AG Raps BIDMC Execs, Board for Levy's Lapses

The Massachusetts Attorney General's Office has chastised the executive leadership and the board of directors at Beth Israel Deaconess Medical Center in Boston for years of inaction before addressing CEO Paul Levy's inappropriate personal relationship with an employee.

Investigators determined that while no laws had been broken, the reputation of the prestigious Harvard-affiliated teaching hospital had suffered a blow.

The 11-page report issued Wednesday by the AG's Non-Profit Organizations/Public Charities Division was requested by the BIDMC board, and focused on whether charitable funds were used inappropriately as a result of Levy's indiscretions, and whether the board acted appropriately in its handing of the matter.

In May, Levy was fined $50,000 and publicly reprimanded by the board after the anonymous complaint was made public.

Investigators found that no misuse of charitable funds related to the matter, and said the employee—a former chief of staff at Beth Israel Needham who was not named in the report—was qualified for the jobs she held, and received compensation that was consistent with the position and her experience.

However, investigators said Levy's personal relationship with the employee, who left in November 2009, created the perception among other employees that her employment, her qualifications for the jobs created for her, and her six-figure compensation package were influenced favorably by that relationship.

Levy hired the employee when he joined BIDMC in 2002 and their relationship continued throughout her tenure, despite warnings dating back to 2003 from some board members and executives that the relationship was raising concerns. No action was taken, however, before the employee resigned in November, 2009.  Investigators said BIDMC leadership waited too long to act.

"Had (Levy) been called on his failure to act, or had his failure to act been reported to the entire board, this acknowledged 'lapse of judgment' might never have occurred. For senior managers who reported to Levy, demanding a response was likely difficult. For board members, it was their job," Assistant Attorney General Jed M. Nosal concluded in the report.

Nosal said that respect for Levy and his accomplishments may have created a level of deference from the board that colored their better judgment. "Oversight of management is a primary duty and responsibility of a governing body and this unfortunate and preventable situation should serve as a stark reminder to all boards of the importance of diligent and independent management oversight," Nosal said.

The AG's report is sure to reignite debate over whether Levy—who until the complaint was made public, was an outspoken proponent of hospital transparency—should remain on the job. Hours after the AG's report was made public, the Massachusetts director of the National Organization for Women and the executive vice president of the Service Employees International Union 1199—which represents some BIDMC workers—said in a joint statement that they were "shocked by the facts in the report that demonstrate a clear pattern of governance failures by both the CEO and the board chairs."

"Many CEOs and board chairs in the private sector have been rightfully fired for much less. Taxpayers have a right to expect at least equal standards for public charities and for the executives of hospitals that receive millions in subsidies, and which is a key institution of the public trust," said SEIU's Veronica Turner, and NOW's Christina Knowles.

The two women said they would hold "emergency meetings on Thursday to determine what next steps we should take to ensure accountability for the many troubling facts and disturbing questions raised by this report."

The SEIU has been in conflict with BIDMC since before the Levy complaint and has been actively attempting to unionize in Boston teaching hospitals.