Citing coronavirus spread, Maryland Senate committee approves UMMS board nominees despite negative audit

A state Senate committee voted Sunday to confirm nearly two dozen nominees to the University of Maryland Medical System board ― despite a new audit that revealed details about the self-dealing scandal that rocked the hospital network last year and led to the resignation of Baltimore’s mayor.

Citing a need for the state’s largest hospital network to have leadership in place as it deals with the coronavirus pandemic, members of the Executive Nominations Committee approved most of Republican Gov. Larry Hogan’s nominees to the board by a unanimous vote.


Sen. Clarence Lam, a Howard County Democrat and physician, voted against seven of the nominees, including several who were on the board during the scandal. Lam has emerged as the committee’s top critic of the medical system and the culture of insider dealing exposed there last year.

“I’m disappointed with the vote,” Lam said. “I certainly understand the situation we’re in. But I think the audit pointed out some serious deficiencies and things that need to be taken seriously." He said that when some of the nominees appeared earlier before the committee, “we had inconsistent testimony.”

"I was not comfortable, given the lack of follow-up information, to move forward with these re-appointments.”

Kristin Bryce, the system’s chief of staff, said in a statement that “having a fully confirmed Board of Directors is pivotal to the daily operations and mission of the Medical System" and she thanked the committee for its vote.

“As evidenced over the last nine months, the reconstituted UMMS Board and new management team have been fully committed to addressing the issues of the past and ensuring the continued adoption of governance best practices,” Bryce said.

"The System remains focused on providing world-class health care during this global pandemic.”

The full Senate is slated to vote Monday on the nominees.

Late Friday, The Baltimore Sun reported on the new audit of UMMS finances that uncovered more financial dealings between board members and their organizations than previously known ― revealing nearly $115 million in payments to more than two dozen board members and their related businesses in recent years.


The state’s Office of Legislative Audits, which conducted the probe, sent the findings of the 100-page review to key lawmakers in Annapolis. The auditors did not identify board members by name ― and said they could not definitively determine any transactions were “improper” ― but did include a detailed list of payments made to board members they called “vendors.”

System officials took issue with aspects of the review, arguing auditors counted many aboveboard transactions as conflicts, including dues the network paid to a statewide healthcare association; redacted board member and business names unnecessarily; and falsely accused UMMS of being uncooperative.

During the committee voting session, Senate President Bill Ferguson, a Baltimore Democrat, said the review from auditors was troubling, but the coronavirus crisis necessitated the Senate’s actions to put board leadership in place.

“The audit had concerning information in it,” Ferguson said. “The whole incident was concerning. But right now, in this state of emergency, it’s really important we have a health institution that is operating at full strength.”

Ferguson said he was submitting a budget amendment that would restrict funds to the medical system unless the hospital network implements reform recommendations from several independent audits.

“We are going to trust and verify,” Ferguson said.


The board has been under intense scrutiny since last March when The Sun reported that a third of its 30 members had deals with the 13-hospital system they were charged with overseeing, some not competitively bid.

One of those deals was with then-Baltimore Mayor Catherine Pugh, a Democrat who made hundreds of thousands of dollars selling her “Healthy Holly” children’s books to the system. She resigned from its board and as mayor last year and was sentenced to three years in prison after she pleaded guilty to federal fraud conspiracy and tax evasion.

The scandal also resulted in the system’s former CEO and four other top hospital officials resigning, and the passage of sweeping reform legislation.

Most nominees to the medical board are new, but five are returning. They are Chairman James “Chip” DiPaula Jr.; Vice Chairman Alexander Williams Jr.; Louis Pope, a former state GOP chairman, and businessmen Barry P. Gossett and R. Alan Butler.

During testimony before the committee, Gossett acknowledged he had some knowledge of the hospital network’s “Healthy Holly” book deals, saying the system’s former CEO made a passing mention of them during a meeting. The others testified they had no knowledge of the book deals.

Of the $115 million in deals outlined in the state legislative auditors’ report obtained by The Sun, more than $46 million involved a single board member. Another $16 million involved a second. Just six of the 27 board members accounted for nearly $100 million of the payments ― though some of the spending was passed through to other entities and some was associated with philanthropic giving.

The review provided the fullest picture to date of the huge scope of transactions occurring between UMMS and its board members in recent years. Many were carried out without proper bidding or otherwise constituted conflict of interest, the auditors said, and UMMS could not justify many of them.

The auditors wrote UMMS often lacked “justification for awarding a contract without obtaining bids or proposals from potential vendors,” and could not always provide “sufficient information to ensure the propriety of the related payments." The auditors wrote that they “could not always ascertain that the contracts were awarded to the most favorable vendor and could not always verify that all required and/or billed goods and services were provided and related payments were proper.”

The review did not include the names of the board members who were vendors, a decision the auditors said was based on “advice obtained from legal counsel to the Maryland General Assembly” and was consistent with longstanding practice.

However, it was clear auditors referenced Pugh in a section describing payments for children’s books. The scope of the audit covered $200,000 of the $500,000 that UMMS paid Pugh for her “Healthy Holly” children’s books over the years, as well as a $20,000 payment UMMS made to Pugh’s inaugural committee.

The auditors wrote that the book purchases were not competitively bid, and that UMMS could not provide any documentation as to why Pugh’s books were selected or how the purchase amounts were determined.


“We were advised that UMMS did not competitively procure the purchases because it considered the purchases of the books to be sponsorships of the school system,” the auditors wrote. “UMMS could not explain how the book donation to the school system supported its community outreach initiative nor explain why the payments were made to [Pugh] instead of directly to the school system.” UMMS did not confirm with school officials that they wanted the books, nor that they received the books.

As for the $20,000 donation to Pugh’s inaugural fund, UMMS officials have said that they viewed it as payment for tickets to inaugural events, plus advertising there. However, the auditors found that UMMS never documented its justification for the payment, or how supporting Pugh’s inauguration “was aligned with its mission or provided a community benefit or service.”

UMMS also could not provide evidence it received the tickets or advertising, the auditors wrote.