Following Pugh scandal, UMMS seeks a 'fresh start’ in implementing auditor-recommended ethics changes

The University of Maryland Medical System has implemented dozens of recommendations from auditors relating to board governance and conflicts of interest a year after a high-profile self-dealing scandal involving ex-Baltimore City Mayor and former system board member Catherine Pugh, system officials said.

Lawmakers asked the Office of Legislative Audits to investigate the system after The Sun reported that one-third of the 30-member board had contracts with the system, including Pugh, a Democrat. The system paid Pugh $500,000 for 100,000 copies of her “Healthy Holly” children’s books. Pugh later pleaded guilty to conspiracy and tax evasion charges related to the deal and reported to federal prison for a three-year sentence in June.

A separate audit commissioned by new members of the UMMS board, and released in December 2019, also issued recommendations for reform. The report found that officials never read Pugh’s books or checked to see if they were printed before paying her.

Matt Clark, a senior vice president with the hospital system told The Baltimore Sun that UMMS issued its report on those recommendations to lawmakers in September. Clark said that all of the recommendations were addressed, even though the system was only required to report progress to the legislature.

If the system did not report on the recommendations issued by the Office of Legislative Audits and the board’s Special Committee by Oct. 1, UMMS would not receive a $500,000 grant for the R Adams Cowley Shock Trauma Center.

“I view this as a fresh start for UMMS,” Lisa Adkins, the chief compliance and privacy officer for the system, said at a Wednesday briefing of the Maryland House of Delegates' Government Operations and Facilities Subcommittee. “The goal is really to drive that strong compliance culture throughout the system. We did that as we moved forward.”

One change highlighted by Adkins is requiring a questionnaireto identify any potential conflicts of interest for contracts. If a conflict is identified, it would be sent to the compliance unit to investigate, she said.

Another change Adkins highlighted was “enhanced” conflict of interest training, which includes middle management and front-line staff. The system also added a new whistleblower policy and created an anonymous hotline for those who want to report any potential violations, Adkins said.

“I’d prefer that they feel the comfort in calling [compliance], but we do want to have an outlet in case they don’t,” Adkins said.

Another recommended change from the special committee was that the audit department periodically review board member conflict of interest disclosures.

Other recommendations implemented include setting 10-year term limits for board members, board chairs and committee chairs, said Aaron Rabinowitz, a senior vice president and general counsel for the system.

“[We did this] to ensure that we don’t have really extended tenure, where folks end up with this sense of ownership of the asset as opposed to stewardship of the asset,” Rabinowitz said.

Only “disinterested directors” can chair the board’s key committees, including the board itself and the audit and compliance committees, meaning the director nor their family members can have any business ties to the system, Rabinowitz said.

Adkins emphasized that just implementing the recommendations isn’t the end, and that building a “best-in-class compliance ethics program is an iterative process," one that will continue going forward.

“We’ve evolved quite a lot,” said Donna Jacobs, a senior vice president with the hospital system at the Wednesday briefing. “We’ve learned a lot and depended a lot on outside experts not affiliated with this organization. We certainly have a very engaged and committed board, responsible and responsive to conflict of interest issues.”

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