Maryland lawmakers advanced bills Wednesday to overhaul the University of Maryland Medical System’s board, which is at the center of a political firestorm after the revelation that its members benefited from lucrative contracts with the system they oversaw.
The two bills, one receiving approval in the House of Delegates and the other getting initial approval in the state Senate, would bar board members from holding single-source contracts with UMMS and require stringent financial disclosures. They would also dissolve the current board in several stages. Nine board members, including Baltimore Mayor Catherine E. Pugh (D), had contracts with the hospital system, in some cases worth millions of dollars.
“It’s like a kick to the gut for many of us,” said House Minority Leader Nicholaus R. Kipke (R-Anne Arundel). “We had to act as quickly as possible.”
UMMS is a private, nonprofit organization that operates a network of 13 hospitals and is one of the largest employers in the state. It has received nearly $25 million in public funds in the past two years.
The emergency legislation in the House, introduced by Speaker Michael E. Busch (D-Anne Arundel), will be merged with legislation in the state Senate, which was introduced by Sen. Jill P. Carter (D-Baltimore City). The bills have moved through the General Assembly with unusual speed and bipartisan support as fallout from the contracts, first reported by the Baltimore Sun, continues.
Meanwhile, the Baltimore Ethics Board voted unanimously Wednesday to investigate whether deals made by Pugh violated city ethics rules. Avery Aisenstark, the board’s executive director, said it was the first time the board had opened its own investigation of a sitting mayor. He said the board assisted the state prosecutor with the investigation of a previous mayor, Sheila Dixon (D), who resigned after being convicted of embezzlement.
Pugh, who began an indefinite leave of absence as of Monday night, citing health concerns, was paid $500,000 by UMMS for her “Healthy Holly” children’s book series, a deal she has called a “regrettable mistake.”
She is the only UMMS board member implicated in the scandal who currently holds elected office.
As first reported by the Sun, UMMS, Kaiser Permanente, Associated Black Charities, the Maryland Automobile Insurance Fund and Grant Capital Management, among others, had made at least $800,000 in payments to Pugh’s Healthy Holly LLC since 2011.
Baltimore City Council President Bernard C. “Jack” Young (D), the acting mayor, has asked agency heads to submit by Friday all major contracts signed within the past 90 days for the law department to review. He also requested that they submit all pending contracts.
“It’s a very, very troubling situation that we are going to get to the bottom of,” Senate President Thomas V. Mike Miller Jr. (D-Calvert County) said Wednesday.
Gov. Larry Hogan (R) asked the state prosecutor to investigate Pugh’s deal with UMMS, and Pugh’s attorney, Steve Silverman, told the Sun on Tuesday that a probe had been launched.
Comptroller Peter Franchot (D) called the practices of the UMMS board “glaringly unethical” during a Maryland Board of Public Works meeting Wednesday. “My fear is that we have only barely broken the skin of the apple,” Franchot said.
One-third of the UMMS board has resigned or been placed on leave, and its chief executive is on paid leave. A California-based firm, Nygren Consulting, is conducting an audit of the system that is expected to take four to eight weeks, said John Ashworth, the system’s interim chief executive.
That audit — which will include reviewing board members’ contracts and the corporation’s policies, and how they compare with industry best practices — will be delivered to Hogan, Miller and Busch.
Ashworth announced Tuesday that board members Francis X. Kelly, a former state senator, and his sons were taking leave from all hospital boards affiliated with UMMS.
Kelly, who served in the Senate from 1979 to 1990, disclosed that his insurance company made $2.8 million in deals with the hospital system last year and more than $1.6 million in 2017. He had already taken a leave from the UMMS board, but he and his sons remained on the boards of affiliated hospitals.
“We are kind of in unchartered territory here,” said Carter, who introduced her bill in February after hearing from a minority contractor who could not get work with the system. She never anticipated the scandals that have erupted over the past weeks, she said.
If the bills are approved, one-third of the UMMS board members will end their terms by July 1, one-third by Oct. 1 and one-third by Jan. 1. Board members may reapply, but their terms would be limited to five years.
The bills would also prohibit board members from using the prestige of their office for their private gain, or that of another person.
They do not address how the system awarded its contracts, including the no-bid awards. Carter said she would like to see UMMS make public its meeting minutes and agendas.
UMMS, which is not subject to public records laws, has declined to do so. Spokesman Michael Schwartzberg said those records are “considered proprietary business information.”
“The issue is not just the nine members on the board that were making contracts with UMMS, but it is the others that sat there, and what they knew,” Carter said.
She said improving transparency and accountability is especially important to people in Baltimore, where many struggle under extreme poverty and violence has surged in recent years.
“This kind of insider network that is engaging in graft and self-dealing perpetuates the economic divide,” she said. “It’s so important to bring light to this and change how the system operates so people can have hope and think the system isn’t just rigged against them.”
Dixon, who was narrowly defeated by Pugh in the Democratic primary in 2016, said she is praying that the mayor gets well soon.
Dixon, speaking on WBAL radio Wednesday morning, said she did not want to “pile on” by calling for Pugh to resign.
“I am disappointed, and I believe it deserves further investigation,” said Dixon, who was found guilty in 2009 on an embezzlement charge relating to her use as mayor of more than $600 worth of gift cards that were supposed to go to needy families. “Baltimore is in turmoil.”
Dixon, citing her love for the city, said in the radio interview that she is considering a possible mayoral run in 2020.