Independent Report Blames Former UMMS CEO For Board Members' Deals

On Wednesday, the University of Maryland Medical System released and responded to an outside consultant's report on flaws in the governance of its board of directors.

The report by Nygren Consulting found that the system's contracts with former Mayor Catherine Pugh and other former board members didn't go before the full board for approval, in violation of the conflict of interest policy then in effect. It faults former CEO Robert A. Chrencik for failure to follow those guidelines.

"Our review has determined that management did not present the book purchases to the board or any committee for prior approval, as required by then-in-effect Conflict of Interest policies, and the purchase was not subject to any competitive bidding process."

Officials with the hospital system indicated indicated they plan to implement the recommendations by Nygren that haven't already been adopted.

“On behalf of UMMS, I fully accept the findings and recommendations contained in the Nygren report," interim CEO John Ashworth said in a statement. "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.”

In May, the board approved a new conflict of interest policy that had been drafted by Nygren. The policy was then delivered to Gov. Larry Hogan and top lawmakers.

Going forward, a governance committee will be a permanent committee of the board and will be tasked with overseeing all board practices, policies and relationships. A new research-based model will ensure the board membership is determined based on the competencies required of each member and the competencies required by the entire board. The board will reform its education process related to disclosures and conflicts of interests, including the creation of an official code of conduct.

Board committees will be restructured so that separate individuals chair the finance committee and the audit and compliance committee and that the chair of the latter has no business relationship with the system.

Furthermore, the system will no longer let any board member engage in a personal services agreement, regardless of the circumstances.

“No person of authority should benefit personally from a decision he or she makes about the organization they serve," Ashworth said. "All boards within the system must balance demand for expertise and leadership with conflict-free representation. This is simply not negotiable.”

Hogan on Wednesday announced 11 new appointments to the hospital system's board. Emergency legislation passed this year requires the entire board to be replaced in the coming months.

The changes arose after a scandal over self-dealing among the system's board members. Former Baltimore Mayor Catherine Pugh resigned several weeks after revelations that began with her own no-bid contracts to sell children's books to the system. Chrencik and the system's chairman resigned, as did several board members when their own financial ties became public.

The Nygren report reviewed the financial relationships of Pugh and other former board members and the policies in place at the time, including documents going back to 2002.

As recently as 2018, board members had no awareness of the arrangement to buy "Healthy Holly" books from Pugh, according to a presentation document shown to the board.

"The CEO agreed to enter into an agreement with Ms. Pugh without consent of the Board," the consultants wrote. "The Audit and Compliance Committee was apprised of the book arrangements long after the fact as line items in four separate presentations."