State Senator Loretta Weinberg requests investigation of fraud allegations against Hoboken University Hospital

September 17, 2011 - Statehouse Bureau

HOBOKEN — A state senator has asked the U.S. Attorney and the state Attorney General to investigate allegations of fraud raised by the former attorney of Hoboken University Hospital before the state decides whether its pending sale can move forward.

Sen. Loretta Weinberg (D-Bergen) sent letters to U.S. Attorney Paul Fishman and state Attorney Paula Dow asking them to probe charges by Donald Scarinci, who resigned as the hospital’s attorney two weeks before it filed for bankruptcy on Aug. 1.

In court papers, Scarinci said he quit because the city-backed authority created to oversee the hospital withheld millions in contractual payments to help make it appear it was in duress and push it into bankruptcy. The ultimate goal, he said, was to ensure an investment group that owns the Bayonne Medical Center gets to purchase the hospital. The group wants to buy the hospital for $65 million and convert it to a private facility.

The city vehemently denies his allegations.

Scarinci’s accusations are in e-mails and motions filed in response to questions by the attorney for the hospital’s authority about whether he violated attorney ethics by meeting with attorneys for the creditors to talk about his ex-client.

"If reports are true, the actions of the Hoboken Municipal Hospital Authority represent criminal fraud and malfeasance, and should be prosecuted to the highest standard of law," said Weinberg. "The latest allegations cast a shadow on this deal, and I hope that state and federal regulators will get to the bottom of this sooner, rather than later, and that the Department of Health will withhold approval until all of the allegations are put to rest."

Doug Petkus, spokesman for the Hoboken Municipal Hospital Authority, said the "the allegations by Mr. Scarinci are unfounded and false. The Hoboken Municipal Hospital Authority and the City of Hoboken have always acted in the best interests of the hospital, its employees and the residents of the city and in compliance with all applicable laws, rules and regulations, including the Open Public Meetings Act."

Rebekah Carmichael, a spokeswoman for the U.S. Attorney’s Office of New Jersey, said she was aware of the letter but could not confirm or deny an investigation. Paul Loriquet, a spokesman for the state Attorney General’s Office, said the letter would be reviewed but declined further comment.

Weinberg, who said she called for the probe after reading about the charges this week in The Star-Ledger, had already scheduled a hearing on non-profit hospitals being converted into private facilities for Monday. She will expand it to include the circumstances around the sale of the hospital. The hospital is waiting for the state to approve the transfer of the license and several court rulings before the sale can go through.

EdMecka Note:  Here are Senator Weinberg's letter to NJ Attorney General Paula Dow and U.S. Attorney Paul Fishman (courtesy of politickernj.com):

Weinberg-Dow-Ltr_9-14-11_.pdf

Weinberg-Fishman-Ltr_9-14-11_.pdf