As a Maryland Senate committee vetted nominees to the revamped University of Maryland Medical System board, one returning board member acknowledged he had some knowledge of the hospital network’s “Healthy Holly” book deals that sparked a scandal and resulted in the conviction of former Baltimore Mayor Catherine Pugh.
Barry P. Gossett, who serves on both the medical system board and the University System of Maryland board of regents, said former UMMS CEO Robert A. Chrencik informed board members of the children’s book series deals ― but didn’t provide details.
Other board members previously denied knowledge of Pugh’s arrangement. The medical system paid her $500,000 to produce “Healthy Holly” books. Those deals, federal prosecutors say, allowed Pugh to begin a “seven-year scheme to defraud, multiple years of tax evasion, election fraud and attempted cover-ups, including brazen lies to the public.”
Pugh, while a member of the UMMS board, sold the books to the medical system, agreeing that she would distribute them to city schoolchildren. School officials, however, said they hadn’t asked for the books, never used them for instruction and had thousands sitting unread in a warehouse.
Sen. Clarence K. Lam, a Howard County Democrat, asked Gossett during a meeting Monday night of the Executive Nominations Committee for assurances that he had no knowledge of the deals, as other board members have testified.
“To say I had no knowledge is somewhat of an error,” said Gossett, a longtime member of the board. “At one of the meetings, the president of UMMS did make mention of 'Healthy Holly’ ... saying the system was going to underwrite that, because it was part of our mission of wellness and the inner-city kids."
But Gossett said he and other board members trusted management and didn’t ask for more information.
“That was the end of it,” he said. "There was never any disclosure about the amount, the number of books, anything else. It was just an announcement. From that standpoint, that was all we were told. Sometimes you place trust as a board member into management. And sometimes you find that the trust was misplaced.”
Sen. Delores Kelley, a Baltimore County Democrat, asked why the board didn’t appoint a committee to vet the books’ content. The clumsily produced books contain grammatical and spelling errors, such as a main character’s name being spelled two different ways and the word “vegetable” appearing as “vegetale.”
“Did you have a subcommittee to look at the lack of subject-verb agreement and the misspellings?” Kelley said. “If you’re going to buy something to help kids in the future, you want to make sure it’s up to snuff.”
“I never even saw the book,” Gossett said.
“That was the problem,” Kelley replied.
Then-Gov. Martin O’Malley, a Democrat, appointed Gossett to the University of Maryland board of regents in 2007. In that capacity, he also has served on the board of the medical system since 2013.
In an interview Tuesday, Lam said Gossett’s testimony prompts questions about what other board members knew. Lam noted several other returning board members ― Chairman James “Chip” DiPaula Jr.; Vice Chairman Alexander Williams Jr.; Louis Pope, a former state GOP chairman; and businessman R. Alan Butler ― told the Senate committee they had no knowledge of the book deals.
“What was brought up yesterday was really concerning,” Lam said. “All other nominees have testified they had no knowledge of these insider deals taking place. To Mr. Gossett’s credit, he was upfront that there were members who were made aware.”
According to an audit of board practices by the law firm Latham & Watkins, commissioned by UMMS, financial transactions between the hospital network’s leadership and Pugh were disclosed to the board’s Audit and Compliance Committee in 2013, 2014, 2016 and 2018.
“However, there is no evidence of any discussion of, review of, vote on, or approval of the arrangement by the (committee) or the full board,” the audit stated. “Although there is some evidence that the board was told of the initial book purchase, there is no evidence of board approval of that purchase or any subsequent purchases.”
Michael Schwartzberg, a spokesman for the medical system, said the Latham & Watkins report highlighted that “the practices and policies in place prior to the recent governance reforms, including disclosure requirements, were inadequate and allowed for conflicts of interest.”
“Mr. Gossett’s comments refer to his memory of events that took place in or around 2013, when he initially joined the board,” Schwartzberg said. “None of the other current board members were on the board at that time.”
An earlier review by Nygren Consulting, paid for by UMMS, concluded Chrencik agreed to “enter into an agreement with Ms. Pugh without consent of the board.”
“According to minutes of the [audit] committee’s meetings, neither this nor other financial relationships of board members was noted as significant,” that review stated. "Minutes of various committee meetings also show that the committee decided to provide summaries of the disclosure reports to the full board each year, but it is not clear that such disclosures were discussed in the board meetings.”
The Senate committee has postponed confirmation votes on nearly two dozen nominees to the system’s board, awaiting the results of an ongoing state audit into the scandal that rocked the hospital network last year.
Lam said he believes Gossett’s testimony calls into question “the credibility among the existing board members as to what they knew and when.”
“They have testified they had no prior knowledge of this,” Lam said. “We have a clear discrepancy. That’s why it’s proper for us to wait until we see the results from the Office of Legislative Audits.”
The state’s top legislative auditor said last fall the hospital network was “hindering” his work. UMMS officials have said they are cooperating. The audit is expected to be completed by March 13.
“UMMS remains firmly committed to a culture of transparency and accountability while continuing its major policy reform work,” Schwartzberg said.
Senate President Emeritus Thomas V. Mike Miller, a Democrat, testified Monday in favor of Gossett’s re-appointment, calling him a “person of impeccable credentials, unquestionable integrity.”
The board has been under intense scrutiny since March when The Baltimore Sun reported that a third of its 30 members had deals with the 13-hospital system, some not competitively bid. After The Sun’s revelations, Pugh resigned from the board in March and as mayor in May. The FBI raided her houses and City Hall in late April and she pleaded guilty to federal conspiracy and tax evasion in November.
Pugh will be sentenced Feb. 27. Her attorneys are asking for a sentence of one year and one day, while prosecutors are seeking nearly five years in prison.
State lawmakers last year passed sweeping reform legislation, sponsored by Sen. Jill P. Carter and late House of Delegates Speaker Michael Busch, mandating several reforms at UMMS, including requiring the resignations of all board members and mandating the audit. The scandal led to Chrencik and four other executives resigning.
The board now has 25 board members, serving in acting capacities. If senators do not approve the appointments by the end of the General Assembly session in April, the nominees would have to step down and Republican Gov. Larry Hogan would have to start the appointment process over.
During the current confirmation process for the revamped board, senators have had tough questions for the five members Hogan nominated to return to the panel.
Senators have expressed confidence in many of the new appointees. Sen. Justin Ready, a Carroll County Republican, spoke Monday in favor of Edward P. Nevin, a business executive with experience in tax planning.
“He brings the experience, the intelligence and the integrity that we need," Ready said.
Baltimore Sun reporter Kevin Rector contributed to this article.