The full board of Beth Israel Deaconess Medical Center (BIDMC) failed to stand up to CEO Paul Levy after complaints first surfaced in 2003-04 about his improper relationship with a subordinate, according to an 11-page letter released Wednesday by the Massachusetts attorney general's office.
It's likely that deference to a successful CEO, who is widely perceived as having rescued BIDMC, may have impaired board independence, the letter notes.
"As the charitable sector strives to improve and enhance effective governance, this unfortunate outcome serves as a stark and compelling reminder to all our charitable boards of the critical importance of board independence in all aspects of management oversight," the letter says.
Board members who early on conveyed their concerns to the CEO or managers then failed to convey them to the full Board.
"Had Levy been called on his failure to act, or had his failure to act been reported to the entire Board, this acknowledged 'lapse of judgment' might never have occurred," the letter says. "For senior managers who reported to Levy, demanding a response was likely difficult. For Board members, it was their job."
The AG's review focused on whether the board's actions were in line with its fiduciary obligations to BIDMC and the public BIDMC serves.
Although it found no evidence of the misuse of charitable funds, it noted that the woman's performance reviews and compensation will always be subject to the perception that they were influenced by the personal relationship with Levy.
The review found that during the employee's years at BIDMC and BI-Needham, her salary fell within the range of her job grade.
But the employee stood out in other ways. She was the only non-physician director to receive a bonus in all four of the years reviewed. And both positions the employee held at BIDMC and BI-Needham were newly created for her and ended when she left.
A statement issued by BIDMC's board said that it found the report to be a fair evaluation.
After news of the Levy scandal broke this spring, BIDMC's Board added anti-fraternization policies to its HR regulations.
To learn more:
- here is the 11-page letter that contains the attorney general's findings
- see the press release from the Massachusetts attorney general's office
- see the Mass High Tech article
- here's the Boston Globe article
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