Morris and Sandra Hill sit atop a corporate ladder fashioned from their own family tree.
The couple has helped build Baltimore Behavioral Health Inc. into a $17 million enterprise. Two of Sandra Hill's children have jobs paying six-figure salaries, and her son-in-law is the chief doctor.
The family, which holds six of eight seats on the nonprofit's board of directors, has enjoyed rising personal income while serving Baltimore's plentiful supply of drug abusers under a taxpayer-funded system intended to help those beset by psychiatric problems.
As BBH billings to Medicaid shot upward in recent years, so did family salaries. Last year, the six made a combined $1.4 million. All eight board members are paid.
Nonprofit experts say Baltimore Behavioral Health exemplifies bad practice for tax-exempt charities.
Daniel Kurtz, a partner at the New York law firm Skadden, Arps, Slate, Meagher & Flom, reviewed BBH's public tax filings at The Baltimore Sun's request. He noted that BBH does not have an independent board. While federal tax law does not require unpaid directors, Kurtz said having an independent board provides important oversight and is a "foundation stone for good governance" at nonprofits.
"There is nobody to whom they are accountable here, nobody," Kurtz said of BBH executives. "Because they are the board. Senior management and the board are the same. The principle of accountability is lacking."
Chuck McLean, vice president of research at Guidestar, a Virginia-based organization that tracks nonprofits, said: "This is a public entity, and when you don't have independent board members, the concern would be that the board members are not necessarily looking out for the best interests of the community that this organization is intended to serve.
"Overall," McLean said, "what is most disturbing to me is that they don't have audited financial statements."
Morris Hill prepares the returns, though he is not an accountant, and in tax filings BBH says it does not hire outside accountants to audit or review its books. McLean said that is "very unusual" practice for such a large nonprofit.
McLean described as "pretty extreme" the family's collective 84 percent pay raise from 2004 to 2009.
In October, investigators from the Office of Health Care Quality informed BBH that it is in violation of a state law passed in 2005 that governs the composition of boards at nonprofits that receive public mental health funds.
The law says no one can serve on the board of such an organization if an "immediate family member" works for that organization. In BBH's case, investigators concluded, the law applies to all six family members on its board. BBH has yet to respond to the state's notification. BBH did not respond to The Sun's written questions about its executive salaries or board makeup.
Here is a look at the key members of the organization:
Morris and Sandra Hill
The autumn of 1998 marked a low point for Morris and Sandra Hill. That October, the Baltimore couple filed for Chapter 7 personal bankruptcy, burdened by debts that included 20 credit card balances totaling more than $250,000.
Today, they have an array of assets: a Fells Point condominium bought four years ago for $675,000; a Virginia Beach condo that cost $519,000 in 2003; and a 45-foot yacht, the Argo, for which they paid $684,000 in 2007, according to property records.
Their fortunes have rebounded during a period of significant growth for BBH. Last year, husband and wife together made just over $500,000 as executives of the nonprofit. He is the president; she is vice president for clinical and medical services.
BBH's roots go back to the 1970s, when Sandra Hill, a registered nurse, worked among alcoholics in Baltimore. She "really wanted to make a difference," recalled the Rev. Richard Lawrence, pastor of St. Vincent de Paul Church. "She believed these guys could make it, and she believed she could be responsible for helping them do it."
Hill, now 72, went on to earn an executive master's degree in business at what was then Loyola College. She's licensed as an advanced practice nurse specializing in psychiatric care.
From its inception in 1997, Baltimore Behavioral Health was a family affair, with Morris Hill, now 76 and licensed in Virginia as a counselor, as president. His wife initially served as secretary-treasurer and chief clinical officer.
As early as 1998, the nonprofit company provided a healthy sum for the Hills. Sandra Hill was paid $13,000 as an executive, and BBH paid her company, Sandy Hill Associates, $71,000 under a contract to provide psychotherapy. BBH paid Morris Hill's company, Healthcare Management Services, $79,000 for "management/consulting/training."
Last year, BBH paid the Hills identical salaries of $252,992.
William andVictoria Hathaway
As chief executive and chief financial officer, William "Kris" Hathaway, 47, runs day-to-day operations at BBH. The son of Sandra Hill and stepson of Morris Hill, he made $347,000 in 2008, more than double his $153,000 salary three years earlier.
His pay has been high compared with that of top executives at other mental health nonprofits in the United States. According to Guidestar's most recent compensation report, his 2007 salary of $290,000 far eclipsed the national average of $185,000 for CEOs at nonprofits of BBH's size and type. Last year, his salary dropped to $236,250, still above average.
In a 2009 tax return, BBH said it "reviews salary data from like organizations to set limits" on salaries. Hathaway did not respond to a Sun request for details.
Hathaway has been at Baltimore Behavioral Health since its early days as chief financial officer, a title he retains along with that of chief executive. A 1986 graduate of Loyola, he later earned a master's degree in business. Three years later he became a certified public accountant. (He let his Maryland license expire in 1996, state records show, though in tax documents he's still listed as a CPA — a mistake, he says.)
In 2002 Hathaway's wife, Victoria, 46, appeared in tax filings as BBH's recording secretary, a position she still holds. Last year, the job paid her $60,100 for working 20 hours per week.
Dr. Nicholas G.and Susan Scotto
Dr. Nicholas G. Scotto, 48, is chief physician at BBH and Sandra Hill's son-in-law. His wife, Susan, is the sister of the CEO and the daughter of Sandra Hill.
Susan Scotto, a licensed clinical social worker, has worked at BBH since 2000 and last year made $274,000 as chief clinical officer, tax records show. Nicholas Scotto received a salary of $320,000.
In 2002, the nonprofit listed Nicholas Scotto as chief of psychiatry. He was then on probation imposed by the Maryland Board of Physicians after being been found guilty in August 1999 of professional misconduct.
By Scotto's admission at a hearing in New York, where he was also licensed, he became addicted while trying to cope with attention deficit disorder and a busy Eastern Shore medical practice. He'd begun using Ritalin, a stimulant, and the anti-anxiety drug Xanax, and kept using Ritalin "despite the detrimental effects on his professional, social and family life." An earlier marriage ended in divorce, and he went bankrupt, court records show.
Scotto told the Board of Physicians that he wrote Ritalin prescriptions in his nephews' names. He improperly allowed a volunteer at his Salisbury office to obtain Xanax, and he prescribed Ritalin, Xanax and the stimulant Adderall for a man who provided computer services but was not a patient.
In early 1998, Scotto checked into Marworth, a drug treatment center in Scranton, Pa. While in treatment, he kept writing prescriptions for his patients, the Maryland board found, and Marworth clinicians felt he was not serious about his 46-day rehab stay. Scotto's "motivation remained highly questionable throughout his treatment stay," his discharge summary said. "It did not seem that he internalized his need for treatment and recovery."
The discharge summary made another key point: "It was clearly reinforced to [Scotto] that he could not return to practicing psychiatry at this time." Then he did just that.
Board of Physicians staff, by then aware of Scotto's situation, tried to reach him in April 1998, only to be told by his Salisbury office that he was seeing patients. Two weeks later, staff at Peninsula Addiction Services, where Scotto had begun outpatient treatment, assured the board he was not working as a psychiatrist. That day, board staff members who visited his office were told by a receptionist that they could not see him because he was seeing patients.
That June, Scotto admitted his addiction to board staff.
His acknowledgement led to an August 1999 consent decree signed by Scotto. In it, the Board of Physicians concluded that he was guilty of misconduct and imposed four years of probation. Among other conditions, Scotto was required to have his work reviewed by a board-approved physician supervisor.
In November 2003, the board lifted the probation. Since then, his record with the board has been clean.
Terry T. Brown
Terry T. Brown spent five years in prison in the 1980s for an attempted murder that prosecutors called a contract killing gone wrong. Today, he drives a black Bentley sedan with a one-letter license plate, "B."
Brown, while not part of the Hill family, has played a key role at Baltimore Behavioral Health for nearly a decade.
Brown made $184,000 last year as a BBH executive and is one of two members of the board of directors outside the Hill family. The other is Lloyd W. Fuhrman, chief executive of an Eastern Shore nonprofit who was paid $36,000 by BBH for a reported 3.5 hours of service per week.
Brown, 56, first appeared in tax records in 2001 as BBH's director of consumer services. More recently his business card lists him as vice president of resource development. He is the public face of the nonprofit, serving on the boards of local organizations and attending social functions.
In 1983, he was convicted of shooting the husband of a Greenbelt woman who prosecutors said hired him for $2,000. A Baltimore Sun article in 1994 said Brown met her at a Washington nightclub that he managed. She paid him $1,000 in cash and was to pay the other half after the killing, according to court records.
Brown has acknowledged that he carried a gun, saying that his job required him to carry cash, but he has denied acting as a hit man.
Prosecutors alleged that Brown shot the man in the shoulder, then fired at him again eight days later and missed. When Brown was arrested, he had a .357-caliber Magnum pistol in his possession, and police found ammunition, a photo of the woman's husband and a sheet of paper bearing the man's name and the notation "$1,000" in his car, The Sun reported. Brown had no criminal record and was working at St. Elizabeth's mental hospital in Washington. He also co-owned two nightclubs.
As an inmate, Brown made dean's list at Coppin State College, The Sun reported, and after his release earned a master's degree in business at Morgan State University. He opened an antiques shop in Fells Point, became head of the neighborhood business association and kept a 30-foot sailboat.
In 1994, Brown's past cost him a chance to run the debt-ridden Harrison's Pier 5 hotel at the Inner Harbor. The city ended negotiations with Brown over a proposed management deal after learning of his conviction.
Brown told The Sun in 1994 that he felt that he had been wrongly convicted and that "if anything, a debt is owed to me."
"I could have blamed the system, said another black man was being crucified by the system, found a lot of crutches," he said at the time. "But I went on with my life. I still believe the American dream is possible."