Audit: Medical system board was ‘deeply compromised’

Health

ANNAPOLIS, Md. (AP) — The University of Maryland Medical System paid $500,000 to buy the self-published books of Baltimore’s now disgraced ex-mayor, but there’s no evidence any system executives ever read them or that a process was in place to determine their fair market value, an audit released Friday said.

The audit comes amid a scandal that rocked the medical system this year and after former Mayor Catherine Pugh, a former board member of the system, pleaded guilty to federal charges related to her “Healthy Holly” books. The books were purchased by the system in five installments to be donated to Baltimore City schools, as part of an educational initiative.

The audit said the former board of the system, known as UMMS, was “deeply compromised”and that there was no evidence any executive with the medical system had ever read installments of the book “to support a belief that the books would serve that population health goal.”

The audit was conducted by a committee formed by new board members named to the system after the scandal. Last month, Pugh pleaded guilty to four counts of conspiracy and tax evasion in federal court to charges relating to the book deals.

The audit found significant ways the board’s effectiveness as an oversight and decision-making body “were deeply compromised, not only by the self-interested transactions of a group of Board members, but by structural and operational flaws in the Board’s organization and operation.

“The policies governing conflicts of interest were both ineffective and incomplete,” the audit concluded.

The audit noted that it did not identify many clear violations of the medical system’s policies, because, generally, the transactions technically complied with the policies in force until this year.

“But those policies allowed conflicted transactions to proceed and multiply, without careful objective review, approval, or oversight,” the audit said.

The audit found that policies seemed to allow board members “to lobby management on behalf of their financial interests without adequate controls or disclosure.

The audit said it was determined certain board members frequently contacted management to promote potential businesses transactions “in which the members had a financial interest.”

The audit also noted that a failure to observe term limits enabled a number of board members to exercise disproportionate influence. Under state law, board members are not allowed to serve more than two consecutive full terms of five years each.

Pugh, a former state senator, served on the board for 17 years, the second-longest after Frank Kelly, who also is a former state senator and served for 33 years on the board, the audit said. Kelly resigned from the board in June.

Top officials at UMMS stepped down in the scandal’s aftermath. Earlier this year, the Maryland General Assembly approved emergency legislation to reform the system’s leadership.

The law firm of Latham & Watkins conducted the audit. It interviewed 38 people, including current and former officials in the system. The review involved scrutiny of more than 100,000 email communications collected from 17 current and former senior executives, including nearly 44,000 communications with board members.

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