Category Archives: 2015

2015, Camden News Archives, Corporate Accountability, Corporate Responsibility

Camden’s ‘Renaissance Schools’ Takeover Plans May Face Legal Challenge

Leave a comment

Attorneys for Education Law Center say restructuring moves may violate state law

logo-110
| APRIL 9, 2015

kipp school camden

Latin Kings graffiti adorns the wall of a building near the new KIPP Cooper Norcross Academy now under construction in Camden.

Plans for sweeping restructuring of state-run Camden school district, including turning over four schools to charter operators, faced its first open challenge yesterday when lawyers contended that the moves violated state law and regulations on several fronts.

The Education Law Center, the Newark-based advocacy group, released a statement that said the plans failed to meet both the letter and spirit of the Urban Hope Act, the 2012 law that cleared the way for the charter-operated “renaissance schools.”

It is these “renaissance school” projects that would expand under the reorganization plan announced by Superintendent Paymon Rouhanifard last month.

RELATED LINKS
BONSALL ELEMENTARY SCHOOL APPLICATION

MOLINA ELEMENTARY SCHOOL APPLICATION

MCGRAW ELEMENTARY SCHOOL APPLICATION

EAST CAMDEN MIDDLE SCHOOL APPLICATION

Four schools would be turned over to Mastery Charter Schools and Uncommon Schools, and a fifth school would be closed outright, with most of its students attending the new KIPP Cooper Norcross Academy now under construction.

The ELC contended that the Urban Hope Act was never intended to have existing schools handed over to the charter operators.

The group said the plans also violate the state’s own procedures, under which the targeted school are already operating under improvement plans that preclude such charter conversions.

“Once again, there has been really no public process here,” said David Sciarra, the ELC’s executive director. “The superintendent doesn’t put anything out, doesn’t even post the applications, and he provides no opportunity to have any public input in this.”

RELATED STORIES

FIVE OF CAMDEN DISTRICT’S WORST PUBLIC SCHOOLS WILL GO THE CHARTER ROUTE

EVERYTHING’S GOING GREAT FOR CAMDEN’S STATE-RUN PUBLIC SCHOOLS, RIGHT?

Sciarra wouldn’t yet commit to a formal legal challenge, noting that the plans still require final approval from the Christie administration.“I don’t want to get into that at this point,” he said last night.

Rouhanifard’s office rejected the claim that public input had not been sought or even that the changes could even be defined as conversions. It said that the schools are actually being closed and reopened under the new management, including “substantial reconstruction” of the buildings, as allowed under the law.

That might have been semantics but it was, perhaps, a critical legal distinction as Rouhanifard had initially characterized the moves as “transformations.”

District officials said that selling or leasing of the properties to the charter operators is also still being considered.

In addition, Rouhanifard said public hearings were held last year when the first charter projects were approved and again this winter as the new plan was being considered.

“The misrepresentations and factual errors of interest groups will not distract us from the urgent cause of improving our schools,” he said in a statement. “With two out of five students not graduating from high school, it’s critical that we stay focused on improving the education of our children. We have remarkable students, but for far too long the system has come up short in providing them with the educational opportunities they deserve.”

“Over the past 18 months, I have listened to the concerns of parents from every school in Camden, at dozens of community meetings, and most recently, at four town halls,” Rouhanifard added. “I heard loudly and clearly that where our schools are struggling the most, we need to take action. These new renaissance school partnerships represent a real opportunity for us to dramatically invest in our facilities and provide new, high quality educational options for our students and families.”

The challenges to the restructuring were hardly unexpected in light of such sweeping changes and considering that two lawsuits have already been filed since the first of the renaissance-school plans were unveiled.

The first case ended when the state Legislature amended the law to address the complaint. The second lawsuit, lodged by a group of parent advocates, is pending in appellate court.

Rouhanifard is moving ahead with plans for the next school year – including door-to-door canvassing — as the proposals go through the formal review process with state Department of Education.

In each case, the state needs to sign off on the specific applications for each school, and there is also a review process for when a school is closed.

But it would be surprising if the state rejected the plans, given that Rouhanifard is a state appointee whose every move has been backed by the Christie administration

2015, Camden News Archives, Corporate Accountability, Corporate Responsibility

The Troubles at Cooper Continue, Part 2: Since 2005

Leave a comment

Health Care Renewal

Addressing threats to health care’s core values, especially those stemming from concentration and abuse of power. Advocating for accountability, integrity, transparency, honesty and ethics in leadership and governance of health care.

The Troubles at Cooper Continue, Lately Gruesomely, But Will Its Leadership and Governance Change This Time? – Part II: the History since 2005

Wednesday, April 01, 2015

 by

In our most recent post, we noted the latest tragic, and gruesome development at Cooper Health System, the largest hospital system in southern New Jersey.  Months after the system CEO, John F Sheridan, and his wife Joyce were found dead after a fire in their home, local law enforcement concluded that Mr Sheridan murdered his wife, set fire to the house, then committed suicide.  It turns out this is just the latest, albeit possibly most tragic and grisly, troubling news from that health care system.

Our last post summarized the history from 1978, including:
–  Seven people, including the hospital system chief financial officer, confessed to and/or found guilty of participating in an embezzlement scheme that cost the hospital more than $21 million
–  An internal investigation was suppressed for years, but later revealed several severe management problems
–  The media revealed multiple conflicts of interest affecting the system’s board of trustees, including members of the committee that performed the investigation
–  One member of the board of trustees who participated in the internal investigation was later convicted of arranging his wife’s murder
–  Resulting financial losses caused layoffs and service reductions, some of which affected the hospital system’s charitable mission
–  The stories received little attention outside the region, and apparently did not result in any fundamental changes in governance or the structure of leadership.

Since 2005, there have been other troubles at Cooper.

Conflicts of Interest Involving Local and State Politics

Board Chairman George E Norcross III

In 2006, the Philadelphia Inquirer found close ties between NJ politicians and hospital leaders (see this post).  In particular, the story noted “the board of South Jersey’s major hospital, Cooper University Hospital in Camden, is chaired by the region’s most powerful political figure, Democratic power broker George E. Norcross III.”

In 2012, as we posted here, Mr Norcross’ relationships became more evident.   The New York Times reported that a story about his conflicts of interest had been held from publication by the Inquirer because Mr Norcross was part of a business group seeking to purchase that newspaper.  When the Inquirer story finally came out, it stated firms with financial relationships to the hospital under Norcross had donated generously to Norcross’ political allies, and that Norcross had influenced the creation of relationships with these firms.  It suggested that Norcross’ political influence had resulted in an unusual level of state financial support for the hospital system.  It noted that the law firm for which Cooper CEO John F Sheridan had previously worked did lobbying for the hospital.  It noted that the hospital did millions of dollars of business with firms tied to hospital trustees, including Mr Norcross.

Trustee Emeritus Peter Driscoll

Recent reporting after Mr Sheridan’s death suggested the rehabilitation of former board chairman Peter Driscoll under Chairman Norcross.  Mr Driscoll was the former board chair who resigned in 1999 after the embezzlement scandal report and revelations about conflicts of interest affecting the board were finally made public, and the hospital system was in financial difficulty.  However, by 2014, he was identified by the board as a “trustee emeritus.”  Per the Philadelphia Inquirer, after the fire at the Sheridan house was attributed to arson,

‘If they had died because the house was on fire, that would be a terrible, terrible tragedy,’ said Cooper Health System trustee Peter E. Driscoll, a senior member of the Haddonfield law firm of Archer & Greiner. ‘. . .I don’t know what to make of it. I can’t imagine anybody that would want to do something like this.’

New Vice President Kevin O’Dowd and his Family

Also after Mr Sheridan’s death, the hospital system hired a new top manager with his own extensive political connections and conflicts of interest.  Per the Inquirer,

Gov. Christie’s chief of staff, Kevin O’Dowd, will step down this month to work for Cooper University Hospital in Camden, nearly a year after the governor named O’Dowd his pick for attorney general.

O’Dowd, whose selection as attorney general never moved forward after controversy arose over lane closures on the George Washington Bridge, will serve as senior executive vice president and chief administrative officer at Cooper, where he will focus on business development, Christie officials said. He will start at Cooper in January.

The conflict was

 O’Dowd’s wife, Mary, serves as commissioner of the state Department of Health.

A NJ.com story made that more explicit,

 State Health Commissioner Mary O’Dowd will refrain from making decisions that would directly affect Cooper University Hospital in Camden after her husband accepted a senior management job there, officials said Friday night.

The move was made to avoid any conflicts of interest as the state Department of Health licenses and inspects hospitals, and doles out money to compensate them for treating uninsured charity care patients. Cooper will receive $37.3 million in charity care payments from the state this year, the fifth highest amount in the state.

A story in the NJ Spotlight suggested that would not solve the problem,

The question that the O’Dowds will have to face is whether they can overcome even the perception of a conflict of interest when their jobs so pervasively present opportunities for such a situation.

‘It’s a very, very tenuous situation,’ said William Schluter, a former longtime member of the State Ethics Commission and state senator.

He noted that nearly everything that senior hospital executives do in their jobs is influenced by state regulations.

‘It’s a situation that I sure as heck wouldn’t want to be in,’ said Schluter, adding that he expects second-guessing in the media and by elected officials as the state handles issues affecting Cooper.

Just to ice the cake for Mr O’Dowd, the Courier-Post noted that Mr O’Dowd’s job at Cooper could be considered an example of the revolving door, albeit delayed,

O’Dowd, previously the governor’s deputy chief counsel, also worked under Christie at the U.S. Attorney’s Office for New Jersey.

During seven years as an assistant United States attorney, O’Dowdoversaw a securities and healthcare fraud unit. He also prosecuted cases ranging from child pornography distribution, cybercrime and drug trafficking.

O’Dowd served earlier as a state Deputy Attorney General, where his responsibilities included providing legal counsel to the state Department of Health.

As US Attorney, Christie, possibly with the aid of Mr O’Dowd, pursued a deferred prosecution agreement for UMDNJ, then Cooper’s primary academic affiliation, for a complicated set of allegations that we discussed extensively in the past (look at this post and follow links backward).

Late CEO John F Sheridan and Family

Apparently only after Mr Sheridan’s death did the media report extensively on his political connections.  The earliest report I found was in the Philadelphia Inquirer from September 28, 2014.  He served

on Gov. Christie’s health-care transition subcommittee in 2010.

The statement said he was New Jersey commissioner of transportation under Gov. Thomas H. Kean and served as New Jersey deputy attorney general and assistant counsel for the New Jersey Turnpike Authority, and was counsel for the New Jersey Senate majority.

Also,

 his son Mark – a prominent lawyer … has represented Christie in the Bridgegate scandal

NJ.com added,

John Sheridan Jr., the CEO of Cooper University Health System … previously spent 40 years in New Jersey government

Also,

He has held positions on Gov. Thomas Kean’s cabinet as transportation commissioner and chairman of the New Jersey Transit board, as well as held roles on transition teams for Gov. Chris Christie and Gov. Christine Todd Whitman. 

Furthermore,

 Earlier in his career, he served as Deputy Attorney General of the State of New Jersey, Assistant Counsel to Gov. William T. Cahill, General Counsel to the New Jersey Turnpike Authority and Counsel to the New Jersey Senate Majority.

Finally, his son

Mark Sheridan, a partner at Squire Patton Boggs, acts as general counsel for the New Jersey Republican State Committee.

So, in the years since conflicts of interest at the board of trustees level were noted as part of the investigation after the management embezzlement scandal at Cooper, many more apparent conflicts affecting top managers and board members have appeared, most recently in late 2014.

Settlement of Allegations of Kickbacks

In 2013, the media reported that Cooper settled federal allegations that it gave kickbacks to doctors to induce referrals.  As reported by the Inquirer,

The Cooper Health System in Camden has agreed to pay $12.6 million to settle a whistle-blower lawsuit alleging that it made improper payments to doctors in an effort to build its cardiology business, the U.S. attorney for the District of New Jersey said Thursday.

From October 2004 through 2010, local doctors were paid $18,000 to attend four meetings of the Cooper Heart Institute Advisory Board in any given year under ‘consulting’ and ‘compensation’ agreements, in possible violation of antikickback laws, state and federal law enforcement officials contended.

The whistle-blower was South Jersey cardiologist Nicholas L. DePace. He attended an advisory board meeting in 2007 and was convinced that the board’s purpose was not to provide advice to Cooper, but to be a source of patient referrals to the Heart Institute, according to a lawsuit he filed in 2008.

‘He was invited to be a member of the advisory board. He attended a meeting and it quickly became apparent to him what the advisory board really was. It was sitting and listening to lectures and not providing advisory services,’ said Michael A. Morse, a partner in Pietragallo, Gordon, Alfano, Bosick & Raspanti L.L.P. in Philadelphia, one of DePace’s lawyers.

As is typical of legal settlements involving prominent health care organizations,

Cooper admitted no liability.

‘After more than three years of extended discussions with government lawyers, we decided, in the best interests of Cooper, to settle our dispute without the admission of wrongdoing to avoid the burdens and uncertainties of a protracted litigation,’ Cooper president and chief executive officer John P. Sheridan Jr. said. ‘This allows us to focus our full energies on serving our community.’

In a note to Cooper employees, Sheridan said the board was established to ‘improve the quality and responsiveness of our cardiac programs’ and ‘was reviewed by outside legal counsel before it began operations.

However, given that the Inquirer reported that “the $12.6 million penalty is financially significant for Cooper,” one wonders why it was made if hospital leadership felt that the case against it was poor.

So years after the embezzlement scandal, another scandal involving allegations of illegal behavior was settled.  This time, there was no trial, but since the settlement was financially burdensome for the hospital, it is plausible that it resulted from managers’ realization that they would not have a good defense against the charges at trial.

The Death of the Sheridans

Mr Sheridan became CEO of Cooper in 2008.  As noted in the Gloucester County Times,

On Feb. 7 John P. Sheridan Jr., was appointed president and chief executive officer of The Cooper Health System by the Cooper Board of Trustees. Sheridan joined Cooper as senior executive vice president in July 2005 and has served as president of Cooper University Hospital since September of 2007.

‘Cooper has grown dramatically in recent years and is positioned as the academic medical leader of South Jersey,’ said George E. Norcross III, chairman of the Board of Trustees at Cooper.  ‘John Sheridan is a proven leader. He has the skills required to build-out our $500 million health care campus in Camden, implement our suburban strategy and achieve our vision of creating the premier academic health care system in South Jersey and the Delaware Valley.’

As of early 2014, he was getting substantial compensation typical for a hospital system CEO, per NJBiz, “John T. Sheridan Jr. (of the $913 million Cooper Health System) received $963,433.”

In late September, 2014, Mr Sheridan and his wife were found dead in a house fire.  Initial reports suggested the fire was accidental.  Then it was declared to be arson.  Then Joyce Sheridan’s death was found to be the result of a homicide.  Finally, as we posted here, law enforcement declared that Mr Sheridan killed his wife, set the fire, and then committed suicide.

That news was so horrendous that it dumbfounded Cooper insiders.  As reported by the Inquirer,

 ‘It’s not something I can imagine,’ said Peter Driscoll, a Cooper Health System trustee emeritus and a senior member of the Haddonfield law firm Archer & Greiner.

Also,

In a brief statement, Cooper University Health Care called the prosecutor’s findings ‘unfathomable to us.’

I can only hope that they will get over their shock and realize that the institution really has some big problems.

Summary

Since 1978, there have been multiple stories about mismanagement, conflicts of interest affecting managers and board members, and crimes committed or alleged to have been committed by management and at least one trustee at Cooper Hospital/UMC which then became Cooper Health System.  Despite these often lurid stories, there is no indication that there has been a fundamental change in the governance of the institution.  While managers have come and gone, sometimes under difficult circumstances, there is no indication that how managers were hired has changed.  Since the early 1990s, there has been no obvious effort made by management or board members to change, at least not one announced publicly.  There has been no outside investigation.

Given that the hospital system has long enjoyed a cozy relationship with state government, including both the legislative and executive branch, maybe it has been easy to go along to get along.  More cozy relationships, including some with ownership of the news media, may have helped to keep this story anechoic outside of the region.

Yet the cumulative story is so striking that it should prompt national attention, and inspire some real hard thought about how health care leadership and governance has gotten so bad.

To repeat what I have said all too often, and I admit with little impact so far….

True health care reform requires governance that is accountable, transparent, true to the organization’s mission, and honest, ethical, and without conflicts of interest; and leadership that understands health care, upholds its values, is honest, ethical, and without conflicts of interest, is transparent and open, and is willing to be accountable and subject to appropriate incentives.

Read more at: http://hcrenewal.blogspot.com/2015/04/the-troubles-at-cooper-continue-lately_3.html

2015, Camden News Archives, Corporate Accountability, Corporate Responsibility

The Troubles at Cooper Continue, Part 1: Historical Background

Leave a comment

Health Care Renewal

Addressing threats to health care’s core values, especially those stemming from concentration and abuse of power. Advocating for accountability, integrity, transparency, honesty and ethics in leadership and governance of health care.

The Troubles at Cooper Continue, Lately Gruesomely, But Will Its Leadership and Governance Change This Time? – Part I: Historical Background

Wednesday, April 01, 2015

 by

Allegations of Murder-Suicide by a Hospital System CEO

This will be a hard series of posts to write. It was triggered by the latest, and perhaps most gruesome chapter in the troubled history of the leadership of Cooper Health, the largest hospital system in southern New Jersey (known locally as South Jersey).  As reported by the Philadelphia Inquirer on March 28, 2015,

Cooper University Health System CEO John P. Sheridan Jr. stabbed his wife to death, set their bedroom on fire, and then took his own life, authorities have concluded, closing a six-month investigation into the deaths that shocked New Jersey’s political and civic communities.

The Somerset County Prosecutor’s Office announced its results in a news release Friday, citing forensic evidence and a lengthy probe that included more than 180 interviews.

But it offered no conclusive motive to explain why Sheridan, described by family and friends as mild-mannered, would brutally stab his wife and kill himself.

‘Many possible scenarios and theories were considered,’ the prosecutor’s office said in a statement after months of virtual silence. The evidence ‘supports the conclusion that John Sheridan fatally stabbed Joyce Sheridan, set the fire, and committed suicide.’

The Story in Context: a Long History of Leadership and Governance Problems 

We have often discussed bad leadership of health care organizations, and written a lot about the contrast between the munificent compensation paid to non-profit hospital CEOs and the lack of evidence justifying such pay.  However, a murder-suicide allegedly perpetrated by the CEO of a large non-profit hospital system is way at the tail of the curve of questionable managerial behavior.

But it turns out that Cooper Health System has a very long record of leadership and governance troubles.  The current chapter is the latest, and possibly most gruesome, in this sorry series.  However, the context of this history has been lacking in the recent coverage, which has been so far limited to local media.  The history deserves a more complete discussion, and maybe then it could lead to some reconsideration at least of this one institution’s leadership and governance, and perhaps the larger troubles in leadership and governance in health care.

Thus this post will summarize the history that I could find up to 2005.  A second post will summarize more recent history up to and through the terrible deaths of John and Joyce Sheridan.

In the interests of full disclosure, I started my faculty career at what was then Cooper Hospital – University Medical Center, the main teaching hospital for the University of Medicine and Dentistry of New Jersey (UMDNJ) – Robert Wood Johnson Medical School (RWJMS) branch at Camden, NJ.  During my four years there, 1983-87, I was impressed with the dedication of the physicians, nurses and other health care professionals there.  However, even given my naivete at a young faculty member, the leadership of the institution, which was one of the early adapters of the generic management model, seemed strange. Little did I know how strange it was.

In the late 1990s, when I became seriously concerned about what I know call leadership and governance problems in health care, I ran into some folks from South Jersey who told me that Cooper had a tumultuous history since I left.  I got around to researching it, leading to an article in our local American College of Physicians newsletter.  The article, to which I had linked here, is no longer available on the internet.  So I have reposted it below, with some minor modifications, put in square brackets .  Again, the history is of major problems with leadership and governance at Cooper that had inspired no reconsideration by 2005.

The Curiously Quiet Case of Cooper’s Corrupt CFO

Embezzlement by Top Management

In 1994, two powerful executives at Cooper admitted their guilt in an elaborate embezzlement scheme.  In 1978, John H. Crispo, the owner of Financial Management Corporation Inc., to keep his contract with the hospital, began paying monthly kickbacks of $2500-$10,000 to John M. Sullivan, the Cooper Executive Vice President for Finance.  Sullivan then referred delinquent hospital accounts for collection to a new company Crispo set up.  In turn, Crispo repaid him $340,000 in more kickbacks.  Sullivan recruited Cooper’s Controller, P. John Lashkevich, and the three devised a scheme to defraud the hospital using fabricated bills, established a fictitious company to launder money, and falsified tax returns.  A prosecutor claimed “Mr Sullivan blew this money on wine, women, parties, and a lavish lifestyle,”which included trips with girlfriends to the Plaza Hotel, and jewelry shopping at Tiffany’s.  Sullivan had driven a Porsche, and lived in a $700,000 house.  The conspirators also bought cars, boats, and racehorses.

Other conspirators were also found and prosecuted.  Helene Weinstein admitted to helping establish a shadow company as a conduit for Sullivan to send money from the hospital to his estranged wife, Elarba Pagan.  Pagan was accused of receiving money sent by Sullivan from Cooper to another firm.  Weinstein testified that Pagan carried “briefcases of cash from the hospital to shop in New York for $1500 shoes.”  Also, Cooper’s Vice President for Finance, Robert Schmid Jr, admitted embezzling money from Cooper to pay for home improvements. Finally, Thomas J. Damadio admitted helping launder up to $600,000 stolen from Cooper, and evading income taxes.

Sullivan was sentenced to 55 months in federal prison, Lashkevich, 25, Pagan, eight, Weinstein, three years of probation, Damadio, six months of house arrest.  Crispo died before serving prison time.

The Internal Report, and the Murder Conviction of One of Its Authors

After these stories became public in 1994, Cooper’s Board of Trustees established a special committee to investigate its financial operations, which included Peter E. Driscoll, Chairman of the Board, Kevin G. Halpern, Chief Executive Officer (CEO), and a local Rabbi, Fred Neulander.  The hospital pledged to make its investigation public, but then fought to keep it secret.  Its report was finally released in 1998, after a discovery motion in a civil lawsuit.  Prior to then, the Philadelphia Inquirer had revealed numerous financial conflicts of interest affecting Board members,  including those on the special committee.  For example, Cooper paid the law firm of Archer & Greiner, of which Driscoll was a senior partner, $2.1 million over three years from 1993-96.

The report revealed that the conspiracy had bilked the hospital of at least $21.8 million from 1987 to 1994, while “Cooper has been the victim of a massive crime wave.”  It stated Sullivan, Lashkevich, and Crispo “had unrestrained and absolute control of virtually all the important financial functions at Cooper and they took full criminal advantage….” It also noted that “employees who became suspicious and questioned the accounting practices or tried to alert management were intimidated, transferred, or dismissed by the high-ranking executives.”  Furthermore, it suggested “the ability to bypass or defeat controls grew from an institutional culture that delegated and outsourced too much responsibility, without developing effective controls….” The report also raised questions about how the internal investigation was conducted.  It noted that Driscoll and Halpern “often locked horns with [the other] committee members….”  Driscoll had objected when other board members called for an independent investigation.  Halpern and Driscoll resigned their positions within days of the forced release of the report.

One member of the special committee became particularly notorious.  Soon after the internal investigation was set in motion in 1994 Rabbi Neulander’s wife had been murdered.  Soon after, Neulander had failed a polygraph test when questioned about it.  He then resigned his clerical position after his extramarital affairs with members of his congregation were revealed.  In September, 1998, he was charged with hiring the “hit men” who committed the murder.  In 2002, he was convicted  and sentenced to life in prison.

The Aftermath, Financial Woes and Impact on Patient Care

By 1997, Cooper was in financial trouble, although none of its managers ever admitted a connection to the conspiracy and resulting losses.  However, during a related civil lawsuit, Cooper officials alleged “the hospital’s general operating fund was depleted” by the conspiracy.  Cooper began merger discussions with several partners, including AHERF, although none were ultimately successful. Physicians started leaving in 1997, when all but one full-time cardiologists announced their resignations.  Cooper revealed a $16 million loss for 1998, the largest ever incurred by a New Jersey hospital.  Its bonds were down-graded to junk. The hospital then announced that it would stop accepting uninsured patients for elective treatments, departing from its historic mission of charitable care.  Losses continued in 1999, again totaling $16 million, leading to additional budget cuts.  [CEO Halpern and Chairman of the Board Driscoll resigned within days of each other in 1999, both denying their actions were related to the report.]  By 2000, the hospital had cut its work-force to 3100, from 4000 in early 1999. and had closed various clinical sites and units.  Only thereafter did Cooper began posting budget surpluses.  [By 2002, more physicians quit Cooper en bloc, and the hospital was on its second new CEO since Mr Halpern.]

The Lurid Stories Remain Anechoic

The only published reaction to Cooper’s woes came from the related legal proceedings.  The prosecutor in Sullivan’s trial claimed that his thefts were so big that they “threatened the financial stability of the hospital,” and “hurt the image of the city as a whole.”  At Pagan’s sentencing hearing, Judge Joseph H. Rodriguez stated “society could not tolerate a system in which hospital executives ‘rake millions off the top’ that were intended for medical care for the poor.”

It does seem likely that Cooper’s scandals had major effects on its patient care and academic missions.  Yet, I could find nothing  published about such effects.  Despite the luridness of this case, I also found no reaction from local or national medical groups, from academic organizations, accrediting groups, or government agencies.

Summary

In 2005, I wrote,…  The case of Cooper’s corrupt executives can be viewed as the forerunner to the even more massive bankruptcy of AHERF [Allegheny Health Education and Research Foundation, see posts here].  One can only speculate that learning the lessons of the Cooper case could have mitigated the AHERF disaster.  However, as noted in my last article,  the lessons from AHERF are also not widely known.  Yet, as George Santayana wrote, “Those who cannot learn from history are doomed to repeat it.”

As I will address in another post, events at Cooper after 2005 also generated few echoes, up to the latest tragedy.  These events did not suggest much had been learned from the events through 2005.

So the unfortunate, and sometimes terrible case of Cooper Health has become one of the longest running examples  – starting in 1978 – of the troubles with leadership and governance of large health care organizations, the bad effects of these problems on health care and the values of health care professionals, the lack of public attention to and discussion of these problems and their effects, and the failure of organizations to address on their own their problems with leadership and governance.

True health care reform, as we have said endlessly, requires governance that is accountable, transparent, true to the organization’s mission, and honest, ethical, and without conflicts of interest; and leadership that understands health care, upholds its values, is honest, ethical, and without conflicts of interest, is transparent and open, and is willing to be accountable and subject to appropriate incentives.

References

Embezzlement….

Lewis L. Former official gets jail term for bilking Cooper: John M. Sullivan was sentenced to 55 months – the scheme netted $4 million.  He spent his take lavishly. Philadelphia Inquirer, April 26, 1996.

Graham M. New panel at Cooper plans review: embezzling of $3.8 million by two former top aides and a vendor prompted the study. Philadelphia Inquirer, July 27, 1994.

Lewis L. Ex-hospital executive gets 2 years: he helped steal $4 million from Cooper Hospital – his lawyer said the investigation was going to spread.  Philadelphia Inquirer, November 9, 1996.

Graham M, Turcol T. Inquiry widens into finances at Cooper Hospital: a federal grand jury subpoenaed several officials this month – the inquiry was spurred by testimony from two former Cooper executives indicted for fraud. Philadelphia Inquirer, February 27, 1996.

Lewis L. Woman admits role in bilking Cooper Hospital. Philadelphia Inquirer, September 6, 1996.

Lewis L. Ex-hospital executive admits theft: Robert Schmid Jr. pleaded guilty to embezzling about $50,000 from Cooper Hospital. Philadelphia Inquirer, September 24, 1996.

Lewis L. More charged in theft at hospital: six people have now been indicted in the embezzlement at the Camden facility. Philadelphia Inquirer, December 12, 1996.

Lewis L. Ex-wife of jailed Cooper Hospital official sentenced in scam: Elarba Pagan bought $1,500 shoes with medical center money, her business partner said. Philadelphia Inquirer, July 2, 1998. P. B5.

Lewis L. Business owner pleads: Thomas J. Damadio said he helped Cooper Hospital executives launder stolen money.  Philadelphia Inquirer, January 18, 1997.

The Internal Report…

Anonymous. Cooper forms committee. PR Newswire, July 26, 1994.

Graham M. FBI is probing Cooper Hospital for violation of securities laws. Philadelphia Inquirer, April 3, 1997.  P. A1.

Hollreiser E. Cooper urged to release audit results. Philadelphia Business Journal, May 30, 1997.

Graham M. Hospital gives state its audit: Cooper complied after the state threatened to withhold funding – the report will be kept secret.  Philadelphia Inquirer, May 14, 1997, P. B1.

Graham M. N.J. finds nothing amiss at Cooper: the Attorney General’s office reviewed an internal hospital audit – no criminal wrongdoing was uncovered. Philadelphia Inquirer, July 11, 1997. P. A1.

Graham M, Cusick F. Listing Cooper’s board deals: companies associated with the hospital’s trustees have gotten some of its largest contracts. Philadelphia Inquirer, June 15, 1997. P. A1.

Anonymous. Report says Rabbi failed polygraph on wife’s death. The (Bergen County) Record, September 5, 1996.

Burney M. Rabbi charged in wife’s killing. Associated Press State & Local Wire, September 10, 1998.

Mulvihill G. Judge declares mistrial in case of Rabbi charged with arranging wife’s murder. Associated Press State & Local Wire, November 13, 2001.

Bell T. Rabbi found guilty of murder in wife’s 1994 death. Associated Press State & Local Wire, November 20, 2002.

Mulvihill G. Jury spares life of rabbi in wife’s murder; faces life in prison.  Associated Press State & Local Wire, November 22, 2002.

The Aftermath…

Uhlman M. Cooper talks with Allegheny: the Camden hospital wants a partner, and the Pa. chain plans a further push into South Jersey. Philadelphia Inquirer, May 20, 1997. P. C1.

Gerlin A. Philadelphia hospital raids New Jersey system’s cardiology staff.  Philadelphia Inquirer, September 27, 1997.

Kastor JA. Governance of Teaching Hospitals: Turmoil at Penn and Hopkins. Baltimore:  Johns Hopkins Press, 2004. P. 41.

Goodman H. As Cooper suffers loss, it says care won’t suffer. Philadelphia Inquirer, February 11, 1999.

Rizzo N. Cooper Hospital announces cuts in staff. Associated Press State & Local Wire, March 18, 1999.

Goodman H. Cooper Health system cuts 103 employees: financial problems were cited – about 400 jobs could be lost this year, and uninsured care will be curtailed. Philadelphia Inquirer, March 19, 1999. P. A1.

Anonymous. As losses mount, Cooper Hospital’s debt rating falls. Associated Press State & Local Wire, April 16, 1999.

Goodman H. Cooper’s debt rating tumbles as losses rise: the 1998 figure is twice as bad as estimated – the poor rating means the hospital must pay more to borrow. Philadelphia Inquirer, April 16, 1999. P. B1.

Kent B. In Camden, a hospital finds itself seriously ill: Cooper, the city’s biggest employer, has ‘heavy losses.’  New York Times, May 9, 1999.

Anonymous.  Cooper Hospital announces more cuts in staff.  Associated Press State & Local Wire, May 20, 1999.

Anonymous.  Camden hospital posts $16 million loss: president sees turnaround.  Associated Press State & Local Wire, February 23, 2000.

Kiely E.  Cooper Hospital to forgo charity-care payments – the state will not reimburse the Camden facility for uninsured patients for four months – the reason: the beleaguered hospital received the money from the state in advance last year.  Philadelphia Inquirer, April 11, 2000. P B1.

Anonymous.  Cooper Hospital president quitting.  Philadelphia Business Journal, January 15, 2002.

Anonymous.  Hospital company sues six departing surgeons.  Associated Press State & Local Wire, July 4, 2002.

Read More at: http://hcrenewal.blogspot.com/2015/04/the-troubles-at-cooper-continue-lately.html

2015, Camden News Archives, Corporate Responsibility

Christie’s Camden tax breaks reward political insiders

Leave a comment

images

Jeff Horwitz and Geoff Mulvihill, Associated Press

11:20 a.m. EDT March 17, 2015

CAMDEN — During Chris Christie’s first term as governor, he made tax incentives a cornerstone of a promised “New Jersey Comeback” that would lure new businesses to the state.

With New Jersey’s job growth still poor at the beginning of his second term last year, the governor doubled down.

New Jersey’s Economic Development Authority has handed out more than $2 billion in tax breaks since 2014, more than the total amount issued during the decade before Christie took office.

The aid has gone disproportionately to businesses in Camden, a city of 77,000 that ranks among the nation’s most impoverished. Development projects in the city received $630 million in future tax breaks last year. Because of those grants, Christie said in his State of the State address, Camden is “seeing a new tomorrow.”

As Christie considers a Republican presidential campaign, the prospect of a renaissance for heavily Democratic Camden would offer a useful counterpoint to New Jersey’s lackluster economic performance. But a closer look at the grants — which will amount to nearly four times Camden’s annual budget — indicates they may do less for the city than advertised and more for Christie’s political alliances. The state law that set up the more generous grant program was adopted in 2013 by a Democrat-controlled legislature and signed by Christie.

Most of the jobs coming to Camden are filled by existing employees who currently work just a few miles away. One tax break exceeded the value of the company that received it. Another went to a developer who owes New Jersey millions of dollars in long-unpaid loans. And nearly all the recipients boast notable political connections — either through an affiliation with a prominent southern New Jersey power broker, Democrat George Norcross, or through donations to Christie and the Republican Governors Association during his tenure overseeing it.

New Jersey’s Camden incentives raise questions about his administration’s stewardship of New Jersey’s finances — and whether Christie’s claims of revitalizing Camden will resonate with Republican voters opposed to corporate welfare. For conservatives, incentives buck the free market and could undermine New Jersey’s prospects for legitimate tax reform.

“Giving huge subsidies to companies moving from the suburbs of Camden to the city is just off-the-charts crazy territory,” said Michael Doherty, a Republican state senator. “If you’re a high-profile individual, you can get the EDA to make decisions to your benefit.”

Christie spokesman Kevin Roberts said in an email that critics of the tax breaks “offer no alternative plans for creating jobs, growing the economy or renewing our urban centers.”

Driving the 4 miles from Subaru’s current U.S. headquarters in Cherry Hill to its new home in nearby Camden takes eight minutes. Tax credits granted by the state of New Jersey will make that trip worth nearly $118 million for the company.

Subaru’s short trip is not an exception: Most of New Jersey’s incentives for Camden have gone to projects shifting existing employees from nearby locations. Holtec International Inc., a manufacturer of nuclear reactor components, is receiving $260 million for relocating 160 nearby jobs and adding 235 more. Cooper University Hospital will receive $40 million, mostly for returning 353 employees that it previously moved to the suburbs. The Philadelphia 76ers will receive $82 million for bringing 250 jobs across the Delaware River, just a few thousand feet from the Pennsylvania state line.

The low bar for incentive payouts is justified due to Camden’s dire circumstances, said Timothy Lizura, president of the Economic Development Authority.

A top economist at Rutgers University’s Center for Urban Policy Research, Nancy Mantell, said: “It always concerns me that you’re just moving people around, not creating anything particularly new to the regional economy. And this is not going to help the places the companies left.”

The scale of New Jersey’s generosity has bolstered one profitable new industry: the resale of tax incentives by businesses that can’t use them.

Economic development incentives are transferrable under state law. When New Jersey awards tax breaks in excess of a company’s tax bill, the recipient can sell them to an unrelated corporation looking to pay less in taxes. The 76ers, for example, told the AP last year that the team expects to sell a portion of its $82 million in New Jersey incentives — the NBA franchise doesn’t make enough money to use them all.

In at least one case, the value of the tax credits outstripped the value of the business that received them. In November, a Maryland medical testing startup, DioGenix Inc., received a $7.9 million tax incentive to relocate to Camden. Two months later, DioGenix sold itself for between $8 million and $10.9 million to a buyer that announced it would resell the tax breaks for at least $6 million.

Lizura said he was unaware of DioGenix’s upcoming sale when it received its state tax credits but called the sale evidence of success. The incentives are awarded only when companies meet their job and investment obligations.

“If a capitalized company comes in and buys a startup company and they live up to the approval we had, how great is that?” he said.

Diogenix’s buyer, Amarantus Biosciences Holdings Inc. of San Francisco, has been unprofitable since its founding in 2008, has less than $2 million in assets and warned investors in November that there is substantial doubt about whether it can stay in business, according to Securities and Exchange Commission filings. The company did not return phone calls from The Associated Press over several weeks.

Many of the tax breaks involve projects connected to Norcross, the Democratic power broker, whose tacit support for Christie is widely viewed as vital to his 2009 victory over then-Gov. Jon Corzine.

Norcross is on the board of Holtec, the nuclear equipment manufacturer. He also sits on the board of Cooper Hospital, which both received a grant and is the indirect beneficiary of two more — one to build housing for its students and the other to DioGenix, which the state authority said moved to Camden to work with Cooper.

COURIER-POST – EDA approves $260M for Camden proposal

Some recipients also have business relationships with Norcross and his family. Over the last three years, Cooper has paid more than $1 million to Norcross’s insurance brokerage and more than $2 million to a law firm partially owned by his brother Philip, though the hospital’s financial statements said those relationships predate George Norcross’s tenure on its board. Along with his firm’s work for Cooper, Philip Norcross’s firm represented the Philadelphia 76ers for the negotiation of the team’s $82 million in tax credits.

Dan Fee, a spokesman for Norcross, said in an email that there’s nothing wrong with his interest. “He’s been an active and regular cheerleader for companies to relocate to the city, so it’s not a surprise that he has relationships with many of their leaders — he’s been personally advocating for them to move to Camden.”

Lizura said it’s the board, not Norcross, who decides what deals get made.

“Each approval stands on its own merits,” said Lizura, the head of the Economic Development Authority. “The more cheerleaders, the better.”

As money has flowed to development in Camden, some trickled back into politics. The lead investor in the 76ers, Joshua Harris, donated $50,000 to the Republican Governors Association during the time Christie ran it, and other part-owners of the team have given tens of thousands more to the group or to Christie’s campaigns. A political committee supported by employees of Lockheed Martin, another recipient of a Camden grant, pumped more than $100,000 into the governors’ group during Christie’s tenure.

No donations are as notable as those from Pennsylvania developer Israel Roizman. Last February, the state awarded incentives worth $13.4 million to Broadway Associates 2010 LLC, a real estate development company he controls. The project in question: refurbishing 175 low-income housing units that deteriorated under two decades of Roizman’s ownership.

Roizman received the tax breaks despite having failed to repay a state loan on the nearby Camden Townhouses development. A company he owns owes New Jersey’s Housing and Mortgage Finance Agency a total of $6.2 million in unpaid principal and interest on a loan that has been overdue by several years.

The agency does not consider the loan in default because it is still hoping to work out a repayment deal and does not believe it would gain much by foreclosing, spokeswoman Tammori Petty said.

Roizman is one of the region’s top political donors, giving as much as $100,000 each year and raising six-figure sums for national candidates. Though his contributions have overwhelmingly supported Democratic entities — Roizman was a campaign bundler for President Barack Obama — he cut a $10,000 check to the Christie-led governors association in late 2013, just before Christie became chairman and a few months before receiving his tax breaks. Last year, when Christie was at the helm, he gave the group the same amount.

The AP asked Roizman how he received additional money from New Jersey despite owing the state so much money.

“Why don’t you call the state and let them explain that to you?” Roizman said, then hung up.

New Jersey housing officials said that near the end of its multi-decade loan to the Roizman Camden development, the property ceased being profitable. Because Roizman did not personally guarantee the loans, the state has no recourse against the developer himself.

Copyright 2015 The Associated Press. All rights reserved.

2015, Camden News Archives, Corporate Accountability, Corporate Responsibility

UMDNJ whistleblower cases cost Rutgers nearly $2M in settlements

Leave a comment
Ted Sherman | NJ Advance Media for NJ.com
By Ted Sherman | NJ Advance Media for NJ.com
Email the author | Follow on Twitter
on April 26, 2015 at 9:05 AM, updated April 26, 2015 at 9:08 AM
NEW BRUNSWICK — Rutgers University has quietly resolved several major whistleblower cases inherited with the merger of the University of Medicine and Dentistry of New Jersey, agreeing to nearly $2 million in settlements with former high-level administrators.

The never-disclosed confidential agreements bring to an end two long-running lawsuits that charged UMDNJ, the state’s troubled former medical university, with wrongful termination over alleged fraud and illegal bidding practices.

In one case, Rutgers earlier this month reached a $1.2 million settlement with Edward Burke, the former chief financial officer of UMDNJ’s University Hospital in Newark, who said he was fired after he accused top administrators of systematically defrauding Medicaid.

And last year, Rutgers reached a $700,000 settlement with Ellen Casey, a purchasing official for UMDNJ, who claimed she was terminated after discovering that telecommunications contracts worth millions of dollars were being awarded without public bids.

Rutgers imposed strict restrictions on the disclosure of any terms of the settlements on lawyers in the two cases. NJ Advance Media, however, obtained copies of both through Open Public Records Act requests with the state university.

In a statement, Rutgers spokesman Greg Trevor said the university “is satisfied with the resolution of these cases that were filed before the integration of most of UMDNJ with Rutgers.”

Attorneys for the former employees who brought the litigation did not comment.

But Adam Henick, a one-time vice president at UMDNJ’s University Hospital who oversaw Medicaid billing for outpatient services and first discovered evidence of overbilling in 2002 before being forced out, said Rutgers “is probably trying to put UMDNJ’s sordid past to rest.”

A medical university marred by scandal

That past had included a culture of waste, fraud and abuse, including lucrative consulting contracts that went to political insiders, double-billing Medicare and Medicaid by millions of dollars, and an illegal kickback scheme that gave doctors no-show jobs in return for referring patients to the university’s faltering cardiac surgery program.

One state powerbroker, former state Sen. Wayne Bryant was eventually sentenced to four years in federal prison for using his influence in Trenton to secure a pension-padding job at UMDNJ that required little work.

UMDNJ ultimately came under the oversight of a federal monitor in 2005, following threats by then-U.S. Attorney Chris Christie to prosecute UMDNJ for allegedly overbilling the government $4.9 million for treatment of Medicare and Medicaid patients. The fraud and waste at the medical university, though, spawned more than a dozen whistleblower and wrongful termination lawsuits against UMDNJ, many settled out of court.

In 2009 UMDNJ reached a $2 million settlement with the U.S. Justice Department over the Medicare and Medicaid fraud allegations. Unsealed court records later revealed that it had been a former UMDNJ faculty member and attending physician, Steven Simring, who first alerted federal prosecutors to the illegal billing, after he filed a whistleblower complaint under the Federal False Claims Act. He received a portion of the settlement with the justice department.

After absorbing most of UMDNJ, though, Rutgers still found itself defending—and fighting—several outstanding legal cases being contested in state and federal courts.

Alleged billing fraud

In the most recent settlement, Burke, the University Hospital CFO, had accused superiors of retaliating after he accused the school of covering up its failure to comply with federal rules. According to a complaint filed in federal court in 2008, Burke alleged UMDNJ had been deliberately overpaying doctors and shifting those costs to the hospital to inflate its Medicare, Medicaid and Charity Care reimbursements.

He also claimed the UMDNJ teaching hospital had been subsidizing the private practices of faculty physicians. Burke said he was forced out because he raised the issue of physician overcompensation and potential criminal violations.

The university, in its most recent court filings, responded that Burke’s claims had been raised by others and had been addressed—calling his case an “opportunistic and parasitic suit” based on information already publicly disclosed.

“Burke attempts to walk a paved road years in the making by many others before him,” wrote university attorneys. “For the past decade, numerous litigations and extensive media coverage have discussed alleged Medicare, Medicaid and Charity Care fraudulent billing and reimbursement issues involving the University of Medicine and Dentistry.”

Earlier this month, however, Rutgers agreed to settle the matter and Burke agreed to drop his lawsuit with the payment of $1.2 million by Rutgers, paid in part by the medical school’s faculty practice group.

The settlement covered all claims by the former UMDNJ vice president, as well as any back pay, lost benefits and attorneys’ fees. Rutgers admitted no wrongdoing.

Burke’s attorney, Neil Mullin of Mullin Smith in Montclair, did not return calls or emails.

In a similar settlement, Rutgers last year also agreed to pay Casey, who had complained that telecommunications contracts worth millions of dollars were being awarded without public bids. Casey, in a lawsuit filed in the state courts in 2008, charged that UMDNJ continued to violate New Jersey bidding statutes even as a federal monitor was winding down his oversight and new controls were imposed. At one point, she said her department was forced to hire a politically connected employee for a mailroom position that did not exist.

Her attorney, James O’Donohue of Hill Wallack in Princeton, would say nothing of the settlement, only that the case “was resolved to the satisfaction of all parties.”

Meanwhile, Rutgers officials earlier this month said they were recently notified that the federal Office of the Inspector General of the U.S. Department of Health and Human Services was finally concluding its own monitoring of the medical and health science schools now under Rutgers—nearly a decade after the scandal at UMDNJ first came to light.

Ted Sherman may be reached at tsherman@njadvancemedia.com. Follow him on Twitter @TedShermanSL. Find NJ.com on Facebook.

2015, Camden News Archives, Corporate Accountability, Corporate Responsibility

Protesters Call for Removal of Camden School District Superintendant

Leave a comment

download (3)

By Carly Q. Romalino

CAMDEN The Camden School District’s superintendent should resign, local control of the district must be restored, and Renaissance schools must not be expanded, city activists demanded Tuesday.

Save Camden Public Schools interrupted a portion of the New Jersey School Choice Education Reform Alliance conference to deliver the demands to state-appointed Superintendent Paymon Rouhanifard, Democratic power broker and Cooper Hospital Chairman George Norcross, and New Jersey Education Commissioner David Hespe.

“We mean business about our schools,” Save Camden Public Schools founder Gary Frazier told Gannett New Jersey at a small protest of about 35 outside the Camden County College conference center on Cooper Street.

COURIER-POST

Renaissance school debuts in Camden

“When is somebody going to do something about it?”

Frazier’s group — supported by the New Jersey Education Association and the Camden Education Association — started four years ago, growing to 400 active members, he said. Its Facebook community has garnered 1,417 “likes.”

“Renaissance schools are not for the city of Camden,” said Robert Cabanas, of Save Camden Public Schools’ counterpart in Newark, a state-run district facing issues similar to the South Jersey city.

Camden’s first newly-built Renaissance school — KIPP Cooper Norcross Academy — opened in September. It’s the first of three new K-8 Renaissance schools to open in the city in the next several years. The new batch is among the district’s seven Renaissance schools.

COURIER-POST

Director, Camden students to sing for pope

The $41 million KIPP school is overenrolled, with a waiting list of 360 kids, the academy’s director told Gannett New Jersey earlier this month.

Protesters believe education funds get routed to Renaissance and charter schools and around other schools in the district, Frazier said.

Rouhanifard said in his conference address Tuesday Renaissance schools receive less funding than traditional public schools.

(Story continues below image)

Save Camden Schools member Kyisha Colvin, a Camden mother of two, marched with 30 others to oppose charter schools in the city. She took her daughters — 15 and 8 — out of charter schools last year, saying her youngest showed more success at Yorkship Family School than at Freedom Prep Charter School.

She said she believes academic success in Renaissance schools won’t be better.

“We have some really promising early signs of (students) succeeding academically,” Rouhanifard rebutted.

The superintendent — who has met with Frazier and other members of Save Camden Public Schools — said he doesn’t believe “their voices represent the majority of the voices in Camden.”

COURIER-POST

Survey: Camden schools make progress

However, Rouhanifard, appointed by Gov. Chris Christie in 2013, sees a return to local control of school districts.

“Camden’s fight is very significant for Newark because we’re all state-controlled communities,” Cabanas said. Newark’s school district has been state-controlled for more than two decades.

“We want community schools and a democratically elected school board.”

It won’t take 20 years, but it won’t be immediate, Rouhanifard said.

“To demand local control is to completely ignore history,” Rouhanifard said, reminding them of “adult-driven” school district scandals and a district that “did very little for students.”

“What’s important is to stabilize the school district, leave it in a better place. I think it can be accomplished sooner than later.”

As for Rouhanifard’s resignation, that’s not happening.

“I have no plans to go anywhere, and I will always respect the dialogue,” he said.

Carly Q. Romalino: (856) 486-2476; cromalino@gannettnj.com