Following revelations of a $500,000 children’s book deal with the University of Maryland Medical System, Baltimore Mayor Catherine Pugh announced Monday morning that she is resigning her seat as a University of Maryland Medical System (UMMS) board member.
In a statement, Pugh said it “has been an honor to have been associated with the important work of the UMMS Board, but the fact is, I have many other pressing concerns that require my full attention, energy, and efforts.”
Pugh also praised the work of the University of Maryland Medical System. She did not mention her controversial children’s book deal, which has prompted outrage from Baltimore voters and rebuke from Maryland lawmakers in the General Assembly. In recent years, the UMMS system upon whose board she has sat for 18 years, approved the purchase of 100,000 copies of her Healthy Holly children’s book.
Since Sun reporter Luke Broadwater broke the story last week that Pugh and eight other members of the University of Maryland Medical System Board of Directors had business deals with the hospital network, the mayor has been forced to amend seven years of financial disclosure forms with the state ethics commission. State Sen. Bill Ferguson, a Baltimore City Democrat, has called on Pugh to return the money she's received back to medical system.
Speaker of the House Mike Busch, a Democrat like Pugh, also sits on the UMMS board and said that the board was not aware of the private deals others entered into the with hospital system. “Candidly, I was shocked,” Busch told The Sun, regarding the contracts. “I’m outraged the University of Maryland Medical board had individuals on it who were greasing their whole palms by getting contracts with the medical [system]. It was never, ever brought up in a meeting that there were these contracts.”
Legislation introduced by Baltimore City state Sen. Jill Carter, a Democrat, would make it illegal for board members to profit from contracts with the hospitals they govern. Carter told The Sun her bill intends to bring “renewed commitment” to the “best practices of public and private service to the University of Maryland Medical System.” She added it also would prohibit members from “intentionally using the prestige of office or public position for that member’s or another’s private gain.”
The two University of Maryland Medical System board members with the largest financial relationships with hospital network, according to The Sun, are M&T Bank executive August Chiasera, who reported $7.4 million in revenue for the bank from UMMS contracts, and former state Sen. Francis X. Kelley. Kelley’s insurance company reported $4.4 million in revenue from UMMS revenue over the past two years.
Meanwhile, Maryland legislators from both parties are seeking an audit of the University of Maryland Medical System. Gov. Larry Hogan said in a statement that he planned join Senate President Mike Miller and Busch in demanding answers from the UMMS leadership regarding their financial arrangements with the hospital network.
“Like many Marylanders, I have been a patient in the medical system, and I have great affection and respect for the doctors and nurses who serve there,” Hogan said. “That’s why it is so disconcerting to hear that several members of the system’s board have significant financial dealings with these hospitals. These transactions for personal profit damage the public trust. It is not just unseemly, it is appalling, and I have called for an immediate and full review.”
In a statement emailed to Baltimore magazine, Pugh defended the quality of her children’s books, saying they have been featured at the Baltimore Book Festival and Children’s Book Festival in Philadelphia, her deal with the UMMS board, and disclosures. She noted that the University of Maryland Medical System, several years ago, bought and then donated some 20,000 of her children’s books to Baltimore City school children through her company, Healthy Holly LLC.
Anne Fullerton, spokeswoman for the Baltimore City Public School System, confirmed a donation of Pugh’s children’s books from the University of Maryland Medical System, but was unable to track down the exact number or year they had been given. Fullerton also told Baltimore that the donation had not been sought by the school system, nor were the books used as part of any curriculum.
According to Pugh’s statement, her books cost $4 each to print and ship, and that, by charging $5 per book, she earned $1 of profit on each purchase by the UMMS board, which ultimately ordered 100,000 copies between 2011 and 2018.
“I have fully conformed with all disclosure requirements as a board member of the University of Maryland Medical System,” said Pugh. “If it is the decision of the General Assembly to change those requirements, I will, of course, comply with any and all new regulations. In the meantime, I hope that my books have been inspiring and instructive to our young people who need and deserve every indication that we care for them and their future.”
University of Maryland media relations director Michael Schwartzberg emailed the following statement to Baltimore:
“UMMS is in compliance with all IRS filing requirements and has properly disclosed each transaction as required in statute; the threshold for reporting on Form 990 is business transactions that exceed $100,000 per year. There are no contracts for the purchase of the Healthy Holly books, which is a sole-source purchase given the uniqueness of the book.
According to our financial records, the Medical System has purchased 100,000 books since 2011 at a total cost of $500,000. The Medical System strongly believes in and supports promoting healthy lifestyles for Baltimore’s schoolchildren.”
As reported previously by the Baltimore Brew, Pugh’s financial and political ties to the University of Maryland Medical System go beyond books—three UMMS directors loaned Pugh $200,000 in the run-up to the April 2016 Democratic primary. The infusion of funds allowed Pugh’s “campaign to offer free meals, transportation to early polling sites and money—what opponents decried as ‘walk-around” money’—to precinct workers who brought voters to the polls,” according to the Brew.
Pugh won a narrow victory because of her early-voting margin over former Mayor Sheila Dixon. Pugh legislative aide Gary Brown was found guilty of two counts of making illegal campaign donations in the 2016 campaign.