This story was produced with the Better Government Association, a nonprofit news organization based in Chicago.
CHICAGO — When scandal engulfed Loretto Hospital this spring, the West Side facility had a powerful champion: Illinois Senate Majority Leader Kimberly Lightford.
Lightford defended hospital administrators when they admitted improperly vaccinating people at Trump Tower and other places miles from the community the hospital serves. She stood by the officials even after multi-million insider contracts with the business partner of Loretto’s chief financial officer were revealed.
Lightford’s staunch support of Loretto is part of her legacy — but she’s also been the recipient of perks and payments from the publicly funded hospital for years, the Better Government Association and Block Club Chicago found.
She’s been paid by an insurance firm owned by Loretto, which also paid for her to travel to the Caribbean for firm meetings, records show. During some of those trips, she stayed at a luxury hotel and used campaign funds to cover the cost.
Lightford’s campaign fund also has accepted more than $38,000 in contributions from the hospital’s key management contractor, records show.
A Democrat from Maywood, Lightford has served on Loretto’s board for 21 years and is currently the vice chairman. The lawmaker’s website touts that she has steered $26 million in state grants to the hospital, which has put her name above its emergency room front door.
Exactly how much Lightford was paid by Loretto’s insurance firm is not listed on the hospital’s tax statements or on Lightford’s state ethics disclosures, the BGA and Block Club found.
Lightford declined calls and written requests for comment.
Loretto’s recent stumbles throw a spotlight on the senator’s service to the hospital and on the facility’s small, politically connected Board of Trustees.
Loretto’s website currently lists six board members, including Lightford. One of their top jobs is ensuring the hospital is following federal rules for taxpayer-funded programs, most notably from Medicare and Medicaid.
Two members of the board — including Lightford — have received perks or payments through Loretto. The board chairman’s law firm billed the hospital for at least $3 million in legal fees over 11 years, although Loretto said his firm worked at a discount.
Another two members, the hospital’s CEO and a prominent doctor, are paid by Loretto while serving on the board that’s tasked with the hospital’s oversight.
And Loretto’s board and senior staff included two other state lawmakers until one resigned in March.
The hospital’s compliance officer, who vets all staff and board conflict of interest statements, has private business ties to Loretto’s top attorney, who is tasked with defending the institution against legal claims and government investigations.
Health care ethics experts said it’s not illegal for board trustees to do business with the hospital, but these sort of personal financial entanglements could compromise the board’s independence.
“This is a relatively small board for a hospital. And if three or four of them have some sort of insider benefits, it’s really hard to police that — because it is harder for one director to call out the others,” said Donald Kramer, a lecturer at the University of Pennsylvania’s nonprofit law program who reviewed the BGA/Block Club findings.
The benefits to board members and a state lawmaker who served on the hospital’s senior staff were not always disclosed in the charity’s nonprofit tax returns, the BGA and Block Club found in this new examination of hospital tax reports stretching over two decades.
Loretto’s board members declined individual requests for interviews, directing questions to hospital spokeswoman Becky Carroll.
Carroll answered few questions about Loretto’s financial relationships with specific trustees and staff, but she said the hospital tax statements were prepared by certified public accountants and independent auditors before being submitted to the IRS.
The board members’ work for Loretto was good for the hospital in the long run, she said.
“Safety net hospitals in Illinois have been forced to close because of a reliance on the old models of operating,” Carroll wrote in an emailed statement. “Loretto challenged itself to find ways to generate new revenue, reduce costs and expand and maintain high-quality health care services to help reduce inequities facing the communities it serves and it’s done exactly that.”
Loretto Hospital, a 122-bed, acute-care center, serves mainly low-income people and patients of color, and in recent years, the hospital has warned it could close due to funding shortfalls.
The hospital has been under renewed scrutiny since March, when Block Club revealed COVID-19 vaccines went to ineligible people at Trump Tower, a Gold Coast jewelry shop and a steakhouse, among other places. The former chief financial officer who arranged for those doses, Dr. Anosh Ahmed, subsequently resigned. Block Club and the BGA also found Loretto awarded at least $3.9 million in hospital contracts to Ahmed’s friend and business partner.
Caribbean Trips, Political Donations
Lightford touts on her website how she used her position with the Illinois General Assembly to shepherd government funds to the hospital.
“Lightford’s dedication helped bring more than $26 million in grants to the facility to replace outdated boilers, build a state-of- the-art emergency department, add a pharmacy and remodel all bed space,” her website states. “In 2009, Loretto Hospital named their emergency department The Kimberly A. Lightford Emergency Department.”
Loretto consistently reports Lightford took $0 for her board service.
But she has been paid through the hospital’s wholly owned insurance company, Westside Insurance Co. Lightford’s state ethics disclosures list her connection to Westside but do not divulge what she was paid or even her title with the firm.
Illinois lawmakers are required to disclose the name of organizations they received more than $1,200 from in a year but do not have to detail how much money they made or what work they did.
Lightford also made multiple trips to the Caribbean for board meetings. Loretto’s tax reports do not state who paid for Lightford’s trips.
Carroll said wholly owned insurance companies are not uncommon in the health care industry, and Loretto was forced to create its own firm several years ago “because there was not a single provider in the United States that would provide the insurance required for it to operate.”
“Members of boards who create captives also often serve on those boards, and this is no different in the case of Loretto,” Carroll said. “Board members of captives are required by Cayman Islands’ law to travel at least once a year to the island to attend one of their two annual board meetings.
“Naturally, entities like Westside reimburse board members for their individual travel and board members receive a very modest compensation for their time, which is a common business practice across multiple industries,” she added.
The Cayman Islands Monetary Authority has not responded to a request for details filed under that country’s Freedom of Information Act.In 2008 and 2012, Lightford used her campaign fund to reimburse Westside for bills totaling $1,833 related to Westside board meetings or other functions in the Cayman Islands, where Westside is registered. It is unclear why she sometimes used her campaign funds for these expenses.
In 2016, Illinois Times reported Lightford separately used her campaign fund to pay $3,931 for two stays at the Ritz-Carlton in the Cayman Islands. At the time, she told the Springfield publication, “Our meeting every fall is in the Caymans so that our auditors can come in, and we have our yearly meeting there. That’s [the Ritz-Carlton] the location that we stay when we’re there.”
In addition to Westside’s payments to Lightford, Loretto’s former hospital management firm and top contractor, Renaissance Hospital Management Inc., gave $38,350 to Lightford’s political fund between 2002 and 2014, records show.
Loretto paid Renaissance at least $20 million from 2000 through 2013 to provide hospital management, hospital tax forms show. At least one Renaissance officer also served on Westside’s board, records show.
In the face of Loretto’s vaccine line-jumping scandals, Lightford defended the hospital’s CEO — fellow board member George Miller — after Loretto vaccinated 258 people at Miller’s suburban church. A hospital self-audit later ruled those recipients were “decided eligible.”
“Serving on the board for 21 years, as I have, prior to COVID, Mr. Miller is one of our best presidents that we’ve had,” Lightford said at an unrelated March 26 news conference. “We’ve worked really hard to develop relationships in and around the community so that we can continue to provide quality health care to our Austin residents. We are a safety-net hospital. We’re a not-for-profit hospital.”
Lightford also said Miller hadn’t made contributions to her campaign fund, but state election records show that in 2019 Miller made a $2,500 contribution to the Senate Democratic Leadership Fund, which Lightford oversees as chair.
More Trips And Political Donations, But Few Details
State Rep. La Shawn Ford, a Democrat from Chicago, served as Loretto’s seventh board member until March when he resigned, saying he was disappointed in the board’s handling of the vaccine line-jumping scandal.
When asked what role he had with Loretto’s wholly owned insurance firm, Ford told Block Club and the BGA in an email, “I was asked to apply and declined.”
As part of that invitation, Ford wrote, he traveled overseas, but he declined to specify where. “I did travel to the overseas function to learn about the hospital’s relationship,” he wrote.
Ford declined to offer other details or provide travel records. Ford said he received no other compensation from Loretto.
Ahmed, the hospital’s former CFO and chief operating officer, donated $12,000 to Ford’s ill-starred mayoral campaign in 2019.
A Powerful State Rep Becomes Loretto’s Public Face
Another Democratic state representative, Camille Lilly of Chicago, is not a member of Loretto’s board — but Lilly has been paid by the hospital as its vice president and chief external affairs officer. The hospital’s tax returns last listed Lilly’s compensation in 2011, when Loretto said it paid her $122,929. Her salary was not listed in subsequent reports.
Lilly has consistently disclosed on state ethics forms that she works at Loretto, but she does not detail how much she is paid.
Loretto officials in March denied a Crain’s Chicago Business report that Lilly gave hospital staffers a list of people to vaccinate without requiring them to schedule appointments by phone or online like the rest of the public.
Lilly declined to answer questions, directing reporters to Carroll.
Conflicts Of Interest And The Compliance Officer
Board Chairman Edward Hogan billed Loretto at least $3.2 million for legal services between 2005 and 2016, the hospital’s public tax statements show. And Carroll said the facility continues to use Hogan’s firms because “every dollar counts at Loretto.”
The hospital “not only gets a reduced rate on legal services from the firm of Hogan Marren, but those rates are checked every year against those being paid by other hospitals — and its rates are lower,” Carroll said.
No federal regulation prohibits board members from doing business with the hospital, as long as the contracts are reasonable and fair, experts said, and there can be a great value in having people who understand the organization providing key services.
Loretto’s board, including Hogan, oversees hospital compliance officers who serve as “the backbone” of the facility’s commitment to protect taxpayers from fraud and waste, and patients from abuse, according to federal guidelines.
Loretto provided a copy of its 17-page Corporate Compliance Program and Standards of Conduct. When there is a potential conflict of interest, employees must disclose the matter to the hospital’s compliance officer, that document says.
Carroll declined to provide Loretto board members’ conflict of interest forms, but she said they were “filed annually by appropriate leaders within the organization and thoroughly reviewed by the board.”
Some health care industry experts recommend compliance officers not report to the hospital’s top attorney, who is tasked with defending the institution against any claims.
But Loretto Compliance Officer Aileen Brooks works in a private law practice with the facility’s general counsel, Melinda Malecki. Brooks is a managing partner of the Malecki & Brooks Law Group in Elmhurst, according to that firm’s website.
Brooks and Malecki did not respond to requests for comment.
“If you examine a number of corporate integrity agreements entered into as a result of settlements with the federal government, you will see that the Office of Inspector General often requires in those agreements that the compliance function and the legal function be separated,” said Gabriel Imperato, a Florida attorney who represents medical companies in compliance and ethics matters.
Loretto’s compliance and legal functions appear to be merged because of the law firm arrangement between Brooks and Malecki, Imperato said.“There is nothing per se that prohibits this arrangement,” as it may save costs, Imperato said. Still, “if it were up to me and it was otherwise possible, as a practical matter, ideally it would be the best practice to keep the two functions separate.”
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