After nearly a year of tooth-and-nail legal battles, a suburban New York healthcare system and seven of its officers last week settled charges with a state ethics commission that they took illegal gifts and reimbursements from information system vendors during a contract-bidding process.
But the settlements were not acknowledgements of intentional misconduct, said Richard Turan, president and chief executive officer of Nassau Health Care Corp., who maintained that he and the others involved in the vendor selection process never willfully violated any law when they accepted entertainment, gifts, meals and trips totaling about $10,630.
Turan blasted the New York State Ethics Commission for dragging out the proceedings in a "witch hunt" instead of accepting the healthcare system's admission of "technical violations" that were unintentional and considered part of a standard business routine in the private sector. "We admitted at the beginning that we did what we did-(but) we didn't admit any guilt," he said. "They basically said, `Admit total guilt and throw yourself on the mercy of the commission.' And we were not going to do that."
The commission in April 2003 handed down notices of reasonable cause-akin to formal charges-citing 87 incidents in which Turan and six other hospital staff members accepted free goods and other considerations including hotel stays, limousine rides, plane fares, restaurant meals and tickets to plays and hockey games (May 5, 2003, p. 18).
As a chartered public benefit corporation operating formerly county-owned facilities, including one hospital, a nursing home and seven diagnostic and treatment centers, East Meadow, N.Y.-based Nassau Health Care was subject to state ethics laws prohibiting its officers from receiving gifts from any person or company seeking or doing business with the corporation, the commission said.
During the months of legal wrangling, the healthcare system rang up a costly bill for representation by at least four law firms in a series of depositions, court fights, subpoenas, hearings and appellate court filings. Turan would not estimate the total bill, but Nassau Health Care's board of directors agreed to pay all expenses incurred by the seven principals. That decision came against a backdrop of financial troubles including a projected $18 million deficit in 2004.
It's the first time a government entity chose to pay legal fees instead of making the individuals under investigation liable for the expenses, said Walter Ayres, a spokesman for the ethics commission. And those expenses could have been avoided, Ayres said. "This could have been settled the day the notices of reasonable cause were issued," he said.
But Turan said the ethics commission gave the healthcare system no choice. "For them to say they wanted to settle is just a blatant lie," he said. "They wanted to make a big deal out of this, and we were required to defend ourselves." He said the corporation was legally obligated to pay the expenses of people who were acting on its behalf, as long as they weren't found guilty.
The gifts, which were discovered during a yearlong investigation, were provided by five information technology companies vying for the Nassau Health Care contract: Eclipsys Corp., the eventual winning bidder on a contract for a clinical information network valued at $7.2 million; Cerner Corp.; Siemens Medical Solutions; Fujifilm Medical Systems USA; and Philips Medical Systems.
The incidents ranged from trips to the headquarters of Cerner and Siemens to a Cerner representative bringing a few dozen doughnuts during a visit to the office of Christine Forman, vice president and chief information officer.
Among nonpublic healthcare organizations, such practices are not considered suspect, said Carla Smith, executive vice president of the Healthcare Information and Management Systems Society. "My sense is that it is standard practice to treat a customer as your guest, and it's considered polite treatment that if you invite someone to a meal, you pay for the cost of it. And if you invite someone to visit your company, you pay for their airfare and lodging."
Turan and Forman in their settlements did not contest the charges but maintained that any violations were not willful. Both also said they appreciate "that such conduct is prohibited by the Public Officers Law." All except Turan agreed to pay "assessments" equal to or within a few dollars of what they were charged with accepting. Turan was assessed a payment of $2,250 for accepting gifts with a value of $699.60.
The others signed their settlements "without either admitting or denying liability." They were: Paul Moh, radiology chairman, $2,005.86; Joan McInerney, chairwoman of the emergency medicine department, $1,375.72; Judith Eisele, a registered nurse, $1,094.03; Gary Bie, chief financial officer, $883.02; and Lawrence Honold, director of information systems, $216.55.
Forman was the only officer slapped with additional counts during extended investigating by the ethics commission, which included employee interviews and pursuit of written documents between the original April 2003 indictments and official hearings late last year. On top of the $4,010 originally documented, she was charged last October with receiving an additional $356 during 2001 and 2002, including $40 for flowers at Thanksgiving and $96 for a theater ticket. Her final settlement was $4,369.84.
Nassau Health Care argued in state court that the investigation was not justified, while ethics investigators pressed for access to witnesses and documents. Among other moves, the state issued a subpoena to obtain documents and gained a court ruling to stop the healthcare corporation from insisting that its lawyers be present when witnesses were being questioned.
"They threw up so many smokescreens during this investigation," Ayres said. Nassau Health Care also had actions pending in the state appellate court at the time of the settlement, in which both sides agreed to call off all legal action against each other.
But Turan contended that the investigation was "a tremendous waste of taxpayers' money. ... They put up their entire staff for a year and a half to harass this corporation."