Charges Against Health Care Executive Raise Broader Issues

By JIM DWYER

We learned this week from a federal bribery case, of all places, that the going rate in 2008 to park a dying person in a hospital bed in Brooklyn was $772.80. That fee was enough to cover hospice care and, if the charges are true, a payoff to a state senator from Brooklyn.

History tells us that quite a few politicians got rich by awarding contracts for the epic public works of the 19th century, and that graft gave New York City the parks, bridges and reservoirs that have defined it for the ages.

Now, we have State Senator Carl Kruger, who, it is charged, was effectively getting rich on nasogastric tubes. Mr. Kruger has pleaded not guilty, and so has David F. Rosen, the hospital executive accused of being involved in the scheme.

In fact, through his lawyer, Mr. Rosen says that he is more than not guilty, that he is a champion of the poor and the needy, who has moved mountains — and yes, paid a consultancy fee or two to politicians, but never a bribe — to save hospitals in Brooklyn and Queens.

“The media should inquire why it would be necessary to pay bribes to ensure that hospitals in poor neighborhoods dispense quality care to the needy,” said Robert G. Morvillo, the lawyer who has been representing Mr. Rosen during two and a half years of federal investigations. “These hospitals are totally dependent for their survival on help from Albany.”

This is a fair question, to which another might be added: Why it is necessary to pay between $1.5 million and $2 million annually in salary to Mr. Rosen, and proportionally robust salaries to his top assistants?

He is the chief executive of Jamaica Hospital, Flushing Hospital, Brookdale Hospital, and of MediSys, a management company that oversees hospitals. The hospitals are private, but supported heavily or entirely by public financing.

By comparison, the head of the city hospital system is paid $351,000. Mr. Rosen’s salary was approved by the hospital boards after a compensation firm evaluated the appropriate levels, a spokesman for MediSys said on Friday. Mr. Rosen has been working in health care since 1970, which has included periods of rapid escalation in executive salaries.

Nevertheless, New York State, which pays nearly every dime of Mr. Rosen’s wages, has nothing to say about his compensation. That would not change even after an overhaul of the Medicaid system recommended by a task force working for Gov. Andrew M. Cuomo.

The question of bribes to politicians by hospital executives surfaced in 2008, with the arrest of Anthony Seminerio, a member of the Assembly from Queens who had been paid more than $400,000 by Mr. Rosen as a consultant.

From that point on, the hospitals under Mr. Rosen hired teams of criminal defense lawyers to represent various executives and the boards. Much of that cost has been covered through director and officer insurance — bought, of course, with taxpayer money — as well as more than $1 million in fees directly paid by the hospital. In 2009, a year into the criminal investigation, the in-house counsel for the hospitals, Margo Johnson, became concerned that the interests of the hospital were not being served by a lawyer who was reporting to Mr. Rosen on the investigation. She was fired, and has since sued.

Mr. Morvillo said that her case had no merit, and that it was natural for the board and its criminal lawyer to consult with Mr. Rosen about the progress of the investigation, since they all believed that no charges were warranted. He has asked that her suit be dismissed.

However, Ms. Johnson said in an e-mail that her lawsuit “will shine a light on the culture of corruption that exists in Albany and its detrimental effect on health care in New York City.”

A larger question, she wrote, “is about corporate governance, the fiduciary responsibility of not-for-profit boards, and the steps individuals will take to block transparency in an effort to protect their self-interest.”

The announcement of the charges against Mr. Kruger, Mr. Rosen and others has led to calls for Governor Cuomo to seize the moment and demand more ethics reform. More ethics is always good, probably, but we should not count on grafters to suddenly start listing “bribes” under “other income” on financial-disclosure forms.

The Kruger case involves $1 million or so in bribes; the legal fees are several times that. The wages of sin apparently are pretty good. But poverty is a business that pays even better.