The board will now have just four voting members, led by Towson lawyer John E. Sibrea as its new president, and two other newcomers. Only Terry T. Brown, a longtime BBH vice president, will retain his voting seat.
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Sibrea said in an interview that he will serve only until June, suggesting more change to come.
The moves come in response to a letter last week from Thomas V. Russell, inspector general at the Department of Health and Mental Hygiene. Russell told the nonprofit to explain how it was complying with state law that says in order for an organization to receive state mental health funds, no immediate family member of any employee can serve as a voting board member.
"This is an acceptable response to his inquiry," health department spokesman David Paulson said Monday. A letter from Sibrea outlining the changes was faxed to Russell's office Thursday, the day before Russell's noon Friday deadline.
The Baltimore Sun published last week a two-part investigation of Baltimore Behavioral Health that revealed high Medicaid billings at the clinic. According to the investigation, former BBH patients and employees, as well as some outside doctors, say the clinic has been diagnosing mental illness — and collecting public funds to treat it — in some patients whose main affliction is drug addiction.
Nonprofit experts said BBH exemplified bad practice for tax-exempt charities in part because of the family's dominance of its board. Last year, the six relatives were paid a combined $1.4 million, an 84 percent jump from 2004, according to tax filings.
Since the investigation was published, Maryland lawmakers have said they plan to examine the nonprofit's operations and consider legislative changes. Health Secretary John M. Colmers also said his department's interest in BBH has intensified. A unit within the department had launched an investigation earlier this year.
One new board member, medical malpractice attorney Jay Miller, said Sibrea asked him last week to serve as vice chairman. Miller chairs a Baltimore County program that helps lawyers and judges battling substance abuse.
Miller said he hopes to help "right the ship." Like the other newcomers, Miller said he will not be paid to serve. Previously, all eight of BBH's board members were paid, either as executives or for their board service.
Miller said he respects Sibrea. "He's a moral guy, an ethical guy and a great guy," he said. "If he's going to be the leader, I'm on board."
Sibrea said his letter to the inspector general did not mention Miller because he sent it before Miller had accepted Sibrea's invitation.
Sibrea also recruited Kent E. Schiner, whom he described in the letter to Russell as a former director of B'nai B'rith, a Jewish community service organization.
The fourth voting member will be Brown. Last week, Brown took a leave of absence as vice chairman of Baltimore Substance Abuse Systems Inc., a quasi-public agency that distributes state drug treatment grants to Baltimore providers. Greg Warren, the agency's president, said Brown indicated he wanted to focus on his work at BBH, which has never applied for a grant.
Sibrea said Morris Hill, whom he has known for 45 years, asked him to take the reins of the board. His letter says Hathaway requested he join.
Court records show that Sibrea represented another family-related nonprofit, Baltimore Addictions Treatment Center, during its bankruptcy in 1997.
Sibrea also had been a lawyer for Hill's stepdaughter, Susan Scotto, and her husband, Dr. Nicholas Scotto, in 2005, court records show. She is the chief clinical officer at BBH, and Nicholas Scotto is chief physician. Both Scottos were board members until last week.
Sibrea said in an interview Monday that he would "absolutely" act independently. He noted that in the mid-1990s he served as a local chairman for the nonprofit March of Dimes and was earlier appointed to a drug and alcohol addiction board by then-Baltimore County Executive Donald Hutchinson.
Hill and others at BBH thought he would be a good fit, Sibrea said: "They knew I had a cultural background with regard to helping people who were addicted to either narcotics or alcohol."
Henry Bogdan, managing director for public policy and public affairs at the Maryland Association of Nonprofit Organizations, said he does not think Sibrea's past legal representation should constitute a "disqualifying" factor.
Bogdan's association does recommend larger boards with at least five unrelated voting members. But he said many nonprofits function well with fewer members, and the Internal Revenue Service "takes a strong position" that it does not dictate board size.
Founded in 1997, BBH mostly bills Maryland's public mental health system, principally Medicaid. A patient's main affliction must be psychiatric rather than drug addiction for treatment to be billed to that part of the taxpayer-funded system. As billings to Medicaid rose in recent years, so did the salaries of top BBH executives.
BBH, which specializes in treating people with co-occurring mental illness and drug addiction, received about $17 million in public funds in fiscal 2009 and about $11 million in fiscal 2010.
Del. Peter A. Hammen, a Baltimore Democrat and chairman of the Health and Government Operations Committee, plans to meet in coming weeks with state health officials to discuss their oversight of Baltimore Behavioral Health. He said he plans to hold a public hearing in January.
The Sun also found that BBH offers many patients a bed in unregulated rental homes around Southwest Baltimore. More than a dozen former patients and staff members described illicit drug use by patients at some of the houses and at its facilities.
The Mental Hygiene Administration, a unit of the state health department, began an investigation in May, after The Sun started its examination. The state probe led to a survey by the state Office of Health Care Quality, which flagged the law governing family members on boards that Russell cited in his letter to BBH last week.
The name of a new member of Baltimore Behavioral Health's board of directors was incorrect in a previous version of this story. The Baltimore Sun regrets the error.