Audit of UM's medical school raises questions 'Double-dipping,' travel, expense maneuvers cited

June 30, 1992|By John W. Frece | John W. Frece,Staff Writer Staff Writer Marina Sarris contributed to this article.

ANNAPOLIS -- Legislative auditors say they have uncovered a variety of questionable financial practices at the University of Maryland's School of Medicine, including an employee double-dipping on expenses and commandeering a state car to run a private courier service.

The audit also raises questions about practicing physicians who teach at the school claiming as "normal operating expenses" nearly $400,000 they spent on tuition for family members and tickets to sporting events.

These physicians share fees from their private practices with the school. By counting as operating expenses $362,704 spent on tuition and $27,184 on tickets, the physicians effectively reduced the size of the pool of fees they must share 50-50 with the university's development fund, the auditors concluded.

The two-part audit, dated March 2 and June 3, says an unidentified high-level employee of the Department of Pathology took 17 separate out-of-state trips to attend conferences encompassing 55 workdays and at a cost to the state of $17,162.

Moreover, the employee double-dipped for reimbursement for $1,832 in travel expenses, accepting repayment on at least four occasions from both the professional organization to which the employee belonged as well as from the Baltimore campus.

Auditors brought the discrepancy to the attention of the campus president, Dr. Errol L. Reese on Nov. 5, 1991. Within two weeks, the employee agreed to repay $1,559 for duplicate airline ticket reimbursements. But he repaid the outside professional organization, not the university.

University spokesman David E. Taylor said school officials believe the double-dipping "clearly was inappropriate" and said the employee no longer works for the university. Citing privacy restrictions, Mr. Taylor declined to identify the employee or say whether he was fired or resigned.

The same employee also was cited in the audit for setting up a private, profit-making courier business -- called "Prompto" -- that employed state personnel and used a $10,000 state-owned vehicle for deliveries, Mr. Taylor said.

Two employees and one former employee made approximately $39,000 in "private gain" from the courier business before it was halted by university officials in February 1992, according to the audit.

"Once the university heard about that, it was stopped immediately," said Mr. Taylor. "That was clearly inappropriate."

But Mr. Taylor said the case is much less clear-cut on the issue of the physicians' operating expenses.

The money in question was generated by the physicians' private practices and does not belong to the university, he said, but added that the school agrees with the auditors that the issue of what constitutes "normal operating expenses" should be re-examined. Under the university's Medical Service Plan, there are 16 private-practice associations organized around the School Medicine's departmental specialties, such as anesthesiology or pathology.

The gross income generated by each association is put into a pool. A 7.5 percent share is redistributed to the Medical School Enrichment Fund for operational support of the school. After normal operating expenses are deducted, half of the remaining gross income of each association is to be distributed to a separate Departmental Development Fund to support each department's education and research mission.

"While we recognize the benefits of establishing such a plan, we question if items such as tuition payments for family members and tickets to professional sporting events should qualify as normal operating expenses," said chief legislative auditor Anthony J. Verdecchia.

He also said auditors were unable to determine if there were other questionable expenditures because they were denied unrestricted access to association accounting records. He is awaiting a requested attorney general's opinion on whether such records should be open to auditors.

Sen. Julian L. Lapides, D-Baltimore, co-chairman of the General Assembly's Joint Budget and Audit Committee, said, "I think the University has been notorious in the past in attempting to stonewall the legislature with regard to funds they funnel into university-related foundations."

"There appears to be a number of highly questionable activities that have been engaged in," he said. "I believe it's incumbent on the university to open the foundation books in this regard."

In other findings, the audit noted:

* That since 1988, Dr. Benjamin F. Trump, chairman of the Pathology Department, and other department employees have spent at least 10 percent of their workdays soliciting corporate donations, maintaining records and organizing an annual conference on cancer for scientists, educators and researchers held in Aspen, Colo.

In so doing, the department has collected as much as $187,583, which has been deposited in private bank accounts established outside the normal accounts of the state treasury. A non-profit corporation, with Dr. Trump as its head, was set up last July to administer the conference; and campus employees control expenditures, with faculty members signing checks, the audit said.

Auditors said among the more questionable expenditures were: $41,207 in payments to a resort in Aspen.

Auditors recommended that the campus investigate the propriety of the "unsubstantiated and/or questionable expenditures and take appropriate action to recover any amount found to have been improperly expended."

* The Department of Pathology also went into the photocopying business, leasing or purchasing 43 photocopying machines and then renting copying services to other campus departments.

Auditors said the campus could have obtained the same services at less cost through the state's regular procurement process.

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