Roger Williams Medical Center indicted in corruption case
Also charged are the hospital's longtime president, its former vice president and the former head of a Providence assisted-living home.
09:25 AM EST on Friday, January 6, 2006
BY MIKE STANTON
Journal Staff Writer

PROVIDENCE -- Roger Williams Medical Center yesterday became the first nonprofit institution in Rhode Island ever to face federal corruption charges when a grand jury issued a 38-count indictment against the hospital, its president Robert A. Urciuoli and two others.

The institution is charged with conspiracy and mail fraud for allegedly hiring John Celona to use his position as a state senator to champion legislation that benefited Roger Williams, defeat legislation that would harm it, persuade communities to increase ambulance runs to the hospital and pressure health insurers to increase their payments.

The indictment, charging conspiracy and mail fraud, alleges that Roger Williams and its representatives stole the "honest services" of a Rhode Island senator, John A. Celona, by putting him on the payroll to do their bidding at the State House.
Also charged were Peter J. Sangermano Jr., the former president of The Village at Elmhurst assisted-living center; and Frances P. Driscoll, a former Roger Williams vice president.

The indictment alleges that Roger Williams Medical Center and the others hired Celona as a consultant to The Village at Elmhurst, which is partially owned by the hospital, but that Celona's real work was using his public office to influence legislation and perform favors.

The hospital, Urciuoli and Sangermano were each charged with 37 counts -- 1 of conspiracy and 36 of honest services mail fraud. Driscoll was charged with two counts -- one of conspiracy and one of honest services mail fraud.
A conviction for conspiracy carries a penalty of up to five years in prison and a $250,000 fine. Mail fraud is punishable by up to 20 years in prison and a $250,000 fine.

The hospital, if convicted, could be fined up to $500,000 per count and receive five years' probation.

Celona, who pleaded guilty last year to selling his office, is cooperating in the investigation of Roger Williams and his financial dealings with two other companies: the CVS drugstore chain and Blue Cross & Blue Shield of Rhode Island.
People familiar with the investigation say the focus will now shift to CVS and Blue Cross.

"This remains an extremely active investigation, one to which my office, along with the FBI and the Rhode Island State Police have devoted very extensive resources," said U.S. Attorney Robert Clark Corrente. "We are continuing to move forward on a number of fronts."

Corrente said that he is aware of other cases where nonprofits have been charged, but none in Rhode Island.
The directors of Roger Williams Medical Center said in a statement that they were "shocked and deeply disturbed" by the hospital's indictment.

"This decision has threatened a respected 128-year-old institution that employs more than 1,400 people and provides millions of dollars of free care annually to Rhode Islanders who can't afford to pay for care," the hospital's statement said. "Hundreds of nurses, doctors and other dedicated caregivers devote themselves to caring for patients on a daily basis at Roger Williams. Their livelihood is now at risk."

Urciuoli's lawyer, Robert G. Flanders Jr., attacked the indictment as "a one-sided baloney sandwich, served up by John Celona. This is a conspiracy of one."

Urciuoli, 58, who has served as president of Roger Williams since 1988, said in a statement: "I have spent my entire career fighting to advance what I know to be one of the best hospitals in the region. Now, to see it put at risk for no apparent reason, really saddens me."

At a glance

Roger Williams Medical Center
Founded in 1878
Located at 825 Chalkstone Ave., Providence
Inpatient and outpatient services, and long-term care at The Village at Elmhurst and Elmhurst Extended Care
Affiliated with Brown University School of Medicine and Boston University School of Medicine

Unique to Rhode Island -- the state's only bone-marrow transplant unit, at The Adele R. Decof Cancer Center, and the only Center for Stem Cell Biology

* 1,396 employees
* 220 licensed beds
* In 2004, the emergency department logged 24,729 patients and 8,556 admissions to the hospital
* Total patient revenue in 2004 was $117.9 million
* Uncompensated care was $10 million in 2004

Source: Hospital Association of Rhode Island 2005 report and Roger Williams Medical Center Web site

The board at Roger Williams placed Urciuoli on paid leave last month. He earned $419,000 in 2002, the most recent year for which figures were available.
Sangermano was "disappointed" by the indictment and "denies engaging in any criminal conduct," said a statement issued by his lawyer, Thomas G. Briody. Sangermano and Roger Williams sold The Village at Elmhurst about a year ago to Benchmark Assisted Living.

Driscoll, who left Roger Williams in 2000, said through her lawyer, Kevin J. Bristow, said that she will assert "her factual innocence to these allegations."
No date has yet been set for the defendants' arraignment.

THE 30-PAGE indictment charges that the defendants conspired to hire Celona as a consultant in 1998, and that the senator was paid more than $260,000 over the next six years "to cause him to use his influence, power and authority as a state senator to benefit the political and financial interests" of Roger Williams.

Corrente said that the theft-of-honest-services law presumes that citizens "have the right to the honest services of their public officials. Everybody should be on a level playing field. Nobody should have a special advantage."

As part of the alleged conspiracy, the indictment says, the hospital disguised the true nature of Celona's work and deceived the state Ethics Commission when it sought an advisory opinion regarding the senator.

The hospital has maintained that Celona, a longtime North Providence politician, was hired to tap his extensive contacts among the elderly to recruit residents to The Village at Elmhurst.

Asked yesterday if Celona did any work for the assisted-living facility, Corrente replied, "Some." Corrente added that "a large part" of Celona's work was for Roger Williams.

According to the indictment, Celona asked Urciuoli for a job in August 1997, after the senator supported the hospital in a heated State House battle over approving a merger with Columbia/HCA.

The indictment chronicles a litany of actions that Celona allegedly performed at the direction of Urciuoli, Sangermano or Driscoll, from seeking to influence legislation to using his political muscle and powers of persuasion.

At Urciuoli's direction, the indictment charges, Celona pressured Blue Cross and UnitedHealthcare to increase their insurance reimbursements to Roger Williams.

After a 2001 meeting with a Blue Cross executive, the indictment says, Celona e-mailed Urciuoli: "I hope I didn't lay it on [the executive] too much yesterday. But it was done in a systematic fashion in order to get them 'in line' for us. Needless to say, I'll keep up the pressure."

Urciuoli allegedly responded that the Blue Cross executive "deserved to get cranked around."

After a 2003 meeting with a UnitedHealthcare representative, Celona wrote Urciuoli that someone from United had called the senator "to up the United figure. Did he contact you and do you want me to keep pressing."

Four days later, Urciuoli reported to the hospital's finance committee that a United executive had called him and agreed to a 25-percent increase for one year.

The indictment alleges that when Roger Williams was seeking a merger with a for-profit corporation, Urciuoli and Driscoll informed Celona that they opposed a Senate bill prohibiting hospital officials from serving on the board of a converted hospital.

Celona subsequently faxed Driscoll a note saying that he was making calls to "kill the bill in committee."

The indictment also accuses Urciuoli and Driscoll of telling Celona to oppose a 1999 bill creating a Rhode Island Cancer Council, to coordinate research and treatment, because it could hurt hospital finances and because they expected it would be led by a former Roger Williams doctor for whom they "felt animosity."

Driscoll subsequently directed Celona to threaten an unidentified state representative, the indictment says, "and advise her that she would suffer negative political ramifications if she supported the Cancer Council."

The legislator "agreed to do nothing to support the bill," Celona later wrote Driscoll. The indictment says that Celona also arranged for himself and Driscoll to have lunch with the lawmaker to lobby against the Cancer Council.

Urciuoli and Driscoll were also accused of directing Celona to attempt to influence municipalities to increase ambulance runs to Roger Williams.

According to the indictment, Urciuoli told Driscoll and others that ambulance runs were a source of revenue, but that the hospital was not getting its "fair share" from certain communities. Urciuoli also allegedly advised that he was "going to have Celona take care of the rescue run problem politically."

Celona met with local officials regarding ambulance runs, the indictment says.

Driscoll was charged with directing Celona to amend legislation to reimburse Roger Williams for a bone-marrow donation program. She was also accused of directing Celona to work to kill a bill to require nonprofit corporations in Providence to make payments in lieu of taxes.

In 2000, the indictment says, Driscoll directed Celona to oppose a proposed merger between Lifespan and Care New England, "because the merger could have an adverse financial impact" on Roger Williams.
In 1998, Driscoll and Sangermano allegedly directed Celona to work against a bill prohibiting health facilities, including The Village at Elmhurst, from offering care for Alzheimer's disease.

Sangermano was also accused of asking Celona to work behind the scenes to extend a moratorium on new nursing-home beds in Rhode Island, to help The Village at Elmhurst's finances.

LAWYERS FOR Roger Williams had negotiated intensively with federal prosecutors to strike a deal that would have avoided the hospital's indictment.

They argued that the hospital made every effort to ensure that Celona's hiring was proper, including seeking an advisory opinion from the Ethics Commission. And when a former federal prosecutor in 1998 conducted an internal review of various allegations against Urciuoli, he found "no basis for concluding that the [Celona] contract was illegal or unethical."

The lawyer, F. Dennis Saylor IV, is now a federal judge in Worcester -- and is now a potential defense witness, lawyers for the hospital have said.
In November, prosecutors offered the hospital a deferred prosecution agreement to avoid indictment. Under the agreement, the hospital would have admitted criminal wrongdoing and cooperated with the investigation, paid a fine, and implemented internal reforms.

But talks about a deal that would have averted yesterday's indictment collapsed this week, according to people familiar with the situation.
In 1998 -- the year that Celona was hired -- Urciuoli survived despite an internal review that concluded he had spent thousands in hospital funds on family dinners, golf trips and stays in luxurious hotels.

A Sunday Journal story detailing those expenses, and the board's decision to keep Urciuoli, has provoked outrage and prompted Lt. Gov. Charles Fogarty to call for legislation imposing a strict code of ethics on directors of Rhode Island hospitals.

Disclosures about the largess of another health-care executive, former Blue Cross President Ronald A. Battista, surfaced in the months after The Journal first began reporting on Celona's health-care dealings.

Battista, whose former company's dealings with Celona will also come under grand-jury scrutiny this year, resigned under fire in 2004, amid public outrage over his extravagant lifestyle.

Urciuoli has not been seen around Roger Williams Medical Center since the hospital put him on paid leave last month. When the indictment came down yesterday, he was with his family in Florida. Last summer, his wife bought a house on a golf course, the Country Club at Mirasol, in Palm Beach Gardens, for $939,000, according to Florida land records.

The house is just down the street from a $545,000 condo purchased two years ago by the former Rhode Island Blue Cross chief, Ron Battista.
mstanton@projo.com / (401) 277-7724

READ the full text of the federal grand jury's indictment against Roger Williams Medical Center and three others, at:
http://projo.com/rwuindict.pdf