Potential state violations prompt investigation of hospital trustees by New York AG

New York's Department of Health authorized the attorney general's office to launch a probe into the actions of trustees at Jamaica Hospital, Brookdale University Hospital, and their parent company, Medisys Health Network, the Wall Street Journal reports.

The formal request for an investigation allows the attorney general's charities bureau to examine whether Medisys trustees violated state law by breaching fiduciary duties. The bureau regulates not-for-profit organizations in New York. A spokesman for Attorney General Andrew Cuomo confirmed the office received the referral, but did not comment further.

The attorney general's office was alerted earlier in the month about claims made against Medisys by a former general counsel to the company, which was linked to a corruption scandal that involved $400,000 in "corrupt payments" to a former state assemblyman in exchange for lobbying state officials to secure loans and state funding for Medisys hospitals, on top of helping to smooth the acquisition of two hospitals in Queens.

The former general counsel, Margaret Johnson, feared an interaction between Defendant David Rosen, Medisys CEO, and Victor Rocco, the company's criminal defense attorney, could lead to a charge of obstruction of justice against MediSys, according to the WSJ's reporting.

After the WSJ contacted Medisys for the article on the probe, Rosen submitted his resignation, the newspaper reported. Up until this week, Rosen was on a state advisory panel that oversees New York's Medicaid managed-care program.

The call for an investigation comes as federal and state investigators scrutinize the finances of Medisys, a $1 billion company that includes Jamaica Hospital Medical Center, Flushing Hospital Medical Center, Brookdale University Hospital and Medical Center. Medisys primarily serves poor residents and relies heavily on Medicaid for revenue, but also controls about  a dozen for-profit corporations, including Medicaid managed-care companies, according to the WSJ.

To learn more:
- read the article in the Wall Street Journal
- read a related article in the Wall Street Journal