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'Who looked the other way?' Lawmakers grill University of Maryland hospital leadership on self-dealing scandal

Lawmakers in Annapolis on Friday grilled leaders at the University of Maryland Medical System as they considered sweeping legislation to reform the hospital network after allegations of self-dealing and no-bid contracting with board members.

The House of Delegates Health and Government Operations Committee heard testimony on fast-tracked emergency legislation to bar board members from abusing their “prestige of office” after The Baltimore Sun reported nine members — including Baltimore Mayor Catherine Pugh — had deals benefiting their private companies with the system of hospitals they were tasked with overseeing.

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“To everyone who learns about this scandal, it’s shocking,” House of Delegates Minority Leader Nic Kipke told representatives from the hospital system. “It seems to me someone had to look the other way. I want to know who looked the other way.”

Donna L. Jacobs, a senior vice president with the hospital system, and other University of Maryland Medical System representatives fielded the questions from lawmakers. Jacobs said the system’s board of directors was trying to get to the bottom of unanswered questions about who authorized the deals. She said the board supports the reform legislation.

Jacobs noted that three board members — including Pugh — have resigned and four others have taken leaves of absence as the system submits to an outside audit.

“We can’t give you chapter and verse as to precisely what happened on any of these arrangements,” Jacobs said as lawmakers pressed for details.

“It’s just so disappointing some of those members would take advantage of that position,” said Kipke, an Anne Arundel Republican. “I’m just sick over it. I appreciate your work to ensure we do everything possible so this never happens again.”

The fast-tracked legislation — sponsored by House of Delegates Speaker Michael Busch — would require an independent audit of financial management at the medical system by Dec. 31. It would require the governor’s appointees to the board to submit to vetting by the state Senate. And it would prohibit the practice of awarding no-bid contracts to board members.

Board members also would have to file financial disclosure forms that would then be turned over to the leadership of the House of Delegates, the state Senate and the governor.

Alexandra M. Hughes, the chief of staff to Busch, testified that the legislation was drafted with input from Republican Gov. Larry Hogan and Senate President Thomas V. Mike Miller, a Democrat.

Hughes noted Busch — an Anne Arundel Democrat who sits on the board — has been harsh in his condemnations of the board’s actions. Busch has accused members of “greasing their whole palms” and called it the largest “scandal” he could recall in office.

“He has not parsed his words in his disappointment with some of the allegations that have come forward,” Hughes said.

Hogan has said he wants a strict prohibition on board members engaging in business deals with the hospital network, but Busch believes competitively bid work should be allowed, Hughes said.

Jacobs read a letter from board chairman Stephen A. Burch that detailed the steps he’s taken to try to remedy the situation.

System CEO Robert A. Chrencik — who is paid $4.2 million annually — was placed on leave Thursday. Board members also voted to submit to an outside, independent review of the system’s contracting practices

“The medical system supports the spirit of the legislation and the board is acting with the same goals in mind,” Burch’s letter states. “There’s nothing more important than the trust of those who depend on the system’s leadership.”

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The medical system had initially opposed a Senate version of the bill sponsored by Sen. Jill P. Carter, a Baltimore Democrat, which would make any contract between board members and UMMS illegal. Hospital system officials had argued that the inability to make such deals would hobble their ability to recruit quality board members from the business community. However, board chairman Burch said Friday that, as more information about the board’s practices were revealed, officials have come to support the emergency legislation introduced in the House.

Jacobs assured lawmakers there would be no break in service with Chrencik on leave. John Ashworth, a senior vice president, will act as interim CEO.

Nevertheless, members of the committee hearing the bill pressed for answers from the system.

Del. Ric Metzgar, a Baltimore County Republican, asked why more medical system officials haven’t been forced to resign.

“Somebody got caught with their hands in the cookie jar,” Metzgar said.

Jacobs cautioned against concluding that board members who resigned had done something wrong.

“They would rather not have a pall continue to be cast on the organization, and so stepping down was a reasonable thing to do,” she said.

Pugh resigned from the system’s board of directors Monday amid scrutiny over her deal to sell 100,000 copies of her self-published children’s book series to the medical system from 2011 to 2018 for $500,000. Pugh has said the books were distributed to schools and day care programs. Baltimore school system officials have said 8,700 of those books are sitting unread in a warehouse.

Pugh also amended seven years of ethics forms she filed while she was in the state Senate that did not disclose her Healthy Holly LLC, through which she sold the books. Pugh said Wednesday that she was returning the final $100,000 payment to the University of Maryland Medical System.

Del. Shane E. Pendergrass, a Howard County Democrat who is chairwoman of the committee, said the bill would likely get a vote early next week.

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