Mayor Catherine Pugh resigned Monday from the University of Maryland Medical System’s board of directors amid intense scrutiny over the system’s contracting practices — and as Baltimore school officials acknowledged that 8,700 copies of children’s books the medical system purchased from her are sitting unread in a warehouse.
Pugh’s resignation came after the mayor has encountered heavy criticism for failing to fully disclose the $500,000 business relationship she started in 2011 with the medical system as she sat on the volunteer board overseeing the hospitals.
Through the deal, which was not competitively bid, Pugh sold 100,000 copies of her self-published book series called “Healthy Holly” to the medical system. According to Pugh, the medical system then gave the books to day care programs and the city school system.
But the Baltimore school system said Monday the books were “unsolicited,” were never used for instruction, and officials had no accounting of how many books actually went to students.
Pugh, in stepping down from the board, said in a statement, “It has been an honor to have been associated with the important work of the UMMS Board, but the fact is, I have many other pressing concerns that require my full attention, energy and efforts.”
A review by The Baltimore Sun found a third of the members of the hospital network’s board of directors had business deals with the system worth hundreds of thousands of dollars each. The goods and services they provided the system ranged from pest control to civil engineering and insurance services.
Senate President Thomas V. Mike Miller said Monday he expected other board members to resign in addition to Pugh. He said he also expected there to be an audit of contracting practices.
“This was obviously a decision that everyone regrets,” Miller said of the contracting, which he has previously described as “self-dealing.” “I’m sure Mayor Pugh does as well. It’s a very unfortunate chapter in all of our lives. We need to learn from it.”
Gov. Larry Hogan called Pugh’s resignation “a good step in the right direction.”
“I was frankly shocked and appalled,” Hogan said of the contracting practices at the medical system. “People should either resign from the board or terminate their relationship. They should not be a board member and be receiving compensation.”
Hogan said he’s called for a Wednesday meeting with leadership of the hospital system, Miller, and House of Delegates Speaker Michael Busch — who also sits on the medical system’s board. Busch has said he and some other board members were never informed of the contracting practices and he was shocked to learn of the deals.
“We’re going to push for major reforms,” Hogan said. “We’re going to make sure people are either going to terminate their financial relationship or terminate them from the board. We’re going to make sure these types of things don’t happen in the future. It’s outrageous and unacceptable.”
Maryland lawmakers expressed serious concerns and called for an audit of the University of Maryland Medical System after learning nine of its 30 board members had business deals with the network. Legislation is pending in the state Senate to ban the practice.
Busch said he’s looking forward to the meeting the governor has called with leaders of the medical system.
“I cannot remember a scandal of this scale taking place since I’ve been in office,” Busch said.
Busch said the UMMS contracting issues, combined with last summer’s death of University of Maryland football player Jordan McNair and problems in the athletic department there, “makes the entire university system look corrupt.”
The University of Maryland Medical System is a university-based regional health care system that partners with the University of Maryland School of Medicine and the university’s schools of Nursing, Pharmacy, Social Work and Dentistry in Baltimore. The system governs 14 hospitals. Its flagship academic campus is the University of Maryland Medical Center in Baltimore.
Meanwhile, Sen. Bill Ferguson, a Baltimore Democrat, called on Pugh to return the money she's received from the book deal.
Pugh had a book deal with the 11-hospital network, which spent a total of $500,000 to buy 100,000 copies of her self-published “Healthy Holly” children’s books in 2011, 2013, 2015, 2017 and 2018, city and medical system officials told The Sun.
“What the mayor did is questionable at best. I know she has resigned from the board,” Ferguson said. “I hope her next decision is to return the money that she received.”
On Friday, Pugh amended financial disclosure forms for seven years of reports filed with the state ethics commission. The new documents disclosed that she established her company, Healthy Holly LLC, which sold children’s books she wrote to the medical system.
“This is really bad,” Ferguson said. “It is seemingly a symptom of a larger problem. These quasi-public entities are not being held accountable. … This is really poor decision-making and will have lasting consequences.”
Stephen A. Burch, chairman of the medical system’s board of directors, said in a statement he accepted Pugh’s resignation Monday. Burch also met with Senate President Miller Monday morning.
”The Board is grateful to Mayor Pugh for her years of dedicated service and staunch advocacy on behalf of the medical system,” Burch said in the statement. “Mayor Pugh’s volunteerism has helped enable long-term, system-wide growth while improving health care delivery for many millions of Marylanders.”
The leadership of University of Maryland Medical System has long been supportive of Pugh’s electoral efforts.
Board members and senior executives with the medical system and its flagship medical center have donated or loaned nearly $292,000 to Pugh’s Senate and mayor campaign committees since 2005, according to state campaign finance filings.
The Democrat’s biggest haul from top UMMS executives and board members, $255,570, came while she was running for mayor in 2016. Her supporters included medical system CEO Robert Chrencik, whom the board pays $4.2 million annually, and board chairman Burch.
In addition to $55,570 in donations reported on her 2016 state filings, Pugh’s campaign received three loans: $100,000 from the Baltimore County Victory Slate, controlled by fellow board member and Pugh cabinet member James T. Smith; and $50,000 each from Burch and another board member, Walter Tilley Jr., CEO of Home Paramount Pest Control.
In addition to his loan to Pugh’s campaign, Burch has given it a total of $18,000 beginning with a $500 check in 2008 and continuing through Jan. 2 this year with a $4,000 donation.
Tilley and his family also gave Pugh an additional $7,500. Pugh’s relationship with Tilley was questioned in 2016 when the pest control businessman flew the mayor on his private jet to and from the international shopping center convention in Las Vegas attended by many government officials. Tilley is one of the board members that the legislative leaders are frustrated about because his company was paid $160,000 by UMMS last year.
Chrencik was also a reliable donor. He gave $4,850 to Pugh’s campaigns since 2012, records show. That’s in addition to the two $50 fruit baskets he gave Pugh as a gift in 2016 and 2017, according to the mayor’s city ethics forms.
Former state Sen. Francis X. Kelly of Baltimore County gave Pugh $6,250 from 2012 to 2015. Kelly is a board member whose insurance company has disclosed receiving millions from UMMS for managing its employee benefits system.
Baltimore Sun reporters Talia Richman, Pamela Wood and Sarah Meehan contributed to this article.