We all need to remember that Illinois politicians control the number of ventilators as well as ICU beds in long term planning through a process called the ; any crisis to care for those who need these assets are the victims of the political corruption of Illinois, and Governor Prizker can do all of the finger pointing, but he needs to look in the mirror and start there.
New York was the first state to enact a Certificate of Need (CON) law in 1964; 26 states enacted CON laws throughout the following decade. Early CON programs typically regulated capital expenditures greater than $100,000, facilities expanding their bed capacity and facilities establishing or expanding health care services.
In 1972, several states adopted Section 1122 waivers, which provided federal funding to states regulating new health care services receiving Medicare and Medicaid dollars. Congress then passed the National Health Planning and Resources Development Act of 1974 bolstering federal funding for state and local health planning regulations. The federal law required states to adopt CON laws similar to the federal model resulting in all states, except Louisiana, maintaining some form of a CON program by 1982. This meant states had broad regulatory oversight of several facilities—including hospitals, nursing and intermediate care facilities and ambulatory surgery centers—as well as the expansion or development of a facility’s service capacity.
The federal mandate was repealed in 1987, along with the associated federal funding. Subsequently, several states repealed or modified their CON laws.
State Legislative Actions
In the past several years, many states have introduced or enacted legislation to change their CON program. Changes range from fully repealing an existing CON program to creating a new CON program. The following are state examples of legislative actions impacting CON programs:
35 states currently maintain some form of CON program. Puerto Rico, the US Virgin Islands and the District of Columbia also have CON programs. States retaining CON laws often regulate outpatient facilities and long-term care. This is largely due to an increase in free-standing, physician-owned facilities.
Indiana enacted legislation in 2018 establishing a certificate of need program, which the state initially repealed in 1999.
Nine states—Florida, Georgia, Maryland, Ohio, Rhode Island, Tennessee, Vermont, Virginia and Washington—enacted legislation in 2019 to modify CON regulations for certain health facilities and services.
Three states—Arizona, Minnesota and Wisconsin—do not officially operate a CON program, but they maintain several approval processes that function similarly to CON.
12 states fully repealed their CON laws. New Hampshire was the most recent repeal, effective 2016.
As part of a CON program, some states may place certain health care facilities and facility beds on moratorium. This means a state planning agency will grant no CONs for certain facility capital expenditures. Moratorium regulations most often affect nursing facilities and other long-term care facilities.
Several states—including Arkansas, Florida, Georgia, Hawaii, Illinois and Virginia—have restrictions on the development or expansion of certain health care facilities and beds through a needs and utilization assessment process. While not an outright moratorium, a state planning agency may determine there is no need for additional health care facility beds or services in a particular county or district.
Now we need to remember how politics has controlled the delivery of health care in Illinois and now its haunts the care of our Illinois residents today.
Pamela Meyer Davis is a Hospital Administrator in capital letters. In 1988, she became the president and chief executive officer of Edward Hospital, in Naperville, Ill., near Chicago. She quickly built the sleepy institution into a regional health-care provider with cardiac services, a cancer center, a pediatric emergency department, residential care, and more. So in 2003 when she detected possible fraud in the Illinois Health Facilities Planning Board, she had no idea that she would add “undercover spy” to her résumé and help begin an investigation that eventually would lead to the arrest and indictment of former Illinois Gov. Rod Blagojevich.
The night before Davis was to appear before the planning board to ask for approval for a new medical office building, she received a call from P. Nicholas Hurtgen, a senior managing director of Bear Stearns in Chicago, who told her to pull the project from review because, “I supposedly needed their advice and help in terms of signed contracts before this project would be approved,” she said. She had heard this type of pitch before, so she ignored the phone call.
The next day, the planning board soundly rejected Davis’ proposal and did so with “disdain, anger, and inappropriate questioning,” she said. After the vote, a Kiferbaum Construction Corp. executive came over to Davis and stated they had “told me to pull the project and that I should now understand they were serious about the fact that I would never be approved unless I entered into a construction contract with them,” she said.
Davis recognized their tactics as blatant extortion. “My inner voice – my instincts – were screaming and shouting that this was not something I could engage in,” she said. So she called 411 and got the number for the FBI.
The FBI was skeptical, but the bureau agreed to do some investigating. She invited Hurtgen and Jacob Kiferbaum, the owner of Kiferbaum Construction, to her hospital office to talk about the project. FBI agents had wired her and were listening in from a nearby van. After just a few minutes of discussion, they called her on her private line and said, “It’s extortion! Get them out!”
And so began Davis’ eight-month surveillance that would gather evidence to convict Hurtgen, Kiferbaum, and others, and help begin U.S. Attorney Patrick Fitzgerald’s Operation Board Games, which would lead him through a “pay to play” scheme all the way to the governor’s office. Blagojevich’s trial is slated for June 2010.
The ACFE presented the 2009 Cliff Robertson Sentinel Award to Davis at the 20th Annual Fraud Conference & Exhibition for her courage and tenacity in pursuing crooked state officials. The inscription on the award reads, “For choosing truth over self.”
Interview below best explains the politics that now threatens the health care of every citizen in Illinois today, this week, this month:
What kept you from agreeing to any kind of deal with the administrators of the Illinois Health Facilities Planning Board and Kiferbaum Construction Inc.?
As the president and CEO of a not-for-profit organization that provides health-care services to a population of more than a half million people, it is my responsibility to ethically and appropriately manage the resources to fulfill the mission of providing health-care services to the individuals in our service area. So I will not, and cannot, compromise the trust placed in me by our board of trustees to honestly and ethically fulfill my responsibilities as CEO. My ethical standards did not allow me to consider making a deal with the Illinois Health Facilities Planning Board or any individual involved in the extortion attempt on Edward Hospital.
I read that the FBI agents first thought you were a crank. When did they realize you were most definitely not?
The FBI agents, after listening to an initial meeting in my office with Nicholas Hurtgen and Jakob Kiferbaum, acknowledged that my instincts were probably correct, and they became exceedingly interested in gaining more information to determine the extent of corruption.
What advice did the FBI agents give you during the surveillance? Did the agents counsel you on how to converse with the suspects? How did you hand off the tapes to the agents? Did they continue coaching you through the process?
The FBI gave me broad latitude to converse with many of the subjects under review. Following each meeting, I handed off the tape to the FBI agents in a variety of locations including their home office, restaurants, Marshall Field’s department store, and my office. I was, and am, exceedingly angry toward the corrupt businessmen. However, after spending time with them in a variety of settings and hearing about their families, I began to develop a sense of deep sadness about the impact of their corrupt behaviors on their spouses and children.
Maintaining secrecy during my undercover work required isolating myself from conversations with staff. I would walk away from encounters with innocent people who inadvertently were being recorded due to my work with the FBI. I was required by law not to discuss this case with anyone unless I received a court order to do so. Ultimately, I was able to share my situation with the chairman of the hospital’s board of trustees, who was extremely supportive.
During your May 5 testimony to the Illinois General Assembly’s Joint Committee on Government Reform, you said that “pay to play” schemes have been targeted at hospitals because the “temptation for corruption is huge.” How should the Illinois system be overhauled? Are other hospitals nationwide put in these untenable positions? Should the federal government step in?
I believe that planning for health-care services is best left to health economists and health planners. The Illinois legislature recently passed a law that reforms the Illinois Certificate of Need [CON] program. However, even with the changes recently passed, the CON process is still broken because it essentially protects the status quo as opposed to allowing the health-care services to respond to normal market conditions. There have been numerous reviews of the economic impact of CON and, to date, there have been no documented savings in health-care costs that are attributable to the CON process.
What were some amusing moments of your surveillance for the FBI?
The FBI agents told me they had never eaten better in their lives at the restaurants I was taking them to for surveillance! Unfortunately, sometimes I received some unwanted advances. One man, trying pick me up at one restaurant, asked if I was alone, although there were more than 20 agents in the room at the restaurant who would be listening to every word he said!
When and what caused you to stop surveillance work for the FBI?
I abruptly stopped working undercover with the FBI when my story was leaked to the Chicago Sun Times. I still don’t know to this day who or how that information was leaked, but it immediately stopped my working communication with the FBI. I did not have any meaningful additional interaction with the FBI again until I reviewed my recorded tapes in preparation for the trial of Nicholas Hurtgen with Bear Stearns. Ultimately, he pleaded guilty and I was not required to testify at his trial.
Before you were involved in the FBI surveillance, did you have any inkling that such corruption existed in the Illinois hospital construction approval process?
I had been aware of the widespread corruption in Chicago. I have never personally been involved in corruption and was shocked and appalled at the arrogance of the “bad guys” and the arrogance of the demands made upon me. I was also shocked that other executives had experienced these illegal approaches but either agreed to the extortion schemes or said no, but failed to report it to the appropriate authorities. I firmly believe that all of us, as responsible citizens, must take a stand against corruption or we will lose the very freedoms that make America a strong and wonderful country.
Have you ever received approval to expand Edward Hospital into Plainfield, Ill., which was the project request that first started all this?
As of today, Edward Hospital has received approval to develop many outpatient services at our Plainfield location. We currently have a medical office building and an immediate care center, which has been converted into a 24-hour emergency room. Construction is underway on a major cancer center on this site, and we also run an outpatient surgery center. The proposal for inpatient hospital beds still has not been approved, but we continue to submit Certificate of Need applications to complete our development of health-care services for the ever-expanding population of Plainfield.
How do you feel about your role in getting the ball rolling that led to Fitzgerald’s Operation Board Games and the exposure of Illinois political corruption?
What are your thoughts now that the investigation has led to alleged crimes in the highest elected office in Illinois?
I feel a sense of pride in my work with the FBI and the U.S. Attorney’s Office. I have developed a deep respect for the consistent and excellent work provided by these individuals. As for myself, I had faced stress before, but nothing on this scale. I really had two jobs at the same time – the president and CEO of Edward Hospital, and working covertly for the FBI.
When working with unethical people, it definitely takes a toll on your outlook of the world. I began to be paranoid and began to distrust individuals and large businesses. I became concerned about the safety of my family, and I had to distance myself from the people I worked with because I didn’t want to tape any conversations inadvertently of innocent people who had routinely talked with me both on a personal and professional level.
I have since recovered my sense of equilibrium and positive outlook. I once again do believe that most people are, in fact, good and trustworthy. Individuals sometimes fail to recognize that each and every one of us can make a difference in how we live our lives and the impact we have on others. Because of the way most people live their lives in quiet anonymity, it becomes easier to simply turn away from taking a stand against evil. But with increasing awareness of unethical behavior and the concomitant negative impact on business, many people are now willing to do the right thing. I am confident that justice will prevail in spite of marginal players.
What prevents other people in your position from having the gumption to blow the whistle on fraudsters?
The individuals who tried to extort Edward had vast experience and many years of extorting many other individuals and companies. Why no one stood up and exposed them, why others went along with their schemes, why many simply said no, but didn’t report them – I don’t know. As I shared with the attendees of the ACFE Annual Fraud Conference, I do believe that a well-known quote by Edmond Burke sums it up for me: “All that is necessary for the triumph of evil is that good men do nothing.”
What advice would you give would-be sentinels?
Every individual citizen can make a difference in the way our society works. I believe that individuals have a responsibility to behave in an ethical manner and then, more importantly, only through individual action so we can protect the freedoms that we so cherish in America. I believe the rewards of doing the right thing more than offset the perils of being a whistle-blower. In the end, the satisfaction of having done the right thing far outweighs the short-term stress of working undercover.
Joseph T. Wells, CFE, CPA, founder and Chairman of the ACFE, began the association in 1988 to train fraud examiners to not just investigate fraud but to help deter it. You’re not a fraud examiner, but you’ve demonstrated many characteristics of one.
Can you give our members some encouragement as they persevere in uncovering fraud and amassing evidence?
I am a firm believer that most people are, in fact, good both in personal relationships as well as in the business area. I also believe that due to many high-profile indictments in Illinois, that we are looking at a future that will not tolerate continued corruption in our government and business. I am optimistic that there are many, many people who are willing to stand up and be herd and who will, through our voting process, ensure that future leaders are ethical.