correction: Earlier versions of this article gave the wrong first name for Keith Persinger, former chief performance improvement officer for the University of Maryland Medical System.
Maryland lawmakers called Thursday for accountability regarding management failures at the University of Maryland Medical System and questioned why four board members who relinquished their duties after a self-dealing scandal was exposed in March were invited this week to rejoin the board.
An outside review released Wednesday largely blamed former chief executive Robert A. Chrencik for hiring companies linked to board members to provide services to the system, ranging from computer software to ambulance transport to thousands of children’s books written and published by then-Baltimore Mayor Catherine E. Pugh (D).
Chrencik made many of the deals directly with the board members, in violation of best practices and board policies, according to the review by Nygren Consulting, a California firm.
“Many of these contracts were not competitively bid, were not declared to be necessary by the board or senior leaders, and, if vetted, were without full transparency to the entire board,” the firm’s report concluded.
State Sen. Bill Ferguson (D-Baltimore City) said there needs to be “accountability for the executives who oversaw these decisions” within the system, which receives significant funding from taxpayers.
“The executives had a fiduciary responsibility,” Ferguson said. “They should be held liable.” He pointed out that Chrencik was paid $4.3 million in 2017, up from $2.4 million in 2013 — an increase the board would have voted on.
“Being in good graces probably had a personal benefit to it,” Ferguson said. “These executives had a heightened level of responsibility because of the tax dollars that were involved, and they breached that trust.”
Chrencik did not return calls for comment.
The review drew a distinction between contracts that involved professional services, such as insurance, pest control and ambulances, and those not related to daily operations of the hospital system, including the children’s books and consulting services.
On Wednesday, the same day the board received the report, it voted to invite back four board members whose contracts involved professional services: Francis X. Kelly Jr., a former state senator whose insurance business has handled more than $100 million in premiums for UMMS since 2005; Walter Tilley, whose pest-control company had a contract for about $160,000 last year; August Chiasera, an executive at M&T Bank who reported that his company had income and fees totaling $4.4 million from contracts with the system; and James A. Soltesz, whose engineering company’s contracts for design work were competitively bid and predated his joining the board in 2018.
John Ashworth, interim chief executive for the hospital system, said the board members were asked to return because the probe placed blame for their contracts primarily with Chrencik, who resigned in April.
But state Sen. Jill P. Carter (D-Baltimore City), who sponsored legislation to overhaul the UMMS board earlier this year, said inviting them back “seems rooted in some level of denial of the gravity of the situation. . . . It’s contrary to the spirit of the legislation and bad for the public trust.”
Kelly, Tilley, Chiasera and Soltesz did not respond to requests for comment. It is not clear whether they will end their leaves of absence and rejoin the board.
Del. Cheryl D. Glenn (D-Baltimore City) said she was “flabbergasted” by the report and the board’s response to it, especially the decision to invite Kelly back to the board — a move she said “stuck out like a sore thumb.”
As a state senator in the 1980s, Kelly led efforts to privatize Baltimore’s struggling public hospital that resulted in the creation of the hospital network. He was a key player in the growth of the system, which now comprises 13 hospitals, including the highly regarded Shock Trauma Center in Baltimore, and employs 28,000 people. Kelly’s critics say he exerted unhealthy control at UMMS and expanded his personal insurance business with little oversight.
“His insurance company made millions, and he’s being asked to return while Catherine Pugh was forced to give up her role as mayor,” Glenn said. “What she did was wrong, and I’m not saying she should have stayed in office, but there needs to be some equity in the way that everybody is looked at.”
The Nygren report found Kelly’s contract was competitively bid in 2008 but had not been reassessed in recent years.
Pugh, whose book deals are under state and federal investigation, resigned from the board and as mayor in the weeks after the Baltimore Sun revealed the contracts.
The review by Nygren also provided the first public documentation of efforts made by UMMS to walk back some of the its deals after the Sun and other news organizations reported on them.
Its report said former board member Scott Rifkin’s company, Real Time Medical Systems, had a contract to provide software to UMMS free for one year and for $10,000 in future years. The contract was signed in June 2018 by then-chief performance improvement officer Keith Persinger.
On April 3, after the Sun reported on contracts held by other board members, Persinger signed an amendment saying that UMMS had no obligation to pay any fees and that “any future agreements or contracts shall be negotiated pursuant to an arms-length transaction,” Nygren found. Persinger resigned last week.
Rifkin said in an interview that the contract was “clearly marked as a one-year agreement and the company has no intention of charging the institution and still hasn’t.”
The report also stated that on April 4, UMMS terminated a lease agreement that the system’s downtown medical center made with Rifkin, chief executive of Mid-Atlantic Health Care, to construct a new building to house a skilled-nursing facility.
Gov. Larry Hogan (R), who this week appointed 11 new members to the board, told reporters Thursday that the resignation last week of five of the system’s top executives was a “step in the right direction.”
When asked about the board’s decision to invite four members to return, Hogan said, “This is a private, nonprofit board, and we can’t control all the decisions they made.”
The board did not notify Hogan of its intent to invite current members to return, his spokesman Mike Ricci said.
Erin Cox contributed to this report.