A well-known New Jersey hospital executive has been accused of spending $2.1 million of hospital money on personal uses, such as travel and entertainment and accounting and legal expenses.
Joseph Michael Galvin Jr., former chief executive officer of Memorial Hospital of Salem County in Salem, N.J., allegedly misused the funds during a 41/2-year period, according to a Dec. 12 hospital statement. Galvin's attorney said the charges are "grossly exaggerated."
Memorial disclosed the amount of money it believes was misappropriated following an investigation by its board of trustees. Saying it is "cooperating fully," the hospital also revealed the existence of a federal probe into the matter. A spokesman for the U.S. attorney's office in Newark, N.J., wouldn't confirm or deny any investigation.
Memorial's inquiry was prompted by alleged improprieties discovered during a routine audit of Memorial's 1995 results by Ernst & Young, the hospital's outside auditor (June 10, p. 4). Based on the preliminary findings, the hospital fired both Galvin and Paul Fredricks, former senior vice president and director of fiscal affairs, on June 5.
Memorial said the inquiry has "confirmed" that Fredricks "failed to properly exercise his responsibility for oversight of those expenditures." But George Bochetto, Fredricks' attorney, said the finance officer "didn't conceal or hide anything. He did his job." Bochetto, a partner of Bochetto & Lantz, Philadelphia, indicated Fredricks might sue the hospital over his termination. "We're looking at all our legal options," Bochetto said.
Memorial said the board's counsel, Dechert Price & Rhoads, has contacted Galvin's attorney, Walter Weir Jr., hoping that Galvin "will agree to provide restitution." If not, the hospital will pursue "all legal recourse necessary for the recovery of its funds."
Weir of the Philadelphia firm of Weir & Partners declined to comment on specific claims. But, he said, "If Mr. Galvin owes any money to the hospital, that money will be paid."
At present, he added, the hospital is holding approximately $3.8 million of Galvin's money. He would not elaborate on the nature of those accounts, other than to say that "there is no possibility that the hospital will suffer any economic loss." A hospital spokeswoman said funds in certain deferred compensation plans had been set aside "potentially" for Galvin's benefit. "However, it is not `his money," she said.'
Galvin, 51, who served as 1990-1991 chairman of the New Jersey Hospital Association, is a familiar figure in healthcare leadership circles. He was appointed administrator of Memorial in 1971 and CEO in 1981. For a number of years, Galvin also served as a member of the board of governors of the Middle Atlantic Health Congress, a now-defunct regional trade show held in Atlantic City.
In 1978, he was featured on the cover of MODERN HEALTHCARE*for winning the American College of Hospital Administrators' Robert S. Hudgens Memorial Award for "young executive of the year." Galvin became a fellow of the professional association, now called the American College of Healthcare Executives, in 1979 and was recertified 1990.
ACHE Executive Vice President Karen Hackett wouldn't confirm whether the organization's ethics committee is investigating the alleged fiscal improprieties against Galvin.