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House of Delegates passes reform legislation for University of Maryland Medical System after self-dealing scandal

The House of Delegates voted 137-0 Wednesday to pass sweeping legislation that would reform the University of Maryland Medical System’s board of directors amid accusations of self-dealing that have rocked the hospital network.

The legislation — which comes after Baltimore Sun reporting sparked a widespread outcry over the board’s practices, including a $500,000 book deal with Mayor Catherine Pugh — would bar no-bid contracts for the hospital network’s board members, force all members to resign and reapply for their positions, and mandate an audit of contracting practices.

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The bill was sponsored by House of Delegates Speaker Michael Busch, an Anne Arundel Democrat who sits on the medical system’s board. Busch said he was never informed of the contracting practices and called the controversy the largest “scandal” he could recall during his time in office.

“In all my years in public service, I have never seen a more blatant and disgusting violation of the people’s trust than the acts committed by some of the members of this Board,” said Anne Arundel Republican Del. Nic Kipke, the House minority leader, who is advocating for the bill while Busch is hospitalized with pneumonia. “While I believe the members of the board must account individually for their actions, I’m supporting this legislation as it will help the University of Maryland Medical System move forward with a new and more thoroughly-vetted Board with strong safeguards to make sure this never happens again.”

The legislation was introduced after The Baltimore Sun reported last month that nine of the board’s 30 members — including Pugh — had deals benefiting their private companies with the hospital system they were tasked with overseeing.

Since then, Pugh and two other members resigned from the board while four others took leaves of absences. Pugh paid back $100,000 to the system and amended seven years of state ethics forms in which she did not disclose her Healthy Holly LLC, through which she sold the books.

System President and CEO Robert Chrencik — who was paid $4.2 million annually by the board — has been placed on a leave of absence amid scrutiny of the medical system.

Pugh, facing a call by Gov. Larry Hogan for a criminal investigation into the book deal that paid her hundreds of thousands of dollars, announced Monday that she will take an indefinite leave of absence because of her health.

On Tuesday, former state Sen. Francis X. Kelly and two of his sons took voluntary leaves of absence from the boards of six affiliated organizations amid the continuing controversy.

The Senate, meanwhile, gave preliminary approval to a slightly different version of the bill on Wednesday — setting it up for a final vote in that chamber.

Lawmakers will have to work out the differences in the two versions before sending the measure to the governor.

“There was clearly a lack of internal controls, a lack of conflict of disclosure, a lack of conflict of interest policies,” said. Sen. Brian Feldman, a Montgomery County Democrat who presented the bill to the full Senate.

Feldman said the medical system had only “some” policies that needed to be strengthened.

“We’ve tried to tackle that on multiple levels,” Feldman said. “I would say, without question, that there was clearly an absence of some of those controls, which gave rise to what we’re reading almost on a daily basis on The Baltimore Sun front page.”

Senate President Thomas V. Mike Miller Jr. credited Sen. Jill P. Carter, a Baltimore Democrat who introduced the bill before the scope of the medical system board’s self-dealing scandal was known.

“That’s what the role of the Senate is,” Miller said. “You see a problem and you address it. She filed a bill, had a hearing. They denied there was any problem. Then all the aspects started rolling out, which we are addressing at the present time.”

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The Senate took Carter’s bill and modified it to reflect the House version of the bill, and added on a few extra requirements.

Early Wednesday, Comptroller Peter Franchot — who has called on Pugh to resign — opened the Board of Public Works meeting in Annapolis by condemning the “self-dealing and backroom politics” of the board.

Franchot said The Sun’s reporting was revealing “one sleazy deal after another.”

He singled out Busch and Miller for harsh criticism, arguing they “either turned a blind eye or sat silent as no bid contracts worth millions of dollars were awarded to their fellow trustees.”

“The State Prosecutor, thank God, is involved,” Franchot said. “My fear is we have only barely broken the skin of the apple.”

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