Review Finds UMMS Deals Were Not Competitively Bid Or Fully Vetted, Faults Former CEO For Healthy Holly Deal
BALTIMORE (WJZ) — Former University of Maryland Medical System CEO Robert Chrencik made business deals with board members-- including former Baltimore Mayor Catherine Pugh-- that weren't bid competitively or properly disclosed to the entire board, an independent review released Wednesday found.
Nygren Consulting, an independent firm hired by the University of Maryland Medical System, has completed its review on the business relationships, policies and practices by the Board after concerns were raised in March.
In their summary of their findings, they said the review revealed "multiple occasions" where transactions involving UMMS board members were not fully vetted by the Board of Directors before they were executed by management.
They also said in some cases, the transactions did not seem to have been presented to the Board or "an appropriate committee of the Board," despite requirements in existing UMMS policies.
Specifically, they said former Baltimore Mayor Catherine Pugh's arrangement to sell her "Healthy Holly" books to UMMS for distribution to Baltimore City Public Schools was not presented to the board by management or any other committee for prior approval.
The firm also said they found no records specifying the terms of that financial relationship or justifying the need for the books by UMMS.
They added that Pugh's initial arrangement with the UMMS, which involved buying $20,000 of the first book in the Healthy Holly series, is not documented until the invoice dated December 21, 2010, arrived.
A member of management said he recalled that Mr. Chrencik approached him saying he (Mr. Chrencik) had agreed that UMMS would buy the books for the schools. The management member said he believed Pugh had approached Chrencik.
Essentially, the CEO had agreed to enter into an agreement with Pugh without consent of the Board, the firm reported.
In terms of total financial relationship practices, the firm found that all board member financial relationships reviewed did not get the level of attention that transactions that could benefit board members should receive, according to the firm's report.
Most violated the 2002 Board resolution as well as the 2011 and 2017 policies, the report said. Many of these contracts were not competitively bid, "were not declared to be necessary" by the Board or senior leaders, and if vetted, were without full transparency to the entire Board.
"These arrangements reflect a pattern by management of making decisions without full Board approval," The report says. It goes to add, "Members of management appear to have taken upon their own authority the right to enter into contracts with Board members that resulted in personal gain to the Director, interacting with Board members in ways that overstep the standard understanding of the role and authority of the board,"
Based on their findings, they recommended changes to UMMS board practices including a new "Conflict of Interest Policy", a governance committee to oversee all Board practices, policies and relationships, as well as a new "competency" model.
Board committees will also be restructured so chair positions on the Finance Committee and the Audit and Compliance Committee are held by separate people, and the chair of the Audit and Compliance Committee will have no financial or contractual relationship with the UMMS.
The UMMS will also no longer allow any Board member to "engage in a personal services agreement, regardless of the circumstance.
"On behalf of UMMS, I fully accept the findings and recommendations contained in the Nygren report. Collectively, we are both responsible and accountable for what brought us to this point. This report serves as a roadmap – not only to increase accountability among leaders and establish a more effective Board structure – but to make progress toward real, lasting cultural change. Policies and procedures are not worth the paper they're written on without an integrity-based culture to enforce them. I am committed to rebuilding that culture and restoring the trust of those that depend on our leadership." said Interim CEO John Ashworth.
Ashworth added that no person of authority should be benefitting personally from a decision they make about the organization they serve.
"All Boards within the System must balance demand for expertise and leadership with conflict-free representation. This is simply not negotiable." He concluded.
In the aftermath of the concerns that stemmed from the "Healthy Holly" scandal, conflicted board members were taken off the Board, those with personal services contracts who resigned-- and members with professional service contracts with UMMS who took voluntary leaves of absence.
Gov. Larry Hogan also appointed 11 new members of the Board on Wednesday.
Hogan Names 11 New Appointees To UMMS Board After Self-Dealing, 'Healthy Holly' Scandals
CEO Robert Chrencik was placed on a leave of absence and then resigned.
