Francis X. Kelly Jr., the former Maryland state senator whose insurance company benefited from contracts with the University of Maryland Medical System while he served on the hospital network’s board of directors, announced Friday that he will give up that seat.
“It has been a tremendous honor for me to have served on the UMMS Board for nearly 35 years, under six different Governors,” Kelly wrote in a resignation letter to board chairman Stephen Burch. “I have decided it is time to move on, and allow someone else the fantastic opportunity of serving.”
Kelly and his sons, John and David, who served on UMMS-affiliated boards, took voluntary leaves of absence in April as probes were opened to review the health system’s contracts with businesses affiliated with board members.
In the resignation letter, Kelly said his sons have also decided not to return to their board positions.
The UMMS board voted Wednesday to ask Kelly and three other members on leave to rejoin the board, after an outside probe of the contracting scandal placed most of the blame with former hospital system chief executive Robert A. Chrencik, who resigned in April.
Several state lawmakers raised concerns about the board’s decision, however, and said board members who had contracts with the system should not return to the board.
“We feel that the best way to serve the system and its affiliated hospitals at this time is not come back onto these boards,” Kelly wrote in a separate letter to John W. Ashworth III, the interim UMMS president and chief executive.
Kelly & Associates Insurance Group has had multimillion-dollar transactions with the medical system since at least 2005, the first year for which financial disclosure records are available, handling more than $100 million in premiums. Kelly’s contracts and those held by other board members — including a children’s-book deal with then-Baltimore Mayor Catherine E. Pugh (D) — were not widely known until the Baltimore Sun wrote about them in March.
The independent review found that Kelly’s contract was competitively bid in 2008 and that a consulting firm determined in 2009 that outsourcing benefits administration to Kelly’s firm would save money for the hospital system. But it does not appear that Kelly’s contract had been reassessed in recent years. UMMS plans to rebid the contract next year, according to the review.
As a state senator in the 1980s, Kelly led efforts to privatize Baltimore’s struggling public hospital, resulting in the creation of the hospital network, which now comprises 13 hospitals and employs 28,000 people.
Kelly’s supporters say his work was critical to the growth of the highly regarded system. But critics say he exerted unhealthy control at UMMS and tried to use his influence to expand his insurance business.