BALTIMORE — Maryland's governor signed fast-tracked legislation Thursday to overhaul a major medical network's board of directors following revelations of numerous questionable financial arrangements involving board members, including Baltimore's mayor.
Mayor Catherine Pugh, who joined the volunteer board in 2001, has become the public face of the University of Maryland Medical System's "self-dealing" scandal. Beginning in 2011, Pugh somehow sold $500,000 worth of her self-published children's books to the $4 billion hospital network. And as an influential state senator before becoming mayor in 2016, Pugh had sponsored and co-sponsored several bills that would've benefited the regional system.
But Baltimore's No. 1 official wasn't the only member who had a lucrative relationship with UMMS: One third of the more than two dozen board members received significant compensation through the network's murky arrangements with their businesses, ranging from pest control to insurance and management consultation.
Gov. Larry Hogan said the emergency legislation he signed will bring "much-needed reforms and transparency" to a board that oversees one of the state's largest private employers, with roughly 25,000 workers and 4,000 affiliated physicians.
"There cannot even be the appearance of impropriety from those connected with the hospital system, especially in positions of such importance," Hogan said.
The new law bars board members from getting contracts without a bidding process. It prohibits board members from leveraging their position on the board for personal gain, and board members must attest to any business relationship with the medical system. It requires an audit of contracting practices, and each board member will be required to submit an annual financial disclosure report. It scraps a rule requiring a certain number of voting board members to be General Assembly members.
The legislation also says all the remaining board members must step down and reapply for their positions, if they want to return. The governor will appoint voting members of the board, and the state's Senate would have to confirm them.
The Republican governor called the law a "good first step," but he said more needed to be done.
"I remain committed to holding UMMS leaders accountable, and I will appoint board members who will serve with integrity and transparency," said Hogan, who signed nearly 200 other bills into law Thursday.
Sen. Jill Carter, a Baltimore Democrat who sponsored an initial reform bill that exposed "self-dealing" by UMMS board members, agreed that more work was needed.
"I think that type of non-transparent self-dealing will soon be a thing of the past — not just with UMMS but all similar entities throughout the state of Maryland. We'll take a look at other boards as well as the nonprofit industrial complex," Carter told The Associated Press in a text.
John Ashworth, the UMMS interim leader, said he's committed to implementing the various reforms during his tenure.
"UMMS will activate the work outlined in the bill. There is clearly mutual alignment among all interested parties to optimal, long-term governance and accountability," said Ashworth. He became acting leader late last month after UMMS CEO Robert Chrencik was asked to take a leave of absence.
Pugh went on a leave of absence from City Hall on April 1, the same day Hogan asked the state prosecutor to investigate her "Healthy Holly" book deals, including the $500,000 in bulk sales to the UMMS. There was no contract backing the book deal, and the hospital network described some of the purchases as "grants" in federal filings.
Last month, Pugh resigned from the UMMS board and returned the most recent $100,000 she received from the medical system, citing the book arrangement as a well-intentioned but "regrettable mistake." Customers for her children's books also included health carriers doing business with Baltimore.
Pugh cited deteriorating health from a pneumonia bout as the reason for her indefinite leave, and her spokespeople say she fully intends to return to City Hall once she feels stronger. It's not clear how long the criminal investigation into her actions will take.