Young losing deal with health firm, gaining $84,000 Higher education chiefs to examine contract with Coppin

Regents chairman 'concerned' by reports

December 05, 1997|By S. Higham, T. Waldron and Walter F. Roche Jr. | S. Higham, T. Waldron and Walter F. Roche Jr.,SUN STAFF Sun staff writers Mike Bowler, Marcia Myers and Ivan Penn, and Sun news assistant Jill L. Kubatko contributed to this article.

State Sen. Larry Young, who chairs an influential health-care panel in Annapolis, is losing a lucrative consulting deal with a health care company that does business in the state -- but not before the senator's private consulting firm collects an estimated $84,000 in fees.

A spokeswoman for Merit Behavioral Care Corp. said yesterday that her company had decided to end Young's $7,000-a-month consulting contract when it expires at the end of December. She said Young has been working for Merit since September 1996.

Also yesterday, Maryland's higher education administrators said they planned to examine the propriety of a $300-an-hour consulting deal Young forged with Coppin State College, a school that relies heavily on funding from Young and other members of the General Assembly.

The University System of Maryland Board of Regents, which oversees Coppin, will examine Young's no-bid consulting deal during a meeting this morning to determine whether it violated state laws and university rules.

"What I have read in the articles has me concerned," said Lance W. Billingsley, chairman of the board. "I cannot ignore what I have read."

The cancellation of Young's contract with Merit and the Regents meeting came in response to a two-month investigation published by The Sun Wednesday that detailed how the West Baltimore Democrat has turned his publicly financed district office into a source of revenue for three corporations he controls.

As chairman of the Senate Finance Health Subcommittee, Young is one of the most powerful legislators in Annapolis. The paper reported that one of Young's companies, the LY Group, has been billing Merit $7,000 a month in consulting fees. Merit paid another corporation headed by Young, the National Black Health Study Group, $50,000 to sponsor two health care conferences.

The newspaper also reported that the LY Group has collected more than $30,000 in consulting fees from a federal grant that pays for a program Young first proposed. Young and the LY Group also have collected $33,500 in fees from Coppin State.

Mafalda Arena, the Merit spokeswoman, said yesterday that her company decided to end its contract with Young and the LY Group because Merit has a financial interest in a contract with the state of Maryland.

Merit won that stake when it bought CMG Corp. of Owings Mills, which had a $10.9 million contract to provide mental health services to Medicaid patients in Maryland.

Appearing on Alan Prell's WBAL radio show yesterday, Young acknowledged that the LY Group consulting contract with Merit was being terminated, but he gave a conflicting timetable, saying he ended his relationship with the company months ago.

Young said he learned of Merit's purchase of CMG a few hours before it was publicly announced in July. Once he was informed, he said, "it was made very clear by both Merit and myself that I would not be able to continue working for them as a result of them purchasing this Maryland company."

Young said his last payment from Merit came shortly after the CMG purchase, but said he did receive $25,000 from Merit to sponsor a conference last month run by another corporation the senator controls, the National Black Health Study Group. Merit's check, along with money from three other health care firms, covered the cost of the conference in Las Vegas.

"Except for a conference, which I did in November, for which I was paid nothing, I had not received additional money, except for work that was done until the conference was concluded in Nevada, the 17th of November," Young said on the radio show.

Records show that Young's company has continued to bill Merit for consulting services and Arena said yesterday her firm plans to pay the LY Group through the end of the contract.

The senator has declined to speak to The Sun.

Arena said that under the contract, the LY Group only worked for Merit when the legislature was not in session.

LY Group's bill

Arena said she wasn't sure exactly how much Young's firm made. But based on the $7,000-per-month payment rate and the length of the 1997 legislative session, the LY Group will make an estimated $84,000 from Merit by year's end.

That brings to more than $200,000 the amount of money Young and his corporations have collected in fees from public institutions and health-care companies like Merit over the last two years.

This isn't the first time Merit has made front-page news in Maryland. Last year, Gov. Parris N. Glendening boarded a Merit corporate jet bound for a New York fund-raiser while Merit was bidding on a $16.2 million Maryland contract. Glendening later reimbursed the company for the cost of the flight, and Merit eventually lost the contract.

Glendening said in interviews this week that he was unaware that Young, one of his close political allies, had any financial ties to Merit, and he questioned the propriety of the senator's outside consulting deals.

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