Pataki's Sick Department of Health

How a Collusive Contagion Has Infected a $34 Billion Bureaucracy

Laura Leeds, who ran the department's Office of Continuing Care—which oversaw nursing and adult homes—left to become vice president for continuing care at the Health Association of New York State, one of the state's top 10 spenders on special-interest lobbying last year ($633,707). The State Ethics Commission fined her $2500 in February, finding that she actively lobbied her former DOH colleagues on two occasions in 2000, even urging them to waive hospital reporting requirements. Concluding that this was an apparent violation of a ban on such contacts for two years after leaving state employment, the commission also cited e-mails she sent her former colleagues.

During Leeds's tenure, the department drastically slashed its inspection staff and cut nursing-home fines, from 24 cases to two. "The goal of the process," she told the Albany Times Union in 1998, "is to get people the care they need—not to punish people." Saluted by industry association leaders for understanding that "you attract more flies with honey than vinegar," Pataki's DOH was blasted in a 2000 Daily News series that concluded it was "unable to keep up with patient abuse complaints or monitor the industry properly." Despite profits that hit $1.3 billion, the homes were so understaffed that the U.S. Health Care Financing Administration criticized the state for overlooking serious—sometimes even life-threatening—problems.

Two audits by Comptroller McCall, one released this July and one in 1998, "uncovered thousands of cases where nursing home complaints were not handled properly," with an incredible 1000 abuse or neglect complaints assigned to investigators who no longer worked at DOH and another 1200 assigned to uncertified investigators. Though complaints rose from 3000 in 1998 to 8000 in 2001, DOH failed for four years to file a legislatively mandated report on how it was handling them, allowing the backlog of unresolved cases to quadruple.

This official indifference was no accident, with Pataki announcing just three months into his administration, in 1995, a 16-point plan to "reduce onerous regulations," and DeBuono proudly announcing that DOH would not longer "micromanage the daily affairs of hospitals, nursing homes, and other health care providers." The same laissez-faire approach, even for a state-supported industry, also infected DOH's oversight of adult homes, which provide housing without nursing care to 28,000 elderly and mentally ill residents.

It was Pataki who shifted adult homes from the Department of Social Services to DOH after industry fat cats donated over $87,000 to his campaign before and immediately after his 1994 election (they've given at least another $202,426 since). And it was the Pataki team that steered hundreds of the mentally ill into isolated and locked wards at nursing homes in apparent violation of state regulations, as the Times reported on its front page last weekend. The health department launched this punishing experiment in partnership with a nursing-home owner also represented by the two Josephs, Benjamin Landa, who gave at least $22,000 to the governor's campaign and got over 200 subsidized beds in his four homes for these specialized units.

Just as Laura Leeds's role overseeing adult homes was coming to an end, the department hired Susan Peerless, the longtime executive director of the industry association, as a special assistant to the commissioner on policies for the homes. The state lobbying commission is currently probing Peerless's relationship with Coppola, Ryan & McHugh, the lobbying firm that represented Peerless's group, the Empire State Association of Adult Homes, and once shared an office with it. She and the firm allegedly conspired to make a false submission to the commission understating Coppola's fee, with some of the excess being paid to Peerless personally. Though documents supporting these allegations—which the Coppola firm vigorously disputes—have been revealed in an ongoing lawsuit, DOH has taken no action against Peerless.

Peerless has hardly been the only state official supervising adult homes who has incestuous ties to the industry. Marti McHugh, who left the governor's personal staff to become the DOH assistant commissioner for intergovernmental affairs, is married to a partner in the lobbying firm. Right after Pataki took office, Robert Balachandran joined the administration as an assistant counsel in the governor's office, advising him on adult-home policy, fresh from the firm whose largest client was the industry association.

The consequence of this intertwining, virtually conceded by an administration promising a clean-up plan before election day, has been a wholesale failure of enforcement, to the point of ignoring a legal requirement that a report be filed for every death that occurs in one of the homes (only three of 1000 were properly recorded). With the Empire State Association boasting on its Web site that it had convinced Pataki officials to adopt "a more reasonable" survey process and make "positive, sweeping changes" in "inspection protocols," inspectors in the NYC office were cut from 25 to three.

"Witness after witness at our hearings," the chairs of four assembly committees concluded in a June report on adult homes, "described situations where the state stopped enforcement actions, reduced fines, let bad operators off the hook, and under-funded enforcement offices." Mental Health Committee Chair Marty Luster charged that "the result has been the untimely deaths of the most vulnerable of our residents."

In addition to these DOH scandals of life-threatening magnitude, the department has also been bit by smaller stuff—including the bribery indictment of the state official leasing a new headquarters for the agency and the recent hiring, despite a hiring freeze, of the son of indicted state senator Guy Velella as a nursing-home auditor. The disturbing tale that follows is a prototype of DOH contracting that demonstrates how agency policies are influenced by politics to the detriment of patients.

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