Cobble Hill

SUNY Downstate wasted thousands on consulting company that oversaw LICH closure

August 12, 2016 By Mary Frost Brooklyn Daily Eagle
The state Comptroller’s Office released a damning audit of fees paid to the consulting company that oversaw SUNY Downstate Medical Center’s closure of Long Island College Hospital, shown above. Photo by Mary Frost

On Aug. 8, the state Comptroller’s Office released a damning audit of fees paid to the consulting company that oversaw SUNY Downstate Medical Center’s closure of Long Island College Hospital (LICH).

The audit found that Downstate authorized a torrent of cash to the Baton Rouge, Louisiana-based Pitts Management Associates, and criticized the financially troubled Brooklyn institution’s slipshod financial oversight.

State Comptroller Thomas DiNapoli said in his report that during a six-month period studied in 2014, Downstate approved tens of thousands of dollars in unmonitored spending by Pitts for expensive hotel rooms, extravagant dinners, limo service and booze.

DiNapoli also criticized the Downstate bill approval process that rubber-stamped nearly any expense Pitts submitted. From December 2012 to Aug. 9, 2016, SUNY paid Pitts almost $37 million for consulting services.

For example, Downstate approved Pitts’s requests for reimbursement for two consultants to stay in Manhattan at The Carlyle Hotel at rates of up to $1,419 and $601 per night, respectively.

Downstate also approved hotel charges for a consultant who reserved a hotel room on a monthly basis, adding up to $14,193 for lodging expenses, even though the consultant had traveled home for the weekend and did not require overnight accommodations.

The Comptroller’s Office theorizes that this consultant may have overbooked the hotel room in order to earn up to 997,490 reward points over the 12-month period he was contracted to Downstate.

Pitts also billed SUNY for their own “team dinners.”

For example, 13 Pitts employees had a team dinner at Docks Oyster Bar and Seafood Grill on May 20, 2014. Pitts submitted a non-itemized receipt for that team dinner totaling $2,039. The investigation found that almost $400 of this was for alcoholic drinks.

Downstate also approved a $3,867 reimbursement for “meals for LICH staff.” Downstate approved the expenses for “security reasons” and the business purpose was defined as “LICH Administration.”

Pitts billed the state $32,500 worth of software license costs and more than $9,000 in legal fees, claiming them as consultants’ travel and out-of-pocket expenses, and close to $16,000 for limousine and car service fees. At times, limo drivers waited for hours outside of restaurants, racking up hundreds of dollars in extra fees.

“We also found several instances where the president of Downstate did not act in the best interest of the state” when dealing with Pitts, the audit says.

Williams himself attended a six-day birthday celebration in Bermuda for Pitts’ CEO — and charged his airfare to his state-issued credit card. Williams reimbursed the state for the airfare two months after his trip, “which was more than one month after our auditors questioned the expense,” the audit says.

When the auditors questioned these expenses, Downstate staff provided a response from Pitts stating the charges were “normal and customary.”

Par for the course

Lack of financial oversight seem to be par for the course at Downstate. Documents show that after taking over LICH in May 2011, Downstate’s failure to file standard paperwork with insurance companies cost LICH at least $106 million, leading SUNY to declare that LICH was a money loser. (See the in-depth investigative report “Shocker: How SUNY lost more than $100M mismanaging LICH.”)

The Comptroller’s Office issued a number of recommendations to SUNY to repair what it called “the breakdown in internal controls and the deficient control environment” still in existence at Downstate.

SUNY’s chief financial officer Eileen McLaughlin told Dinapoli’s office that “efforts are underway” to make the changes recommended by the comptroller.

She partially excused the overspending and lack of oversight, however, by saying that Downstate was in a state of chaos during the time period studied: several members of the leadership team had resigned, and Downstate was trying to close LICH in the midst of “multiple court actions, hearings, media, petitions, protests and government intervention.”

United University Professions President Frederick E. Kowal called for full transparency of SUNY and its institutions in light of Dinapoli’s report.

“These corrupt activities involving Pitts occurred at a time when highly trained, highly effective professional staff, doctors, researchers, and faculty at Downstate were forced to take on increased workloads as Pitts made wholesale staff cuts,” said Kowal.