SUNY Downstate Medical Center (Downstate) consultant, Pitts Management Associates, Inc. (PMA), charged Downstate $83,156 in questionable travel and lodging expenses, exceeding the conditions of the contract, including pricey rooms at the Carlyle Hotel and a “team dinner” that included cocktails, according to a report released today by State Comptroller Thomas P. DiNapoli.
“My auditors exposed questionable expenses and ethical lapses that have no place in state government,” DiNapoli said. “Auditors found tens of thousands in monthly hotel costs and expensive dinners on the public’s dime at a time when Downstate was supposed to be getting its fiscal house in order. Downstate failed to protect the public’s money, and I urge the Joint Commission on Public Ethics to review this questionable behavior.”
Downstate hired PMA to provide organizational restructuring and consulting to identify solutions to fiscal difficulties as reported in a 2013 Comptroller audit that revealed Downstate was facing potential insolvency. PMA had two subsequent contracts with Downstate worth $35.8 million.
DiNapoli’s report found several instances in which Downstate’s then administration failed to act in the state’s best interest by eliminating certain cost controls over PMA travel expenses, including a prohibition on reimbursement for alcohol. In addition, the then president charged his Bermuda airfare and some of his lodging at the Fairmont Hamilton Princess hotel to his state-issued credit card for a six-day birthday bash for PMA’s chairman, prompting a referral by the Comptroller to the state Joint Commission on Public Ethics.
According to the report, PMA’s questionable expenses included:
- Lodging costs of $17,688, including $14,193 in weekend hotel expenses for a consultant who had traveled home and did not require overnight accommodations, and a $1,419 charge for a single night’s stay at the Carlyle for the PMA Chairman;
- Inappropriate meal expenses of $13,629, including free meals for Downstate staff, which is prohibited for state employees;
- A non-itemized $2,039 “team dinner” at Manhattan’s Docks Oyster Bar and Seafood Grill with nearly $400 for alcohol. The total far exceeded the allowable U.S. General Services Administration and New York state dinner rates;
- An alleged ‘travel expense’ of $32,500 for a management software license; and
- Transportation expenses totaling $33,203, nearly half of which lacked proper documentation and included $537 for limousine drivers to wait outside restaurants for hours for PMA consultants to finish dinner.
DiNapoli recommended that Downstate:
- Recover $41,512, including $32,500 for software license fees;
- Review the then president’s actions and ensure time cards and expenses are properly documented and business-related;
- Develop a policy for consulting contracts that includes reimbursement for meals, transportation and lodging that conforms to the GSA Rates and/or the New York State Travel Manual; and
- Perform an independent examination of all travel-related expenses – that PMA charged and Downstate approved – for reasonableness, and recover as appropriate.
In response, Downstate acknowledged that improvements are needed in the procurement and payment areas and agreed to recover the $41,512 in miscellaneous expenses including the software license fees.
Read the report and Downstate’s full response: http://www.osc.state.ny.us/audits/allaudits/bseaudits/bse20160808.pdf