Hospital’s decision on Levy faces AG review

Beth Israel Deaconess sought scrutiny

Paul Levy was fined $50,000 for showing poor judgment in his relationship with a former female employee. Paul Levy was fined $50,000 for showing poor judgment in his relationship with a former female employee.
By Liz Kowalczyk
Globe Staff / May 14, 2010

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The Massachusetts attorney general’s office said yesterday that it will review whether the board of Beth Israel Deaconess Medical Center appropriately handled a “lapse of judgment’’ by its chief executive, Paul Levy, and whether charitable funds were misspent because of a personal relationship he had with an employee.

Attorney General Martha Coakley’s decision was announced last night, after the hospital board held its fourth emergency meeting in two weeks. During yesterday’s meeting, the board voted to send Coakley a letter, asking her to review its actions regarding Levy.

Those actions included a decision last week to fine Levy $50,000 for showing poor judgment in his relationship with a female employee, but the board has not disclosed details of its investigation or what Levy’s lapse of judgment entailed.

In the letter, signed by chairman Stephen Kay, the board said it “is confident in its process and the conclusions it reached based on the facts before it.’’

But, the board said, an independent review by Coakley’s office would “reassure our employees, patients, and the entire Beth Israel Deaconess Medical Center community that our board remains committed to protecting the integrity of this institution and fulfilling its fiduciary duties.’’

The board had issued a statement last week declaring the matter closed. Its action yesterday was taken after days of discussions with the attorney general’s office, which expressed concern with the board’s lack of transparency around its internal investigation, according to an official familiar with the office’s actions.

“Transparency is an issue. Bringing an additional level of transparency is something this review can help accomplish,’’ said the official, who declined to be identified because he was not authorized to speak about an ongoing review.

The person said that David Spackman, chief of the attorney general’s public charities division, would oversee the review and that it would delve into the hospital’s financial expenditures surrounding Levy’s relationship with the woman and her employment. “The issue would be the charitable assets, the expenditures, the appropriation of charitable funds, what the board has heard about it, and how they addressed it,’’ the official said.

In a statement released last night, Coakley’s office said: “Boards of Directors of non-profit organizations have a duty to ensure the proper governance of their organization and that charitable assets are protected. Pursuant to our authority over charitable organizations, our review will be focused on whether the Board met these obligations in connection with its investigation and sanction of its CEO. We will conduct a thorough review of this matter and we will make our findings public at the conclusion of this process.’’

Levy, 59, could not be reached for comment. He has been chief executive since 2002 and has made a name for himself as an advocate of openness regarding hospital costs and quality.

Some of the issues the board has discussed, according to hospital sources, is the appropriateness of various jobs the woman held, including as a special assistant to Levy and a management position at the Harvard teaching hospital’s Needham campus, and whether favoritism was involved in her being given those jobs.

At issue also has been a severance package that was given to the woman when she left her job at the Needham campus last year.

The board has not disclosed whether it reached a conclusion about these issues.

The relationship caused widespread concern among management and employees at the hospital, according to the sources. Kay said in a previous statement that while Levy did not violate hospital policy, “over time the situation created an improper appearance and became a distraction within the hospital.’’

Levy has not publicly described the nature of the relationship, only apologizing in a statement last week for “an error in judgment.’’

“I regret that my behavior had such wide repercussions for the entire BIDMC community,’’ he said.

The board told the attorney general in its letter yesterday that it became aware about April 21 of an anonymous letter dated March 15 involving Levy. The board investigated the matter with Robert Sherman, an attorney who is a member of the hospital’s board of trustees. A second anonymous letter was received April 30, and it was also investigated, the board said.

Sherman interviewed dozens of individuals, the board said, and reviewed the full employment record, documents related to policies, and the complaint logs within the hospital. That process concluded with the board “expressing its disappointment in a single instance where the CEO exhibited a lapse of judgment with respect to a personal relationship with an employee, and the imposition of financial sanctions on the CEO,’’ the board’s letter to Coakley said. “The board believed that once this action was taken, the matter would be closed.’’

But, the board said in the letter, because the matter involves “issues of governance not previously within its experience, and in order to fulfill its public trust responsibilities,’’ it believes it would be “prudent to seek an independent review of its actions.’’

Liz Kowalczyk can be reached at

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