Young using Senate office to boost personal business Health care role leads to fees for legislator

Tax funds pay his firms' bills

December 03, 1997|By Walter F. Roche Jr. and Scott Higham | Walter F. Roche Jr. and Scott Higham,SUN STAFF Sun staff writers Thomas W. Waldron and William F. Zorzi Jr. contributed to this report.

State Sen. Larry Young has turned his legislative office into a lucrative source of revenue, generating at least $165,000 in consulting and other fees from public institutions and health care firms with millions of dollars in state business at stake.

As chairman of the Senate Finance Health Subcommittee, Young is one of the most influential members of the General Assembly, crafting key pieces of health care legislation and helping to set the state's health policy.

A review of Young's corporate activity over the past two years shows that the senator routinely capitalizes on his position as a health care legislator to benefit three corporations he heads -- the LY Group, the National Black Health Study Group and the American Advocate.

State records also show that the senator has been using publicly paid employees to work on his corporate staff and has been using tax dollars to pay the rent and phone bills of his corporations. All three corporations are based in Young's Baltimore Senate office.

A two-month investigation by The Sun shows:

* The LY Group has been receiving as much as $7,000 a month in consulting fees from Merit Behavioral Care Corp., a mental health company that has had millions of dollars worth of business pending in Maryland contracts.

* The National Black Health Study Group collected $25,000 from the same company to fund an expense-paid meeting of legislators at the MGM Grand Hotel and Casino in Las Vegas between Nov. 12 and 14.

* The LY Group has been paid more than $30,000 in consulting fees from a U.S. Department of Energy grant. The grant pays for a program Young proposed to the Baltimore Urban League.

* Young has received $33,500 -- at a rate of $5,000 a month -- in consulting fees from Coppin State College, which receives $13.8 million in annual funding that is approved by Young and other members of the General Assembly.

During the past two weeks, Young declined to discuss his consulting arrangements and the use of his publicly financed office as a base of operations for his private corporations.

"In response to your written request to interview State Senator Larry Young, we respectfully inform you his response is, 'No comment,' " said his attorney, Nelson R. Stewart, in a written response.

Late yesterday, Young's office announced the senator would hold a press conference this morning "to respond to accusations he misappropriated funds."

Young, 48, is a key ally of Gov. Parris N. Glendening. He is close to Baltimore Mayor Kurt L. Schmoke. And as chairman of the Senate Executive Nominations Committee, he has the power to approve or block hundreds of gubernatorial patronage jobs and appointments around Maryland.

His political credo as a $29,700-a-year legislator has long been "unbought and unbossed."

Young's source of power is his chairmanship of the Senate Finance Health Subcommittee. Each year, the panel handles legislation that determines how millions of dollars will be distributed to hospitals, HMOs, nursing homes and other companies lobbying for pieces of lucrative health care bills.

Health care is one of the most heavily lobbied issues in the General Assembly.

The health subcommittee was created specifically for Young to control in 1995, after he complained that African-Americans were not receiving their share of committee chairmanships. As chairman, Young plays a critical role in creating, approving and sometimes killing key health care legislation.

Merit Behavioral Care Corp.

Young's importance was no secret to major health care providers like Merit Behavioral Care Corp., a national mental health company based in New Jersey.

Through much of 1995 and during the 1996 legislative session, Young played a pivotal role in a plan to develop a state blueprint to move Medicaid recipients out of traditional health care and into managed care.

Young served as a member of a task force that drew up the proposed legislation, and he chaired the subcommittee that approved the proposal. A key element of the plan was to contract separately for mental health and substance abuse treatment services.

To provide the new mental health services worth $10.9 million over 18 months, the state solicited bids from Merit and other firms. Merit lost the competition and the contract went to a joint venture between two companies from the Baltimore region: Green Spring Health Services Inc. of Columbia and CMG Health Inc. of Owings Mills.

Merit lost the contract, but it still won the work. Last summer, Merit bought CMG and took over the mental health contract. In October, Magellan Health Services Inc., a company that owns most of Green Spring, announced plans to purchase Merit. The sale has not been finalized.

The LY Group is born

* In April 1996, shortly after the legislative session ended, Young created the LY Group, naming himself president and chief executive officer, and basing the consulting company in his state-financed Senate district office near the B&O Railroad Museum.

The company's motto: "We Want Your Business."

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