State Health Bigs Gave Pedro Espada a Five-Year Pass to Keep Buying Subsidized Sushi


The Wall Street Journal‘s Greater New York section lives up to its name today with a revealing story by reporter Jacob Gershman about how state officials blithely ignored warnings five years ago that Pedro Espada’s health care empire was running wild.

The warning was raised in a January 2005 memo by the state health department’s former number two top attorney, Paul Stavis. The memo, Gershman reports, urged the agency to force Espada to give up control of his network of health care clinics based in Soundview in the Bronx. The move, urged Stavis in the memo, was “fundamental to insuring more legitimacy at Soundview.”

Stavis wrote the memo after state auditors questioned $1.3 million in costs claimed by the clinics. Although the expenses aren’t identified, this week’s federal indictment of Espada and his son allege that the pair diverted more than $200,000 from the clinics to pay for an array of personal extravagance ranging from a steady stream of take-out sushi to Broadway show tickets.

Instead of trying to chase the soon-to-be-former state senator out of the subsidized health care business, state officials opted to settle the audit by having Soundview repay $877,000, while leaving the rogue ex-boxer and his cronies in charge. All was further forgiven a year later when health department bigs approved a new health clinic for Soundview, again over Stavis’s objections.

The agency had no apologies when Gershman asked for comment on this obvious enforcement lapse. “You can’t remove somebody who hasn’t been convicted,” a spokesperson told the Journal. This almost-impossibly high standard helps explain why the agency has become a happy hunting grounds for a bipartisan crew of politically connected operators, such as the home health care profiteers exposed in a Voice story this fall: “If you can’t convict us, you can’t deny us,” goes the credo.

Incoming governor Andrew Cuomo, whose office helped win the Espada indictments, has vowed to cut loose these abusers as he curbs runaway Medicaid costs. As the Journal story shows, he has his work cut out for him.