Saturday, Jan. 20, 2007 | 7:10 a.m.
News that University Medical Center accrued massive debts in the hands of a chief executive accused of awarding his friends sham contracts may have surprised Las Vegas residents, but citizens of Chicago aren't shocked.
In fact, they say we should have known better, because this is not the first time that ousted hospital Chief Executive Lacy Thomas has found himself caught up in similar circumstances.
In Chicago, where Thomas worked as a Cook County hospital director before coming to UMC in 2003, politicians say the hospital system is fraught with financial mismanagement and corruption.
While Thomas was vice president and controller of a Chicago health care center, a court determined that he had failed to pay the government taxes withheld from his employees' wages.
And newspaper articles dating back to 1992, when Thomas was a vice chancellor at the City Colleges of Chicago, tie him to a contract that, like the bogus deals he's accused of backing at UMC, was cloaked in suspicion.
Thomas' contract with UMC was terminated Tuesday, after Clark County commissioners learned that UMC is in far greater debt - $34.3 million - than they had been told by Thomas for months.
That debt is measly, however, compared to the $500 million shortfall facing the Cook County Health Bureau, which includes the John H. Stroger Hospital, where Smith worked from 1999 to 2003.
Cook County Commissioner Forrest Claypool blames the debt on "financial mismanagement, financial chicanery and pinstripe patronage," all of which occurred when Thomas was in town. Although some of those financial problems occurred on his watch, Thomas to date has not been personally tied to any wrongdoing at the Chicago hospitals.
"The (Cook County) Health Bureau has been scandal-scarred and financially mismanaged," Claypool said. "The Health Bureau has been used as a piggy bank for contracts for campaign contributors, friends and relatives of folks, with tons of white-collar jobs for politically connected bureaucrats."
As an example, Claypool offered the case of Earl Bell, the former chief financial officer over Cook County's Provident Hospital. In 2005, Bell pleaded guilty to participating in a scheme to accept phony hospital invoices in exchange for kickbacks.
Cook County Commissioner Roberto Maldonado cited examples of financial mismanagement at the Chicago hospitals. Last year, the chief of the Cook County Health Bureau and his chief financial officer resigned after criticism that senior management had allowed the system to fall further into debt.
Maldonado, chairman of a county committee overseeing Stroger , said the hospitals' financial woes are nothing new.
"It's an accumulation of years of financial mismanagement," Maldonado said.
At least three of the vendors Metro Police are investigating in connection with Thomas - Great Lakes Medicaid, Crystal Communications and Frasier Systems Group - have had contracts with Cook County hospitals as well.
"There is certainly a tie-in there," Claypool said.
Claypool, speaking to KLAS Channel 8 on Wednesday, questioned how Thomas landed the UMC job.
"When Mr. Thomas was here, he presided over hundreds of millions of dollars in deficits, these scandals," he said. "So I think it should have set off alarm bells in Las Vegas, which it didn't."
Thomas did set off alarm bells in 1990, however, while working as a vice chancellor at the City Colleges of Chicago.
According to press reports, the City Colleges board awarded a work contract to Chicago businessman Leon Finney in the belief that a competing bid was for a higher price.
In fact, the competing bid was lower, but college board members were presented with inaccurate bid figures.
Thomas, who recommended that the board accept Finney's more expensive contract, told reporters he could not explain how the incorrect bid figures had been presented to the board. Thomas also told reporters he was unaware that Finney was involved months after bid letters stated he was.
After the Finney contract was awarded, former Illinois Appellate Justice R. Eugene Pincham called on the college board to respond to the contract irregularities and examine whether they had a hidden agenda.
"This assertion about the unusual bidding of contracts must not be swept under the rug. It must not be ignored," Pincham told the Chicago Sun-Times. "You can't teach integrity to children unless you practice it yourself."
The questionable contract came on the heels of another Thomas decision that also drew legal scrutiny.
Before coming to the City Colleges, Thomas worked as the vice president and controller of Mile Square Health Center Inc., a nonprofit community health clinic.
According to court documents, Thomas knowingly failed to pay government taxes that the "financially distressed" clinic withheld from employees in 1987. The Internal Revenue Service ordered Thomas to pay penalties just over $215,000.
Thomas paid part of the penalty and then filed a lawsuit seeking a refund, arguing he was "a mere minion subject to the overpowering will" of his boss. The court, however, upheld its judgment.
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