Hackensack UMC - Record - Deep Dem Connections

Published on NorthJersey.com, Sunday, April 26,2009

Tangled web of power: Hospital's influence reaches far

Sunday, April 26, 2009
Last updated: Sunday April 26, 2009, 11:43 AM

BY MARY JO LAYTON
NorthJersey.com
STAFF WRITER

The trial of former state Sen. Joseph Coniglio, convicted in a bribery scandal involving Hackensack University Medical Center, exposed the hospital’s reach into the State House — and put a spotlight on the wealthy, influential men who serve as the hospital’s power brokers.

Hackensack’s board members have connections and political muscle that extend far beyond the hospital. At black-tie fund-raisers and dinners at board member Joseph Sanzari’s Stony Hill Inn, business — hospital and otherwise — is on the agenda.

Various board members help to underwrite Bergen County’s Democratic machine and powerful lawmakers in Trenton. They’re awarded many of the region’s public construction contracts. They have the network — and the money — to smooth over zoning issues for the hospital. Testimony at the trial this month showed they supported the hiring of Coniglio, who was convicted of steering millions in grants to Hackensack while on the hospital’s payroll.

"A political machine" is how Assistant U.S. Attorney Thomas R. Calcagni described the hospital as he told jurors about Hackensack’s relationships with former acting governor and Senate President Richard Codey, state Sen. Paul Sarlo, Coniglio and others during the trial.

"There are board members who could pick up the phone and call the governor and say, ‘I need help on this,’ " Coniglio’s defense lawyer, Gerald Krovatin, said at the trial.

The hospital’s most powerful board members include major contractors Sanzari and J. Fletcher Creamer Jr., whose political roots run as deep as their wallets. Joseph Simunovich, who rose up through the Hudson County political arena to become chairman of the New Jersey Turnpike Authority and a fund-raiser for Sen. Bob Menendez, is also a key member of the hospital’s inner circle of decision makers. With their help, John P. Ferguson, the hospital’s president and CEO, has taken what was once a community hospital and built it into a $1 billion enterprise — the busiest and, in many ways, the best hospital in the state.

But while Hackensack’s board members are generous donors — and prolific fund-raisers — some are also making money off the hospital. It’s a practice that is frowned upon by health care experts and outright banned at some hospitals in North Jersey, where officials say it crosses an ethical line.

A few examples from the hospital’s federal tax filings for 2007, the latest available:

* Companies owned by Sanzari and Creamer are building a 975-car garage as part of the $135 million cancer center now under construction. Creamer was paid more than $475,000 by the hospital for construction services.

* The hospital paid more than $2 million to Progenitor Cell Therapy, a private stem cell research company owned in part by Ferguson; Dr. Andrew Pecora, director of the cancer center; board members Peter C. Gerhard, George T. Croonquist and Samuel Toscano Jr.; and the hospital’s chief operating officer, Robert C. Garrett.

* The hospital paid $2.5 million to lease space from Sanzari 2001, where board member David Sanzari — Joseph’s cousin — is a managing member with an ownership stake. It also spent $68,000 at the Marriott at Glenpointe hotel, which is owned by David Sanzari’s family.

* The DeCotiis law firm, one of the most influential in the state, made more than $1 million from the hospital. It is representing the hospital in the Coniglio case and guiding its campaign to reopen Pascack Valley Hospital in Westwood. During that time, Frank Huttle III, a partner, served on the board. He said Friday that he resigned recently.

* Universal Health, which operates a retail pharmacy at the hospital, received $200,000. At the time, Toscano was the company’s chief executive officer.

‘Squeaky clean’ is the goal

These types of arrangements trouble expert Jamie Orlikoff, who said hospitals nationally are moving away from allowing trustees to serve if they do business with their hospital.

"It doesn’t pass the smell test," said Orlikoff, a national adviser on governance and leadership to the American Hospital Association.

"When you govern a hospital, you’re governing the most important asset in the community," he said. "You should be squeaky clean."

Englewood Hospital and Medical Center had its general counsel step down from the board to avoid any conflict, said Douglas Duchek, the hospital’s president. Other than doctors, no other board members are being paid by the institution, he said.

State Sen. Loretta Weinberg, D-Teaneck, is so concerned about the potential for abuse that she introduced a bill in October that requires boards to disclose any potential or perceived conflict of interest. The bill also would require hospitals to solicit bids in awarding any contract for more than $25,000.

"If board members themselves are also making a profit from their association, that information should be fully divulged,’’ she said. "We can actually look at what’s grown up to be cozy relationships and decide whether they’re appropriate."

Assemblywoman Valerie Huttle, D-Englewood, sponsored the bill in the Legislature. Her husband is Frank Huttle, who said he resigned from the board because of time constraints.

Screen of privacy

Despite all the public money that goes to the hospital, it’s considered a private institution. Board meetings are closed and contracts are not disclosed. That makes it difficult to paint a full picture of the business of running the hospital.

The hospital has offered little in the way of comment since the Coniglio trial began. On Friday afternoon, however, it released this statement:

"Community-based institutions throughout the nation rely on the support of local civic and business leaders who serve on their governing boards. Members of the Hackensack University Medical Center board of governors are generous with their time and their financial support, but more importantly have gained the skills to govern a complex institution such as ours. An independent, nationally recognized authority on not-for-profit governance has counseled HUMC for more than five years. The HUMC board’s best practices model includes a rigorous annual disclosure statement and ongoing education. This conflicts of interest policy is enforced by a dedicated committee of the board of governors."

The Record called Creamer, Sanzari, Ferguson, Toscano and other board members for this article, but only one, Simunovich, would speak.

Simunovich said he was "saddened" by the Coniglio verdict, but said board members were not involved in hiring the senator.

"We didn’t sign off on him," he said Thursday. "Board members don’t hire or fire."

He said he had been in Florida and hadn’t paid attention to the trial. "All I got was a phone call that he was found guilty," he said.

There are "no politicians that I know of [on the board]," Simunovich said. "You certainly do have corporate representation, and of course you have people we count on for their advice and guidance."

He did not respond to a question about the possible ethical tightrope walked by board members who do business with the hospital.

Big winners in grant race

The Coniglio trial served as a primer on the backroom politics of New Jersey, where certain grants, known as "Christmas tree items," were doled out based on who has "the juice." By all accounts, Hackensack mastered the game and loomed large in Trenton. From 2004 to 2006, the hospital received $17.4 million for its cancer center, an extra $9 million in charity care above the millions it was already getting and $250,000 for the Joseph M. Sanzari Children’s Hospital. A $900,000 research grant was awarded to the private stem cell firm at the hospital and $70,000 went for a seat belt study.

Those awards dwarf the grants given to Hackensack’s competitors. The Valley Hospital in Ridgewood, for instance, took in less than $1 million a year in both state and federal grants during that time, according to the hospital’s tax filings.

Robert L. Torre, a hospital vice president who was given immunity to serve as the government’s star witness, testified that Ferguson authorized Coniglio’s hiring. Torre, who testified that he didn’t need Coniglio, said that after a conference call with Simunovich, Joseph Sanzari and Ferguson, it was clear Coniglio would be hired.

Coniglio, a former plumber, was paid $103,900 between May 2004 and February 2006 for a low-show "community relations" job at Hackensack. "Hackensack’s personal senator," as he was called at the trial, got a $500-a-month raise after the hospital received checks for state grants, prosecutors said.

But the trial showed the hospital’s reach went further than one legislator. Coniglio’s defense attorney said that Torre had "played Joe Coniglio like a fiddle" to get to Codey. A Dec. 13, 2005, report from Torre to his board of trustees credited Codey, in his role as acting governor, for a $9 million award for the cancer center, and noted $3 million of that grant would be earmarked for The Maureen Fund, established in honor of Codey’s aide, to fight ovarian cancer.

Weight to throw around

The power Hackensack wields comes as no surprise to other hospital executives.

"The trial hasn’t showed us anything we didn’t know. It’s not a level playing field," Duchek said. Englewood and Valley are battling Hackensack’s plan — and its considerable P.R. machine — to open a 128-bed hospital in Westwood, which they say could significantly harm the finances of other hospitals in the region.

Besides its board and its members’ connections, Hackensack has weight to throw around because it is Bergen County’s biggest business and one of the state’s top 10 employers. It boasts marquee physicians providing care that rivals that of the nation’s best hospitals.

Hackensack University Medical Center ranks high in nearly every national and state assessment of patient care. Founded in 1888 with 12 beds and as Bergen County’s first hospital, it now has 775 beds and 7,200 employees.

Its fund raising is the envy of the other hospitals in the region. Benefactors include Don Imus and his wife, Deirdre. Even in these tough times, the Hackensack University Medical Foundation reported a staggering $25.3 million in donations last year.

Hackensack’s president, Ferguson, is ranked 12th — just behind House Speaker Nancy Pelosi — in Modern Healthcare’s list of the most influential health care leaders in the nation.

The 60-year-old Park Ridge resident’s name came up often at the trial as the omnipotent boss involved in every decision. He was never charged or called to testify.

But the case may not be over for the hospital. When asked why hospital executives weren’t charged, Executive Assistant U.S. Attorney Michelle Brown said the investigation is continuing. "I think heads at HUMC should roll," jury foreman Walter Palkocki said. "Their culpability is significant."

Influential roles

At Hackensack, a few names — Simunovich, Ferguson, Sanzari, Creamer — keep showing up in influential roles on key boards. They serve as trustees of the Hackensack University Medical Center Foundation, the hospital’s fund-raising arm, as well as the hospital’s board of governors and Hillcrest Health Service System, the hospital’s parent corporation. Leading contractors and developers — Sanzari, Creamer and John C. Fowler — are on the building committee.

During the trial, a large photo of Simunovich seated next to Codey at a hospital fund-raiser was shown to jurors as an example of his access and influence.

In his closing statement, Coniglio’s attorney credited Simunovich and Sanzari with snaring a $500,000 state grant for the hospital without the help of lobbyists or legislators.

Simunovich is the former chairman of the board of governors and current chairman of the board of trustees for the Hackensack University Medical Center Foundation, the hospital’s fund-raising arm.

Simunovich, the former president of United Water Management and Services, was a Hudson County freeholder for 12 years, three as chairman. He served under three governors on the New Jersey Economic Development Authority and is the former chairman of the Bergen County Economic Development Corp., serving along with Ferguson and Creamer. The corporation was later part of a movement to create a bio-tech development area near the hospital.

Governor Corzine did not reappoint Simunovich to the Turnpike Authority in 2007 after he was investigated by the State Ethics Commission; as chairman, he had voted on millions in public contracts that were awarded to Sanzari while he accepted free rides on the contractor’s private jet. Simunovich paid a $50,000 fine, which was not an admission of guilt.

"Mr. Simunovich’s actions do not reflect the standards demanded by the governor for those who serve in his administration," Corzine’s then-spokesman Anthony Coley said.

During that probe, critics pointed out that a company run by Simunovich’s son-in-law landed a contract in 2005 to renovate a thrift shop run by the auxiliary of the hospital’s foundation. Torre said at the time that Simunovich had nothing to do with that decision.

Big contributor

Joseph Sanzari serves as first vice chairman, the No. 2 position on the hospital’s board of governors.

He’s a generous hospital contributor: He and his wife gave $10 million to the children’s and women’s hospital that bears their names. Just days before the trial began, Sanzari contributed an additional $1 million to Hackensack.

Sanzari, who started his business with two trucks and a backhoe, is a leader in highway construction. His companies have taken in more than $380 million in three years through contracts with public agencies, including the Turnpike Authority, Xanadu, and other entities, according to the pay-to-play databank prepared by the New Jersey Election Law Enforcement Commission. The Ho-Ho-Kus resident is such a prominent contractor that he was once serenaded by Luciano Pavarotti at a builders’ event in his honor.

Sanzari is part owner of both the Stony Hill Inn in Hackensack and the New Bridge Inn in New Milford, popular hangouts for Bergen County’s political elite. Sanzari, his companies and employees have contributed more than $100,000 to political campaigns and political action committees in the past three years, according to data the company provided to state elections regulators.

Among his top employees is state Sen. Paul Sarlo, also the mayor of Wood-Ridge. Sarlo oversees billions in public spending as a lead member of the Senate Budget and Appropriations Committee. As chairman of the Senate Judiciary Committee, he also controls key appointments to state agencies that have awarded millions in contracts to Sanzari’s firms.

Sarlo, chief operating officer for Sanzari’s construction company, testified at the trial that he was largely responsible for getting the $900,000 grant for the hospital’s cancer center. He said he also lobbied Codey for the $9 million cancer center grant and played a role in the $900,000 grant for stem cell research at the hospital.

Deep connections

J. Fletcher Creamer Jr., the chairman of the hospital’s board of governors and vice chairman of the foundation board, also has deep connections in Bergen County.

J. Fletcher Creamer & Son Inc. received more than $84 million in public contracts in Bergen County and elsewhere in New Jersey from 2006 to 2008. The company contributed $152,185 to candidates or committees last year, according to ELEC’s pay-to-play Web site.

Like the Sanzaris, Creamer family members are significant contributors to the hospital: Hackensack’s trauma center bears the name of Jeffrey M. Creamer, the late brother of the current board chairman.

Frank Huttle — who is running for mayor in Englewood — is a partner in the Teaneck-based DeCotiis law firm, whose senior management includes chief counsels to two former governors and has a client roster that ranges from EnCap Golf and Xanadu to scores of public entities. Two partners in the firm attended the Coniglio trial virtually every day to represent the hospital.

Federal tax filings for 2007 identify several other board members who work for companies that do business with the hospital. For instance, the hospital paid North Jersey Media Group, The Record’s parent company, $371,255 for advertising in 2007. Jennifer Borg, vice president and general counsel, serves on the hospital’s boards.

In tax filings, the hospital notes: "Any goods purchased or services performed are done so at fair market value rates pursuant to arms length negotiations." The hospital’s bylaws require members of the board to tell the hospital of potential conflicts of interest and to abstain from voting on such issues, but that information — and even the votes — are not public.

Power over local decisions

Hackensack’s power, its money and its vast web of connections isn’t just in Trenton. It also reaches into the local level and into Washington:

* When the hospital wanted to build a new cancer center over the objections of residents, it turned to Scarinci & Hollenbeck, the influential firm where then-Bergen County Democratic Chairman Joseph Ferriero was a partner. Two of the city’s five council members at the time were members of the county Democratic committee, a third was once a member, and a fourth had a job with the county. A political action committee run by the medical center had once donated thousands to this political team. In addition to those connections, the hospital paid the city $1 million and promised to take over its daytime ambulance services. Ferriero, who is now under federal indictment for conspiracy to commit fraud, notarized the deal, which was witnessed by Sanzari.

* Less than a week after the Bergen freeholders pledged not to take sides in the battle over whether Hackensack should be allowed to reopen Pascack Valley Hospital, they passed a unanimous resolution supporting Hackensack. That meeting was jammed with construction workers led by Richard "Buzzy" Dressel — a board member of Hackensack’s foundation who also is a leader of the county Democratic Party, the business manager of a local union itching for renovation work at Pascack and a partner in Sanzari’s New Bridge Inn. They grabbed all the seats before the session began, so that employees bused in from opposing hospitals were stuck in an overflow room.

* In Washington, Michael Hutton, a lobbyist who had done work for the hospital’s foundation, hosted a swanky reception to celebrate Menendez’s swearing in at the Senate in 2007. Hackensack hospital was among a handful of groups — including Verizon and AT&T — that funded the private celebration, where Simunovich and other partygoers feasted on shrimp and lobster pasta. When questioned later, Torre conceded that non-profit firms are barred from political activity. But this was not a political event, he said. "It was hosted by a third party," Torre said.

Union leader Ann Twomey said the trial "makes it clear there wasn’t enough oversight’’ at Hackensack.

"It’s a matter of making sure the scarce patient-care dollars are going to where they belong and that it’s not being influenced by those who are in the greatest position of power — the board of trustees," said Twomey, president of the Health Professional & Allied Employees, a union that represents employees at several area hospitals.

Twomey said Weinberg’s proposed legislation should outright ban trustees from doing any business with their hospital.

At The Valley Hospital, just one board member — its chairman, the president of a hospital supply company — does business with the hospital, said hospital President Audrey Meyers.

The chairman, Vincent Forlenza, who works at Becton, Dickinson and Co., does not participate in any decisions about purchasing supplies, she said.

The hospital directly bought $83,000 worth of supplies from the company and paid an additional $1.6 million as part of a group purchasing program, Meyers said.

"The Valley Hospital does not allow trustees to do business with the hospital unless a trustee works for a company where the value of our business is insignificant to that company," she said.

Others agree that hospitals need to stay away from mixing business with service on the board.

In the public’s mind, if a contractor who serves on the board is the successful bidder, there may be a perception of insider dealing, Orlikoff said.

"It’s exactly this sticky, one-hand-washes-the-other-hand mess you’re trying to avoid," he said.

Staff Writers Peter J. Sampson, Lindy Washburn, Mike Kelly, Jeff Pillets, Bob Groves and James M. O’Neill contributed to this article. E-mail: layton@northjersey.com

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