Scandal at UMDNJ

Scandal at UMDNJ
By AMOD CHOUDHARY

Last month, the country’s largest public university for health--University of Medicine and Dentistry of New Jersey (UMDNJ)--was forced to accept monitoring of its finances and other matters by the ex-Federal Judge Herbert Stern. His charge is to clean up the financial and ethical mess UMDNJ finds itself in over many of its questionable and illegal practices.

As a recap, Chris Christie, U.S. Attorney for New Jersey has alleged that UMDNJ systematically over billed Medicaid and Medicare in the amount of approximately $4.9 million. The US Attorney has also questioned the University’s accounting practices, no-bid contracts, salaries and perks for its Executives, and deliberate destruction of important documents pertaining to on-going investigations by an insider.

Obviously, all these allegations are very damning for UMDNJ. For example, take the document destruction allegedly by an UMDNJ insider. One may recall that as recently as three years ago, accounting firm Arthur Andersen and Enron were accused of the same, and are no longer around. Fortunately for UMDNJ, its staff and the patients, the U.S. Attorney for now has spared UMDNJ the fate of Arthur Andersens and Enrons.

Before I go further, one must look at how UMDNJ got into this mess. There is one simple answer—political corruption and interference. The problem started and as reported by the Star Ledger, when a $75,000 no-bid contract payment was made to a Jim McGreevey fundraiser. Another fundraiser for the Republican Party received $1 million through no-bid contract that was renewed six times for enhancing the recognition and reputation of UMDNJ.

One wonders where were the UMDNJ trustees who approved these expenses and over saw the over billing of Medicare and Medicaid? This is more mind boggling in sense that the University trustees are educated professionals, lawyers and ex-Judges. Again, politics comes to the fore. The Governor appoints the trustees of UMDNJ, and many were probably made trustees for doing favors to the appointing Governor or their Party.

Moreover, in August 2005, the Star Ledger again reported that 5 of the then 11 UMDNJ trustees had conflicts of interest. One of them was a lobbyist with UMDNJ as her client, another is lawyer who was counsel for financing of a dormitory building project, another trustee is building a dorm for the UMDNJ, another trustee is a Chairman of a competing hospital system, and finally another who is an elected official of Newark with contracts with UMDNJ. In summary, all these trustees had something to gain by their position at UMDNJ. Following the intervention of the U.S. Attorney and the negative publicity from the ongoing investigation many of the trustees have resigned. It is worth mentioning that Acting Governor Codey came out with an Executive Order that prohibits New Jersey Public University/College Presidents and Board Members and their relatives from doing business with institutions they govern or are employed by.

Unfortunately, the Executive Order does not go far enough and leaves out other institutions that are not “Public Universities and Colleges”. For example what about other health institutions that are tax payer supported and have Board members who have conflicts of interest?

The question arises as to how to prevent this from happening again, not just at UMDNJ but other tax supported institutions?

By law, New Jersey has an Executive Commission on Ethical Standards (ECES) that is supposed to prevent ethical violations and conflicts on interest. Unfortunately, the ECES is limited in scope does not have any real power. The composition of the ECES is itself questionable—out of the 9 members, 7 are members of the Executive Branch and two are independents. In other words, again the ECES is controlled by the Governor and applicable only to state employees and officers of the State Government. I would hope that legislature would improve the functioning and funding of ECES such that all its members are truly independent, encompassing all tax supported entities (including major non-profit organizations) and have the power to recommend civil and criminal sanctions for any violations.

Therefore, before anyone is offered a trustee position in tax-supported organizations, the trustee candidate would have to file a declaratory statement listing their (including close relatives) business and professional relations to the ECES. After a careful review, the ECES would either reject or approve the trustee candidate and also require the approved candidate to notify the ECES in writing of any subsequent change in their conflict of interest status. Finally, if there is violation of the Ethics laws or misrepresentation by any Board Member or the trustee, ECES shall be able to impose civil and criminal sanctions.

For the past year, New Jerseyans have been subjected to a slew of serious ethical violations at the expense of taxpayers by the educated and elite of New Jersey. Only by extending the reach of and providing financing of the ECES, the Legislative and Executive Branch of the State can restore some credibility to itself and many of the hard working persons who volunteer their time for many organizations.