Pataki's Sick Department of Health

How a Collusive Contagion Has Infected a $34 Billion Bureaucracy

George Pataki and Carl McCall have pivoted the gubernatorial race around school issues, but the biggest business in Albany is health, with hospital, adult- and nursing-home, and related interests spending $18 million on lobbyists last year—$11 million more than education groups and twice as much as any other state stakeholders. In keeping with that state-recorded level of gaudy influence peddling, the Department of Health (DOH), which consumes $34 billion of the state's $90 billion budget, has been a political cancer throughout the Pataki years, literally sick with scandal.

Even after a recent New York Times exposé of the department's abusive mismanagement of the adult- and nursing-home programs, Pataki is dodging accountability, with much of the media failing to focus on a record of gubernatorial malpractice that has cost lives and tainted the delivery of vital services.

This story is a diary of disrepute, recounting the sometimes familiar and sometimes unreported scandals, culminating with the sordid new saga of the state's worst-rated HMO and Child Health Plus provider, a window into just how medical care is compromised in New York. The chronology of CarePlus's rise—from bare-bones startup to one of the top-paid contractors in the governor's best-advertised health program—involves a cast of characters from Pataki's personal counsel to a convicted lobbyist to several major fundraisers and donors.

Let's start at the top. Dr. Barbara DeBuono, the health commissioner for Pataki's first term, was the sister-in-law of his personal attorney Richard Farren, a close friend of Pataki's since their days at Dewey-Ballantine more than 30 years ago who's handled all his real estate and tax matters for decades. Her selection was such a fait accompli that Dr. David Skinner, the president of New York Hospital and a member of the governor's health transition committee after Pataki's election in 1994, recalls that the group "didn't recommend a commissioner," adding: "Pataki had his own idea—Dr. DeBuono—and he just did it."

Skinner should know, because he hired her when she left the administration in 1998, giving her a $300,000-a-year job with the newly merged Columbia Presbyterian and New York hospitals just months after her department approved the deal. DeBuono lost her lofty hospital post when she was caught shoplifting $8.86 worth of hot dog rolls, bagels, goat cheese, and dip at an upstate supermarket. She currently works for Pfizer, the pharmaceutical giant whose interests at DOH are promoted by the same high-powered lobbyists who represent the tawdry adult-home industry.

Executive Deputy Commissioner Dennis Whalen, the department's No. 2, who actually served as interim commissioner for most of a year, was caught taking a Mont Blanc roller ball pen, four Brooks Brothers shirts, Yankees tickets, a tie, and three years of repeated dinners and lunches from two mysterious lobbyists who raised a half-million dollars for the governor's 1994 campaign. Even when Whalen—who returned gifts including jewelry and clothing to the lobbyists—was found by the State Ethics Commission to have violated the Public Officer's law, the new commissioner, Dr. Antonia Novello, kept him on the job. She fined him one week's salary—$2652—and later gave him a $4825 raise (though a notation on state records indicates the raise was held up, and DOH officials declined to answer Voice written information requests about this or any other matter).

It didn't seem to matter that the commission found that Whalen had met with the lobbyists, Rabbis Joseph Goldberger and Joseph Menczer—known in the corridors of Albany power as "the two Josephs"—23 times in three years, a record for access in a department known for its closed doors. Nor did it matter that the Brooklyn-based rabbis, owners of a dress shop and kosher supermarket, had included DeBuono's brother-in-law Farren as a partner in one of their less successful health care ventures while she was still commissioner. Whalen survived even though one client of the two Josephs, nursing-home operator Lawrence Friedman, went to jail in the largest Medicaid fraud in state history, having so prospered at DOH that his annual state payments soared from $4 million to $47 million.

Joseph Chiseri, another deputy commissioner, was forced to quit after belatedly informing officials that Friedman had offered him a $20,000 bribe. Chiseri, who was one of the earliest Pataki contributors and was described in the Times as a "key contact" for the governor's office within the 6000-employee department, rubber-stamped Friedman's applications even when they sought approvals outside the scope of his job.

As Attorney General Eliot Spitzer zeroed in on Friedman, the department circled the wagons, ordering all executive staff to report any law enforcement contacts. Department spokesmen threw up their hands at Times questions, making no effort to explain how Friedman, who paid the Josephs a half-million dollars, had managed to become the first nursing-home operator ever to avert a final state audit after earlier independent ones uncovered serious irregularities. DOH officials did finger one of the governor's top aides, Jeff Wiesenfeld, for introducing them to the two Josephs, both of whom were named to Pataki's post-election transition team and honored by him, one with a silver clock at a Williamsburg dinner.

The investigation of another nursing home represented by the Josephs—whose applications for additional funding whisked through DOH—led to the demotion, and eventual retirement, of the department's director of health facility planning, Charles Murphy Jr. The Ethics Commission found that Murphy asked a second lobbyist representing the home if they were hiring employees in the Albany area, suggesting his wife for a job. Murphy then got clearance from his DOH superiors for his wife to take the job by erroneously assuring them she would have nothing to do with the kind of applications he reviewed. The commission's notice to Murphy found that the firm "actually hired your wife specifically to do the work" he supervised, and that he wound up handling five matters in which she was directly involved. Murphy's wife, who is still working for the lobbying firm, told the Voice her husband was "cleared" in an administrative hearing and was collecting back pay from the department.

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