Dr. Schmoke's delicate city contract Service pays group led by mayor's wife

August 19, 1996|By Scott Higham and Eric Siegel | Scott Higham and Eric Siegel,SUN STAFF

Mayor Kurt L. Schmoke's wife is president of an eye-care practice that has received more than $2.2 million from a nonprofit group that has a city contract to treat tens of thousands of elderly Medicare patients in Baltimore, records show.

The mayor has disqualified himself from any decisions involving the nonprofit group. He also has received a city ethics opinion finding no conflict of interest with Dr. Patricia L. Schmoke doing business with the group.

Discussions of Dr. Schmoke's involvement in the contract surfaced during a City Council meeting in May, when city Health Department officials proposed transferring a city-owned building to the nonprofit group in exchange for $1.

Asked about his wife's relationship with the group, Schmoke said: "I'm not troubled by this at all."

The chief of the nonprofit group acknowledged that he was worried about appearances when Dr. Schmoke bid on the contract, saying "it was a difficult position to be in" and he was "nervous about the ramifications."

Outside ethics experts and legal scholars interviewed by The Sun made it clear that the contract poses delicate, difficult ethical questions. Some agree with the mayor -- including the former counsel to the U.S. House of Representatives -- while others say the mayor's wife should not profit from a group that holds a contract with the city.

"At the very least, it creates the appearance of impropriety and reduces the respect for government," said William I. Weston, associate dean of the Florida Coastal School of Law in Jacksonville and formerly a senior ethics fellow at the University of Baltimore School of Law.

Dr. Schmoke is an ophthalmologist and president of a private partnership called Metropolitan Eye Associates. It provides exams, glasses and other eye services to elderly patients as part of a contract between the nonprofit group and the city Health Department.

The partnership, which won the work through competitive bidding, consists of members of Dr. Schmoke's medical practice and a group of optometrists, Weinstein Eye Associates. In exchange for treating patients in East Baltimore, the partnership receives Medicare payments that are passed through the Health Department by the federal government.

The payments are then split between Dr. Schmoke's medical practice and the optometry group.

Records show that Dr. Schmoke's medical practice received about $950,000 out of the $2.25 million in Medicare payments made to Metropolitan Eye Associates by the nonprofit group since 1992. Dr. Schmoke receives a third of all profits from her Baltimore medical practice, Kidwell, Schmoke & Bryant.

But the true value of the eye-care contract is much higher, according to doctors and others familiar with the arrangement between eye-care professionals and the nonprofit group -- called Baltimore Medical System (BMS).

Not included in the payments by BMS are hundreds of thousands of dollars an eye-care contractor can make from surgeries performed on patients who are examined in the clinics run by BMS. Those surgeries to correct cataracts and other vision problems are performed outside the clinics and billed directly to Medicare.

The ophthalmologist who previously held the contract said its value was two, sometimes three times higher than what is shown on BMS' payment records. In the last year of his contract, Dr. Arturo G. Aglubat said he performed nearly $700,000 worth of eye surgeries on patients he met at the clinics -- 2 1/2 times more than the amount he was paid by BMS.

"It was very lucrative," Aglubat said.

Dr. Schmoke declined through her husband and her attorney to discuss the contract or say how much money she has made under the arrangement. The mayor said he did not know how much his wife has made, and he declined to disclose his income tax returns to reveal her earnings from the publicly funded program.

"That is a very real intrusion," the mayor said.

He also said there is nothing improper about the contract. He said a city ethics ruling found no conflict and he has distanced himself from all decisions affecting BMS. When the health care contract has come before the city's Board of Estimates, he has refrained from voting, according to minutes of the meetings.

"As mayor, I took the steps that were appropriate," he said. "And the body that is responsible for looking at ethics matters for local government officials said there is no problem here."

The contract marks the second time that it has been disclosed that a Schmoke family member has profited from a program approved by the city since Schmoke took over the mayor's office in 1987. Schmoke's brother-in-law received a no-bid contract from the city's Housing Authority in 1993 that was worth $315,000.

In that instance, the mayor said he didn't know his brother-in-law had applied for the work until after the contract was awarded. In the case of the eye-care contract, Mayor Schmoke was aware that his wife was trying to win a slice of one of the more lucrative health care contracts in the city.

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