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Baltimore Business Journal: Comptroller Franchot questions independence of firm hired to look into U

Comptroller Peter Franchot blasted the University of Maryland Medical System, questioning the independence of the firm hired to look into contracts awarded to the health system's board members.

Franchot, speaking at a meeting of the Board of Public Works on Wednesday, also offered criticism of the General Assembly's leadership while saying he thinks the scandal that has embroiled Baltimore Mayor Catherine Pugh has only just begun.

"My fear is that we have only barely broken the skin of the apple," Franchot said.

Pugh, a Democrat, and two other UMMS board remembers resigned last month after news reports highlighted multiple deals several board members had with the health system. Four other members and CEO Robert Chernick have taken a leave of absence.

The Sun first reported nine members made deals with UMMS, raising concerns about conflicts of interest. Pugh's agreement with UMMS to receive $500,000 for 100,000 copies of her "Healthy Holly" children's books has evolved into a full-blown crisis involving the Associated Black Charities of Baltimore and several insurance companies. Kaiser Permanente, CareFirst BlueCross BlueShield and the Maryland Automobile Insurance Fund all disclosed payments related to "Healthy Holly."

Pugh has taken a leave of absence amid the controversy to recover from pneumonia.

Gov. Larry Hogan, a Republican, called on State Prosecutor Emmet C. Davitt to open an investigation into Pugh's book deal. Pugh's personal attorney, Steven Silverman said Tuesday an investigation has begun.

UMMS hired a Santa Barbara, California-based firm — Nygren Consulting — to conduct a review review and assessment of contractual relationships involving board members. The firm will also make recommendations on how the board can improve its policies and procedures for conflicts of interest.

Franchot, a Democrat, praised Hogan for asking for an investigation. He told the public to "stay tuned" because "every day something new appears." Franchot said he is thankful for the state prosecutor to be involved because he does not trust Nygren to do a truly independent review.

"I mean forgive me, forgive me, take a look at that consulting company's client list and tell me that is an independent look at anything," Franchot said.

Nygren works with clients on everything from CEO succession planning to strategy development or board structure and dynamics, according to its website. Clients include large companies such as Hewlett-Packard, Hotels and Resorts, and Merrill Lynch — as well as many hospital systems. Some of those include the UCLA Health System, Geisinger Health System, the Duke University Health System and Ascension, the largest Catholic health system.

Nygren could not be reached for comment. UMMS Board Chairman Steve Burch defended the selection of Nygren in a statement to the Business Journal.

Burch said Nygren was selected among 11 firms because of its "national reputation in working with organizations to ensure proper governance, accountability and best practices."

"Nygren has worked with some of the largest and most prestigious academic health systems across the country, and is coming to UMMS as a completely independent and objective assessor, which is exactly why we have retained them," Burch said. "We are confident that Nygren’s review will yield a strong path forward for the organization and we will be sharing those results with the Governor, Speaker of the House and Senate President."

During his comments Franchot also criticized fellow Democrats House Speaker Michael Busch and Senate President Thomas V. Mike Miller Jr. for allowing the UMMS board deals to happen on their watch. Busch himself is a member of the UMMS board while Sen. Nancy King serves on Miller's behalf.

Franchot said Busch and Miller "either turned a blind eye or sat silent as no bid contracts worth millions of dollars were awarded to their fellow trustees."

Busch has been hospitalized with pneumonia and his chief of staff, Alex Hughes, could not be reached. Jake Weissmann, Miller's chief of staff, said the longtime Senate president does not sit on the UMMS board."

"I think the Comptroller may have missed that," Weissmann said.

The General Assembly is looking to pass an emergency bill sponsored by Busch that would increase legislative oversight of the UMMS board, limit the board's membership and enact other board reforms.

https://www.bizjournals.com/baltimore/news/2019/04/03/comptroller-franchot-questions-independence-of.html

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