November 24, 2006
News Analysis
Latest Twist in a Scandal Hits a Medical School When It’s Down
By DAVID KOCIENIEWSKI, NY TIMES

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TRENTON, Nov. 22 — As New Jersey’s state medical school has been shaken in the past year by disclosures of widespread financial mismanagement, administrators there have repeatedly defended the institution, the University of Medicine and Dentistry of New Jersey, by insisting that the scandals have affected its treasury but not the quality of care for the more than two million patients it treats each year.

But a federal monitor’s recent accusations that the cardiology unit at the university’s main hospital has been paying kickbacks to doctors for referring heart patients have undercut that argument at a time when the school’s future remains in doubt.

A report issued last week by the monitor, Herbert J. Stern, a former federal judge and United States attorney, charged that 18 cardiologists had taken part in the illegal kickback scheme and had defrauded Medicare and Medicaid of $36 million. The report also accused the university’s interim president, Bruce C. Vladeck, whom Gov. Jon S. Corzine appointed in the spring, of covering up the misconduct.

Dr. Vladeck has denied trying to conceal any wrongdoing. Last week he dismissed two cardiologists, slashed the pay of others and vowed to make a thorough review of the referral program. The university has also placed its chairman of medicine, Dr. Jerrold Ellner, on administrative leave in connection with his role in the arrangement, The Star-Ledger reported on Wednesday.

The fact that some of the university’s most prominent doctors now stand accused of taking part in an illegal scheme that involved life-or-death medical decisions is likely to further tarnish the school’s image at a time when state officials are deciding whether to merge the institution with Rutgers University and Robert Wood Johnson University Hospital.

Governor Corzine said on Wednesday that charges about the quality of care being affected by the scandal were deeply troubling — “It’s really disgusting that the culture allowed for this kind of practice” — but added that he had not decided whether to restructure or disband the school.

But other state officials said the latest round of disclosures would only heighten pressure for a merger.

“This just highlights the disaster of trying to salvage what’s left,” said State Senator Raymond J. Lesniak, a Democrat from Union County who is chairman of a panel examining the future of the school. “Before, the focus was on enhancing the ability to provide education. But now we’re also talking about direct impact on health care and people’s lives.”

When the university’s financial irregularities became a public issue last year, they were viewed as just more instances of a New Jersey government institution plundering taxpayers. News organizations published articles about administrators and board members who padded their expense accounts, gave campaign contributions to their patrons, and awarded millions of dollars in no-bid contracts to vendors with political connections.

Federal prosecutors soon began investigating the university and found that administrators had overbilled Medicaid by tens of millions of dollars over the years. When the United States attorney for New Jersey, Christopher J. Christie, threatened to prosecute the school for fraud — which would have disqualified it from receiving the federal funds that make up a vast amount of its income — administrators agreed to allow a federal monitor to investigate its operations.

Mr. Stern spent months poring over the school’s finances, and said that his investigators found evidence that in the past five years, hundreds of millions of dollars were mismanaged, misspent or paid to politically connected vendors who in some cases do not appear to have done any work.

The monitor also issued a report critical of State Senator Wayne Bryant, a Democrat from Camden who is chairman of the Budget and Appropriations Committee, and whom investigators have accused of arranging a $35,000-a-year no-show job for himself at the institution.

Mr. Bryant, who is now the subject of investigations by the United States attorney and the state attorney general as well as the State Ethics Commission, has denied any wrongdoing.

In the cardiology unit, however, the monitor found a case of financial impropriety that was still under way, that implicated high-ranking members of the medical faculty and that was directly related to the school’s core mission of delivering health care.

The report said that administrators were apparently afraid that the university’s main hospital, in Newark, was performing too few heart procedures to maintain its license, so they devised a plan to pay $6 million to a group of cardiologists — mostly in the form of no-show jobs — in exchange for referrals.

The monitor also criticized hospital officials for failing to alert them to the arrangement, even though it was the subject of a critical audit by the accounting firm J. H. Cohn. Moreover, school administrators recently paid a multimillion-dollar legal settlement to a former doctor who had been dismissed after objecting to the referral plan.

Dr. Ellner, who had been earning a salary of $612,000 as the chief of medicine before being placed on administrative leave, did not return repeated calls or respond to e-mail requests for comment. But university officials said that he could lose his tenure if he is found to have violated the law or school policy. School administrators have also placed Ronald Pittore, the second-ranking member of its legal management department, on administrative leave.

Dr. Vladeck declined to be interviewed on Wednesday. His spokeswoman, Anna Farneski, would say only that the administrators would continue their own efforts to cooperate with the monitor and to reform any questionable practices at the school. In a recent letter addressed to all employees, students and faculty members, Dr. Vladeck said he was confident that the school could win back the confidence of the public.

“The continued restoration of U.M.D.N.J.’s credibility requires not only a change in how we do business, but also the more difficult task of reinforcing for the public that we are committed to being open and transparent in those operations.”

But with a monitor investigating its finances and a group of powerful state officials pushing for a merger, it is unclear how much longer administrators will be in a position to control the school’s operations.

New Jersey: Medicaid Billing and Finances Are Under Investigation at the University Hospital of Newark

September 19, 2006
University Gave No-Show Job To Legislator, U.S. Reports
By DAVID KOCIENIEWSKI, NY TIMES

One of New Jersey's most powerful legislators had a no-show job at the state's medical and dental school that paid him $35,000 a year 'to lobby himself,' according to a report by a federal monitor, an accusation that could lead to a possible criminal investigation on corruption charges.

The legislator, State Senator Wayne R. Bryant -- a Democrat from Camden who is the chairman of the Senate Budget and Appropriations Committee -- worked at the School of Osteopathic Medicine at the University of Medicine and Dentistry of New Jersey from 2003 to 2006. During that time, the school's financing from the Legislature rose to more than $4 million annually from $2.8 million.

Mr. Bryant, 58, has for years been unapologetic about the fact that he has held as many as four government jobs simultaneously -- in addition, family members, including his wife, sister-in-law, two brothers and a son, who died this year, were on the public payroll at various times -- but he resigned from the medical school this year after federal investigators began examining his role at the university.

United States Attorney Christopher J. Christie, who has made the prosecution of public corruption the top priority of his office, declined to discuss the matter. But his spokesman, Michael Drewniak, said federal prosecutors would review the findings of the monitor, Herbert J. Stern, very closely.

The harshly worded report about Mr. Bryant's involvement with the troubled medical school comes just three days after a former State Senate president, John A. Lynch Jr., once the most influential Democratic Party boss in the state, pleaded guilty to corruption charges. Mr. Bryant is one in a long line of New Jersey officials accused of using a public position to enrich himself.

It is also the most striking example yet of the role politics played in the financial irregularities at the medical school. After federal officials threatened to prosecute the university for Medicaid fraud, officials there agreed to let a federal monitor investigate its finances. That inquiry, led by Mr. Stern, a former judge and United States attorney, has found evidence of tens of millions of dollars in Medicaid fraud, wasteful spending and no-bid contracts awarded to vendors with ties to elected officials or former trustees.

Gov. Jon S. Corzine -- whose inaugural call for a change in the state's political culture was greeted with a testy response from Mr. Bryant -- said that he was troubled by the report's findings but that only legislators had the power to force the senator to step down from his post on the budget committee.

Mr. Corzine said that as leader of the party, he was suggesting that Democratic legislative leaders review the file and take decisive action. 'There are many precedents where people step aside while an investigation goes on, " he said.

Mr. Bryant refused to be interviewed by the federal monitor, and has not responded to questions from reporters. He did not return repeated calls to his office requesting comment on Monday and, although he had been scheduled to appear at a college groundbreaking ceremony in Bloomfield on Monday, he did not attend.

The monitor's report said that Mr. Bryant first approached the president of the university, Stuart Cook, in 2002, at a time when the state was considering a plan to merge the medical and dental school with Rutgers University, and suggested that the university would have to pay taxes if it opened a branch in Camden. Shortly afterward, Mr. Bryant asked for a job, the report said, and in 2003 he was given a position that had not been advertised.

'Senator Bryant reminded U.M.D.N.J. that it was being threatened and could use some friends in the Legislature, and soon enough, he was hired there," said John Inglesino, an investigator for the federal monitor.

During Mr. Bryant's tenure at the university, its windfall in state financing included $800,000 a year for the Center for Children's Support and millions of dollars in state subsidies for the school's operating expenses.

At the school itself, however, Mr. Bryant's duties were a mystery..

'By all accounts, Bryant performed little to no work at the school; spent less than his required one day per week at the institution,' the report says, citing interviews with 35 administrators and employees at the university. 'No reports, memoranda, e-mail communications, correspondence or evidence of work by the senator were found or produced by U.M.D.N.J.; and no one in the administration of the School of Osteopathic Medicine while Bryant was employed by U.M.D.N.J. recalls supervising what the senator was doing or supposed to be doing.'

The report suggested that Mr. Bryant pressured the university to give financial help to his political allies, prevailing upon school administrators to donate $20,000 to a designated driver program at the Tweeter Center, an entertainment complex that was run by the wife of the chairman of the Camden County Board of Chosen Freeholders.

April 25, 2006
Monitor Sees Misconduct by a State School Dean and a Newark Council Leader
By DAVID KOCIENIEWSKI, NY TIMES

The Newark City Council president and a dean at New Jersey's troubled state medical school misspent nearly a million dollars of university funds on country club parties and bonuses for themselves and no-show jobs and preferential contracts for their friends, according to a report by the federal monitor investigating the school.

The report, which was sent to the United States attorney for New Jersey, Christopher J. Christie, reads like the outline for possible criminal charges against the City Council president, Donald Bradley, and Michael Gallagher, dean of the school of osteopathic medicine, whom investigators accused of 'potentially illegal' activity.

Investigators said that Mr. Bradley helped a campaign contributor obtain a $1-a-year sublease for a building that the school, the University of Medicine and Dentistry of New Jersey, rented for $144,000 a year, an arrangement that could violate federal law on misuse of public funds.

Dr. Gallagher, the report said, spent thousands in university funds on an assortment of inappropriate perks -- renting a suite at the Waldorf-Astoria for a friend, drinking $50 glasses of wine and spending $22,818 in fees for picture framing since 2001. Investigators also said that they found evidence that Dr. Gallagher pressured accountants at the university to falsify documents so he could claim that the Headache Center at the school earned a profit, which helped him qualify for a $15,000 annual bonus.

The report said that Dr. Gallagher was overheard telling university accountants, 'I have to get my 15.' The interim report, which was first disclosed on Monday by The Star-Ledger of Newark, is the latest in a parade of revelations about the school in the past year.

In December, university officials acknowledged that the school had intentionally overbilled Medicare by more than $5 million, and, to avoid criminal prosecution, they agreed to have a former federal judge, Herbert J. Stern, monitor its finances.

A lawyer assisting in the inquiry, John Inglesino, said that Mr. Stern was still investigating a range of alleged impropriety at the school. 'We're still ridding the barrel of the bad apples,' Mr. Inglesino said. 'Unfortunately, there will be some more unsettling news to come out.'

Neither Mr. Bradley nor Dr. Gallagher returned repeated calls to their offices on Monday.

The report said that in addition to the allegations against Mr. Bradley and Dr. Gallagher, the monitor was investigating a complaint that former Gov. James E. McGreevey may have helped State Senator Wayne Bryant obtain his $38,220 a year job as a lobbyist for the school of osteopathic medicine when he was chairman of the budget committee.

The United States attorney is investigating whether the senator's dual role was a conflict of interest, but neither Mr. Christie's office nor Mr. Bryant would discuss it. Mr. Inglesino also declined to comment on the status of that inquiry.

The school's interim president, Bruce C. Vladeck, said he appreciated the monitor's attempt to help weed out those suspected of abusing the finances of the school, which now faces a budget shortfall in addition to its criminal, ethical and public relations problems. Dr. Vladeck, who was appointed last month, said at a public forum on Monday that he planned to cut the size of the school's administration by 'a double-digit' number of jobs, but that the layoffs would not affect the faculty, staff or researchers, who are among the school's 14,500 employees.

In a report issued early this month, Judge Stern found that political officials wielded so much influence within the university that its former president, Dr. John Petillo, devised a ranking system to evaluate the potency of each job seeker's political connections.

The new report cited what investigators called fraudulent behavior by Dr. Gallagher and contends that Mr. Bradley was involved in 'unethical and potentially illegal behavior' for helping broker a $1-a-year lease deal for a doctor who had given $6,415 to Mr. Bradley's campaigns.

It said Mr. Bradley also pressured the university to spend more than $20,000 on a party at the New Jersey Performing Arts Center. Mr. Bradley was also accused of using his position as a member of the school's board of trustees to help friends and relatives get jobs and allow one of his patronage hires, who was identified as 'his goddaughter,' to continue receiving a salary after she was fired.

Dr. Gallagher resigned from his $381,854-a-year position several weeks ago; Mr. Bradley has announced plans to retire from city government later this year.

February 2, 2006
Board Accepts Resignation of Medical University Leader
By DAVID KOCIENIEWSKI, NY TIMES

NEWARK, Feb. 1 — Trustees of New Jersey's financially troubled medical university voted on Wednesday to accept the resignation of its president, Dr. John J. Petillo, but only after he agreed that his $600,000 severance package could be revoked if a federal investigation of the university finds evidence that he should have been fired.

Dr. Petillo, who was appointed to the board of the University of Medicine and Dentistry of New Jersey in 2003 and became the university's interim president a year later, announced his resignation last month after an assortment of revelations that the institution had overbilled Medicaid by nearly $5 million, spent hundreds of millions of dollars on no-bid contracts, and lavished perks on board members, administrators and their political allies.

The University of Medicine and Dentistry's widely publicized financial irregularities have attracted scrutiny from an array of government officials, including Gov. Jon S. Corzine, who last week demanded the resignation of 25 senior administrators.

In the United States Senate, leaders of the Finance Committee this week demanded a briefing on how the university has spent hundreds of millions of dollars in federal aid, saying they were "alarmed and deeply troubled" by the allegations.

Investigators have now added to their list questions about $36.8 million in state funds that were sent to the university last year but are not accounted for.

The United States attorney for New Jersey, Christopher J. Christie, has been investigating the allegations for nearly a year, and in December threatened to indict the university for Medicaid fraud unless administrators agreed to let a federal monitor oversee its finances.

It was that monitor, Herbert J. Stern, a former federal judge, who urged trustees not to approve Dr. Petillo's severance package unless he agreed to cooperate with the federal inquiry and forfeit the $600,000 if it uncovered any evidence of conduct that might have led to his dismissal.

John P. Inglesino, who represented the monitor at the board meeting, said there had been no evidence of any wrongdoing by Dr. Petillo. Governor Corzine, who in his first day in office pressed Dr. Petillo to step down, also issued a statement praising his recent efforts to improve the university.

But the pressure exerted on Dr. Petillo from the state and federal levels offers the clearest indication yet that the institution, which describes itself as the nation's largest health sciences university, is in the early stages of a drastic overhaul.

Eric S. Pennington, the interim board chairman, told the university's faculty members, employees and patients this week to brace themselves for upheaval. "We want to uncover as many problems now, address them, take care of them and move forward," he said after the meeting.

January 31, 2006
Metro Briefing | New Jersey: Newark: Senators Seek Data On Medical School

Ranking members of the Senate Finance Committee have requested information on finances at the University of Medicine and Dentistry of New Jersey from the governor and federal Medicaid and Medicare officials, the committee announced yesterday. In letters to the governor and federal officials, Senators Chuck Grassley and Max Baucus said they were seeking assurance that the state would reverse problems that led to allegations of mismanagement and fraud.

March 26, 2005
An Unlikely University Grant at an Unlikely Time
By JOHN SULLIVAN, NY TIMES

At a time of tightened belts and tuition increases at the University of Medicine and Dentistry of New Jersey, its president, John J. Petillo, awarded an unusual grant to an organization run by an influential Newark community leader.

University records show that Dr. Petillo, while serving as acting president last November, awarded a $95,000 grant to a nonprofit organization run by Stephen N. Adubato, president of the North Ward Educational and Cultural Center in Newark. The grant was for a program for the elderly in Newark called Casa Israel.

It was the first time a president had awarded a grant to an organization that was not affiliated with the university, said Susan Preston, a university spokeswoman. It was given without a public competition, and with no specific description of how the money would be spent, she said.

Responding to questions about the grant, Ms. Preston said some of the university's schools had awarded grants in the past to nonaffiliated groups. But after more than a week of checking, she said, university officials were not able to identify any such grants.

Dr. Petillo, who was appointed president of the university in mid-November, is scheduled to be installed in a weeklong series of celebrations next month. The presidency, which pays $575,000 a year, puts Dr. Petillo at the helm of the nation's largest public health care university. With 5,000 students enrolled in eight schools of medicine, nursing or other biomedical sciences, and with eight teaching hospitals, the university is a veritable industry in Newark, and one of the city's largest employers.

A substantial portion of the university's budget, more than $200 million annually in recent years, is provided by the state. Like the state itself, it is facing financial pressures - in the last two years, tuition has increased 13 percent. In the 2004-5 academic school year, tuition and fees cost state residents about $23,000 a year, and about $33,000 a year for nonresidents.

Casa Israel was formed four years ago by Mr. Adubato's group, the North Ward Educational and Cultural Center. A day care center for elderly people who do not require placement in a nursing home, Casa Israel offers some medical services and counseling, and serves about 100 people a day, Mr. Adubato said in a recent interview.

"These are the poorest people and the sickest people in the state of New Jersey," he said.

Mr. Adubato said services at Casa Israel were usually covered by Medicare, but the grant from the university was being used to cover the expense of counseling and monitoring people who were waiting for their Medicare coverage to be approved.

"In a sense, we can beat the bureaucracy," he said.

Dr. Petillo agreed that the money was for a good cause. He said the grant was intended to help a "community that is uninsured and falling though the cracks."

Casa Israel was selected to receive the money in part because it was the largest group providing day care for the elderly in Newark, Dr. Petillo said. But when asked how the university was able to determine that fact without considering grant proposals from other groups, Dr. Petillo cut short an interview, saying he had other appointments. Ms. Preston, the university spokeswoman, responded to all further inquiries.

The College of Medicine and Dentistry of New Jersey was formed by the State Legislature in 1970 and was changed to a university in 1981. According to the National Science Foundation, it ranks 77th among universities in terms of federal research funds, a common benchmark for the quality of a medical school. Patients visited the university's hospitals more than two million times last year, and University Hospital, the primary teaching hospital in Newark, treated roughly 80,000 people in its emergency room, according to the university's Web site.

Two years ago, James E. McGreevey, then the governor of New Jersey, said he was unhappy with the university's midlevel reputation and announced plans to merge the school with Rutgers University and the New Jersey Institute of Technology. The plan foundered on opposition from groups in the University of Medicine and Dentistry and in Rutgers.

Governor McGreevey appointed Dr. Petillo as chairman of the board of trustees during that battle. A former Catholic priest, Dr. Petillo served as chancellor of Seton Hall University from 1983 until 1990. After he left Seton Hall, he worked for a series of health care companies and served as chief executive of Blue Cross Blue Shield of New Jersey.

Dr. Petillo was also part of a group of people sued by a bankruptcy trustee overseeing the case of Robert Brennan, the former head of First Jersey Securities who went to prison for bankruptcy fraud and money laundering. The trustee claimed that Mr. Brennan had transferred stock to members of the group to hide it from the bankruptcy court. The case was settled, and Dr. Petillo was not charged with any wrongdoing.

When the position of university chairman opened, Dr. Petillo was working as chairman of the Newark Alliance, a business group that supports the development of Newark. Dr. Stanley Bergen, who is the university's president emeritus, said Mr. Adubato was an early supporter of Dr. Petillo. Dr. Bergen said he and Mr. Adubato compiled a list of candidates for the position and sent them to Governor McGreevey. Dr. Bergen said Mr. Adubato wanted to include Dr. Petillo because he was a supporter of Newark.

"He saw John as a Newark guy, and if there is one thing about Adubato, he is loyal and committed to Newark," Dr. Bergen said. "That is why he was pushing him."

Mr. Adubato has a different recollection. He said that he had known Dr. Petillo for years and thought highly of him, but he said he never spoke to Dr. Bergen, or anyone else, about Dr. Petillo's appointment.

"I thought he was a good choice," he said. "But I had no influence and spoke to no one about him being there."

Mr. Adubato is a longtime community leader in the city and, although he does not hold public office, he does have political influence. His annual St. Patrick's/St. Joseph's day dinner, for example, is attended by leaders of both political parties, from Acting Gov. Richard J. Codey to United States Attorney Christopher J. Christie.

"I have always been involved in politics," Mr. Adubato said. "Frankly, that is one of the strengths of the organization."

Last fall, Mr. Adubato asked the university for $150,000 to support Casa Israel. But the university does not typically give grants to organizations that are not connected with it. In fact, the request was so unusual that there was no grant application to fill out; Mr. Adubato's organization typed its own request, Ms. Preston, the university spokeswoman, said. Mr. Petillo wrote a letter to Mr. Adubato, informing him that his organization would receive the money.

"Dear Steve," Dr. Petillo wrote in a Nov. 4 letter, "as per my letter of October 7th, I am enclosing a check for $95,000, which reflects the support from the University of Medicine and Dentistry of New Jersey for the general operations of Casa Israel."

In the letter, Dr. Petillo then asked Mr. Adubato to send reports to the university, at six months and a year, detailing how the money was spent. And he asked that a representative of Casa Israel contact the dean of New Jersey Medical School, Russell Joffe, "to discuss a possible educational partnership."

But Dr. Joffe said earlier this month that he had never heard of the letter and had not been contacted about the $95,000 grant to Casa Israel. He said he had not received any reports regarding the grant.

"The medical school has no educational arrangement with Casa Israel and there is no negotiation about one right now," Dr. Joffe said.

Ms. Preston, the university spokeswoman, said the university's nursing school does send a group of students to Casa Israel once a week as part of a class. She said the program started two months ago, but she did not know whether it had anything to do with the grant to Casa Israel.

Mr. Adubato said the university had once before offered to provide money to Casa Israel, before Dr. Petillo took over. However, they could not agree on financing terms.