFFICIALS RELIEVED OF DUTY AS COUNTY TRACKS DISCOUNTED DRUGS.

Byline: Troy Anderson Staff Writer

Los Angeles County supervisors widened their probe Tuesday into whether $900,000 in federally discounted drugs were used illegally at private health clinics.

Department of Health Services Associate Director Dr. Donald C. Thomas III and Director of Pharmacy Dr. Janet Aiso have been relieved of their duties with pay, according to a memorandum obtained by the Daily News.

Mark Finucane, health department director, said in the memo to supervisors that the county may face federal fines. ``It also should be noted that other disciplinary action may be taken upon employees involved in this matter,'' he said.

Thomas said he is innocent. ``Small bits of the truth have been forced together to make me seem responsible for things I did not or could not do,'' he said.

Aiso also denies any wrongdoing, according to an attorney working with both officials.

On Tuesday, supervisors met privately to discuss the investigation and vowed to ferret out those responsible, said health department spokesman John Wallace.

Supervisors were not available for comment after the meeting, but earlier they voiced concern over the allegations.

``The health department must take immediate action to ensure this flagrant violation of public trust is not repeated,'' said Supervisor Michael D. Antonovich.

The investigation comes a month after the federal government approved a $1.2 billion bailout of the county's health care system, agreeing to pay for the health care of low-income residents at clinics, including the one targeted in the investigation. However, the private clinics in the county network are not eligible for federally discounted medications, officials said.

``It is totally unacceptable that the health department would allow an outstanding bill for $900,000 at a time when we were negotiating the waiver and every dollar we looked at was committed to providing health services,'' said Antonovich's health deputy, Kathryn Barger.

The County Counsel's Office and the health department are investigating allegations that an informal arrangement with the Metro South Provider Network to provide discounted drugs to five clinics in Los Angeles and Long Beach.

The supervisors did not know of the agreement, and there is no evidence anyone profited from the deal.

``I feel very strongly about the unorthodox, if not illegal, practices which surfaced in these particular deals,'' Supervisor Zev Yaroslavsky said. ``We need to get to the bottom of this, find out if any laws were broken, who is responsible and those who are need to pay the price for what happened here.''

Los Angeles attorney Godfrey Isaac said Thomas and Aiso are wrongly accused.

``I'm satisfied that neither Dr. Thomas or Dr. Aiso have done anything wrong and they are the victims of a political witch hunt,'' said Isaac, who has consulted the two.