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DA to Probe $16M Spent on Consultants by Bankrupt Interfaith Hospital

By Camille Bautista | January 13, 2015 8:51am
 Brooklyn's District Attorney Ken Thompson said Tuesday he will investigate the $16 million spent on lawyers and consultants as Interfaith Medical Center filed for bankruptcy. The probe follows a request from Councilman Robert Cornegy.
Brooklyn's District Attorney Ken Thompson said Tuesday he will investigate the $16 million spent on lawyers and consultants as Interfaith Medical Center filed for bankruptcy. The probe follows a request from Councilman Robert Cornegy.
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DNAinfo/Paul DeBenedetto

BEDFORD-STUYVESANT — Brooklyn's district attorney plans to investigate $16 million in fees paid to lawyers and financial advisers during Interfaith Medical Center's bankruptcy case.

Councilman Robert Cornegy, who represents the city’s 36th District, had called on DA Ken Thompson to launch a probe after learning about the costs at the Bed-Stuy hospital, which received state and federal assistance to stay open.

On Tuesday, Thompson issued a statement saying, "To now learn about questionable billing practices and reported excessive fees and expenses after the community fought so hard to save the hospital is troubling.

"I intend to investigate."

Cornegy's request comes as Interfaith tries to rebuild after a 2012 bankruptcy filing, which partially stemmed from two years of reductions in Medicaid reimbursements. In the summer of 2014, the hospital avoided closure with the help of elected officials and additional funding.

During the bankruptcy filing, accountants, lawyers and advisers collected $16.7 million in expenses and fees — including a $30,000 bill for travel costs from an Edison, N.J., office to visit Interfaith or attend court hearings in Downtown Brooklyn. The distance between Edison and Bed-Stuy is about 35 miles.

A federal monitor has red-flagged more than $700,000 in bills during the bankruptcy proceeding, as first reported by the Daily News.

Cornegy expressed outrage at the charges on the steps of City Hall on Monday, describing the “energy and hard work” that went into saving the hospital.

“There is no way, had I or the community known that there would be this level of mismanagement, that we would have fought as hard for the assistance from the state and from the federal government to save Interfaith Hospital,” he said.

Melanie L. Cyganowski, the temporary operator of Interfaith Medical Center, previously told DNAinfo the hospital received more than $40 million from the state as part of the Interim Access Assurance Fund.

And residents and elected officials rallied to keep the center open during the year-and-a-half bankruptcy battle. 

“Unfortunately, a few individuals seized upon this as an opportunity to line their pockets and take advantage not only of the institution, but of the taxpayers as well,” Cornegy said.

The councilman added that the “pilfering” took place when the institution was most vulnerable, and the issue is "very top-heavy in terms of where the money’s being spent." 

“It is a travesty that those dollars aren’t spent where they need to be, which is patient care,”  Cornegy said, citing understaffing and long emergency room wait times.

In a statement to DNAinfo, representatives from Interfaith said the hospital has reduced ER wait times to be consistent with, and sometimes below, the national average, and has increased patient volume by 20 percent at the 287-bed facility.

“Interfaith Medical Center has emerged from bankruptcy in a position of strength. Under its new leadership, which came in after all the decisions were made in the bankruptcy process, IMC remains focused on the future, rebuilding and significantly improving the delivery of quality care to the people of Central Brooklyn,” the statement reads.

The hospital didn't directly respond to questions about the $16 million in fees.

Calling for more community oversight and transparency from the hospital, Cornegy said communication with Interfaith has not been easy, and hospital officials have not outlined the facility's fiscal condition.

“We never got an absolute response,” the councilman said. “We thought it was early in the process for looking at the rebuilding of the hospital, but with that much being spent we’re concerned that we’ll literally run out of money.

“We now have to speed up the times and talks with management to get some clear answers because we haven’t been able to get it today.”