October 17, 2017; Crain’s New York
NPQ has long written about the responsibilities and legal liabilities of boards as a group and of board directors individually. A New York City case illustrates why this matters, with a letter from a state office directly accusing a board of avoiding its responsibilities and putting both the organization and its clients’ health at risk.
Heritage Health and Housing, a Harlem-based New York City agency, has been required to relinquish control of several supportive living facilities to another nonprofit organization. This comes after a long history of accusations of mismanagement, an organizational culture that led to constant leadership turnover, and a lack of adequate fiscal oversight. All of this is reported in a recent article at the website of Crain’s New York. Perhaps most interesting in this report is the associated letter from the State Office of Mental Health (OMH) from May 2017 that places the blame for all of this squarely at the feet of Heritage’s board of directors.
A quick review of Heritage’s website shows its history dating back to 1968 when a well-meaning group of community activists decried the lack of local care for the underserved in Harlem. As the organization progressed, it evolved into Heritage HealthCare Center, which was designated a federally qualified health center or “FQHC” in 1980. FQHCs are a very specific, heavily regulated kind of local healthcare provider with requirements that include the number of people on the board of directors who are regular users of the clinic’s services. Later, supportive living services were added, and the organization became known as Heritage Health and Housing.
Over the last few years, Heritage has reported large losses in its IRS Form 990 filings. Losses were nearly $180,000 in 2013, more than $660,000 in 2014, and more than $950,000 in 2015. These are numbers that would certainly give a nonprofit board of directors some cause for alarm. In recent years, as much as two thirds of the organization’s income has come from government grants, with more than half of the rest coming from Medicaid and Medicare, speaking to the fact that a majority of the residents and patients are, in all likelihood, indigent.
The letter from OMH makes it seem like the board of directors should have been more than just concerned. Heritage’s chief executive, Alvaro Simmons, lied about his credentials, claiming to have had a doctoral degree. After Mr. Simmons left his role, he was replaced by the then-treasurer of the board, Saundra Alexander, and then by Dr. Beverly Mosquera. Dr. Mosquera had been involved with Communilife, a supportive living organization serving more than 3,500 people in the New York area. Without explanation, Dr. Mosquera left Heritage after only two weeks, and Ms. Alexander returned. In this time, there were four chief financial officers, culminating in the hiring of Silva Umukoro, who had been in charge of a clinic that declared bankruptcy a few years ago. This revolving door of leadership speaks to significant cultural issues within the organization that, according to OMH, the board should have addressed.
The board knew things were wrong. OMH had been involved, offering capacity-building services, according to the letter. There had been an outside consultant who had told the board in no uncertain terms that they had to do something about the completely toxic working environment at the organization.
Who are these board directors? David Rosenthal, MD, is listed as president and John Cardwell as Vice President since 2014. If it’s true that the board’s leadership has been in place for the last four years, it completely overlaps the period during which OMH cites contract overpayments totaling more than $1 million, which Heritage is required to repay. Will the board be held liable for that repayment now that the contracts have been migrated over to another provider?
In an interestingly blunt and forthright portion of the letter, the author, Bob Moody, writes, “OMH believes not only that the actions of the Board are not in compliance with NYS nonprofit law, but also that the Board has put Heritage in serious jeopardy and consequently the health and safety of the recipients in Heritage housing.”
This should be another heads-up to inactive nonprofit boards; Moody draws a direct line of responsibility from the board’s governance to the health and safety of the residents. This egregious lack of oversight and involvement may be a “problem of performance,” as described in a recent NPQ article, but according to OMH, the results go way beyond poor performance to putting people’s health at risk.—Rob Meiksins