Audit: $115M went to former board of Maryland medical system

An Maryland audit has found that nearly $115 million went to board members of the University of Maryland Medical System or businesses associated with them

ANNAPOLIS, Md. —
Nearly $115 million went to board members of the University of Maryland Medical System or businesses associated with them, a state audit has found.

The payments went to 27 board members or their associated businesses between Jan. 1, 2016 and April 18, 2019, according to a 100-page report that was sent to state lawmakers Friday by the Office of Legislative Audits.

“Approximately 94 percent ($108.2 million) of these payments were made either directly to a Board member or to an entity with which the Board member (or immediate family member) had a direct financial relationship,” the audit said. “The remaining $6.7 million was paid to 19 entities that met our criteria for an associated business, but for which we did not identify a direct financial relationship between the members and the entities (for example, UMMS Board members who also served on the boards of non-profit entities).”

The audit was done after a self-dealing scandal bedeviled the medical system last year.

Former Baltimore Mayor Catherine Pugh, a former UMMS board member, received $500,000 in one of the deals for her “Healthy Holly” children’s books. She pleaded guilty last year to federal charges of conspiracy and tax evasion. She was sentenced last month to three years in prison.

The audit did not include the names of board members and associated businesses, though that information was shared with UMMS. The audit also noted it had not established that “the transactions were improper.”

In a response included in the audit, UMMS agreed with the audit’s criticism of the procurement policies, describing them as “fundamentally flawed.” UMMS said its new board is committed to addressing the failings going forward.

“To that end, in the past nine months, the Board — comprised primarily of newly appointed members — and UMMS management have taken significant steps to address and remediate these weaknesses,” UMMS officials wrote in response.

UMMS officials also wrote that the audit identified transactions as potential conflicts of interest “where there was no evidence or even a suggestion of personal benefit” to associated board members or their family members. They also noted numerous disbursements cited in the report “that are simply charitable donations.”

“Unfortunately, not only does OLA’s audit scope obscure rather than clarify the Board process problems, it also tarnishes many volunteer community members and organizations that UMMS supports with purported conflicts of interest where none exist,” UMMS officials responded.

Last year, the Maryland General Assembly approved legislation to reform the system, after The Baltimore Sun reported one-third of its 30 board members had deals with the 13-hospital system under some arrangements that were not competitively bid. Lawmakers also ordered the audit.

Del. Nic Kipke, a Republican who is the House minority leader, described the audit’s findings Saturday as “extremely troubling.”

“I am optimistic that the new leadership is setting standards that will protect against unethical behavior, but we’re going to have to keep an eye on this over the coming years,” Kipke said.

The reforms overhauled the network’s board of directors, which oversees a university-based regional health care system. It has about 28,000 employees and 4,000 affiliated physicians in more than 150 locations and at 13 hospitals.

The law bars board members from getting contracts without a bidding process and prohibits board members from leveraging their position on the board for personal gain.