SEBASTOPOL -- Palm Drive Hospital board member Dan Smith announced unexpectedly that he is resigning his seat amid disagreement over a recent board decision to not renew a contract with Dr. James Gude and his telemedicine company, OffSiteCare.

Mr. Smith recently disclosed that he has acted as a consultant and loaned Dr. Gude's company $175,000, which the board determined was a conflict of interest. The board by a 2-to-1 margin declined to renew the contract due to concerns that Mr. Smith's relationship with OffSiteCare was in violation of a state law regarding conflicts of interest.

OffSiteCare provides about four or five internal medicine physicians to Palm Drive, as well as hospitalist and respiratory care, manages the intensive care unit and provides the robotic telemedicine services to Palm Drive.

Mr. Smith, who abstained from the vote on OffSiteCare's contract, made clear his opinions in a letter sent to board members and the media.

"I have always believed that [OffSiteCare's] services to Palm Drive met every test for the legal exemption of necessity to the 1090 conflict of interest law and therefore, the district could continue Jim Gude’s contract in spite of my financial interest in OSC," he wrote.

Mr. Smith has been outspoken supporter of Palm Drive through its financial turmoil in recent years.