We have posted extensively at the troubles at UMDNJ, which now is operating under a federal deferred prosecution agreement with the supervision of a federal monitor (see most recent post here.) We had previously discussed allegations that UMDNJ had offered no-bid contracts, at times requiring no work, to the politically connected; had paid for lobbyists and made political contributions, even though UMDNJ is a state institution; and seemed to be run by political bosses rather than health care professionals. (See post here, with links to previous posts.)
The federal monitor, former federal Judge Herbert J Stern, has issued his first quaterly report, and the findings are stunning. We will summarize them below, as compiled from several news articles listed at the end of the posting.
High Officials Resign After Allegations of Financial Irregularities
The first fall-out from the report were the resignations of R Michael Gallagher, Dean of the UMDNJ School of Osteopathic Medicine, and Robert Saporito, the UMDNJ Senior Vice President for Academic Affairs. UMDNJ's new Interim President, Bruce C. Vladek, is considering barring them from returning to academic positions at the school.
Gallagher's resignation means that all of UMDNJ's medical and osteopathic schools will be operating under interim deans. Gallagher is alleged to have made improper use of his discretionary account to purchase Christmas gifts and a country club membership, and to have his university driver run personal errands for him and his wife.
Saporito was the top academic officer for the university, overseeing all three medical and osteopathic schools, the nursing and dental schools, and three others. Saporito is alleged to have abused his expense account, once by renting an Alfa Romeo for a business trip, and other times for renting local hotel rooms for purported late night meetings
Additional Overbilling Found
UMDNJ has already been charged with $4.9 million worth of Medicare fraud. Last month, the monitor suggested a possible Medicaid scandal worth another $70 million. The report now suggests that UMDNJ received another $51 million from the state to which it was not entitled. The amounts that UMDNJ's University Hospital may now owe could threaten its financial viability.
Job Applicants Ranked by Political Connections
The report also detailed a system to formally rank job applicants for UMDNJ positions by the political clout of their sponsors. Applicants sponsored by powerful politicians received a ranking of "1" on a personnel spreadsheet, while those sponsored by less powerful figures, or none at all, received rankings of "2" or "3." The system began under former UMDNJ President John Petillo, who said that the system was intended as "a courtesy." University employees, however, "saw the ranking system as a codification of what had been going on for decades." The system was in operation for about six months.
Politicians whose sponsorship rated a ranking of "1" included US Congressman Robert Menendez (Democrat - New Jersey), New Jersey State Senator Raymond Lesniak (Democrat - Union), and sometimes Newark Mayor Sharpe James (Democrat). Other political patrons identified included Essex County Chief Executive Joseph DiVincenzo, former chief counsel to the governor Paul Fader, husband to Newark Councilwoman Gayle Chaneyfield-Jenkins, Kevin Jenkings, Essex County Democratic Chairman Philip Thigpen, and Newark Councilman Charles Bell.
Sponsors sometimes accompanied their applicants to interviews. Sometimes human resource administrators hand delivered favaored applications to supervisors.
James did not return a call for comment. Neither did Jenkins or Chaneyfield-Jenkins. Menendez denied ever hearing about the ranking system prior to the public report of it. Lesniak said he only recommended one person to UMDNJ, and not for political reasons. Thigpen did not "recall" anything relevant. DiVincenzo forwarded his daugher's resume, but said she did not apply to the university.
When Interim President Vladek heard about this method of institutionalizing political favors, he said "I couldn't believe it," and "it's one of the more astonishing things I've heard."
Suggestions of Organized Crime Involvement
The most stunning aspect of the report were allegations that now former Vice President for Academic Affairs Saporito, sometimes accompanied by former UMDNJ President Petillo, dined on three occasions with a convicted criminal with ties to organized crime, and charged the meals to the university. Their dinner partner was one Louis Garruto, who was convicted in 1985 of a multi-million dollar fraud against some drug companies. The charges included racketeering and income tax evasion. NorthJersey.com also reported that "in the 1990s Garruto's partner in a firm that did business with Passaic County was James Yacenda, who was linked to the Lucchese crime family by the State Commission on investigation."
Summary
In summary, John Ingelsino, a lawyer working on the investigation, said, "the auditing and compliance were grossly deficient, and that aided in creating an environment where UMDNJ has been used as a political patronage machine." Furthermore, "it was a place that was used, by and large, as a political patronage pit."
The news about UMDNJ gets worse and worse. It has become one of the most striking cases of an academic medical institution run by conflicted leadership, ultimately to the point of corruption. It is now evidenct that the conflicts of health care leaders may involve politics as well as money.
The problems at UMDNJ apparently evolved over decades, yet only were discovered in 2005 after some energetic investigative work by local newspapers. The case at UMDNJ underlies the need to prevent conflicted and corrupt leadership from taking hold of health care organizations, or at least to discover it before decades go by. Yet such institutions still too often lack formal codes of ethics, ombudsmen or chief ethics officers, and methods for physicians, health professionals, and others to complain about unethical practices. Current licensing and accrediting standards do not seem to address these sorts of ethical issues.
As a society, we will not be able to develop the means to persuade health care leaders to be more ethical, however, until physicians, patients, and policy makers are aware of the frequent mismanagement and corruption afflicting the top echelons of health care organizations. For that to happen, cases like that of UMDNJ must be reported beyond their local areas. So, where is the medical journal brave enough to publish even a single news item on this case? So, where is there a medical or health care leader brave enough to even mention the case of UMDNJ in public? We are still waiting.
Sources
Newark Star Ledger: 2 top UMDNJ execs quit as probe widens; UMDNJ may bar two ousted execs; UMDNJ ranked job applicants on political ties; UMDNJ finances in sad shape; how UMDNJ became a 'patronage pit';
New York Times: report finds patronage rife at university
NorthJersey.com: med school executives dined with racketeer
Philadelphia Inquirer: UMDNJ monitor cites 14 inquiries
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