Big universities, big conflicts: 3
Article 3 in a series: "Nuanced" recusal
Upton Sinclair observed that it is difficult to get someone to understand something when their salary depends on not understanding it. In this part of the series, we find that multiple legal requirements that instruct a University Board member to recuse from voting mean nothing to a corporate executive in the face of an opportunity to influence building projects and a merger that affect his corporation’s operations.
Background: Recusal rule
The NJ Recusal Rule (NJAC 19:61-7.1) prohibits “State officials” from “any division, board, bureau, office, commission, or other instrumentality” of any principal Executive or Legislative department from
“voting on any matter in which they have personal or financial interest,” and requires that they absent themselves from “consideration or discussion of the matter.”
Rutgers Policy 15.1.12 reiterates these conditions. NJ State Executive Order 14 is also relevant to Board members serving, and voting, on matters before the Board. This Order:
“… prohibits a member of a State college or university governing board from being employed by or deriving or receiving any compensation from a firm, association, or partnership that does business with the institution that the board member governs.”
Technical Definitions:
The Recusal Rule applies to (see Scope): “Special State officers … as defined in the NJ Conflicts of lnterest Law,” as: “any person holding an office … in a State agency …”
“State agency” is defined to be “any of the principal departments in the Executive Branch of the State government, and any division, board, bureau, office, commission or other instrumentality within or created by such department”.
“Executive principal departments” include the Department of State, within which is Higher Education, including Rutgers University.
A clarification was offered by the NJ Supreme Court, which ruled that Rutgers is considered a state agency for most statutes.
An “Exception” is written in some cases by the NJ State Ethics Commission. Exceptions are provided for some officers to define conditions under which a the officer may or may not participate in particular matters. In the absence of an exception, Executive Order 14 would apply.
Chronology of recusal violations:
February, 2021
Background: 2 medical schools, 1 corporation
Rutgers University has two medical schools, Robert Wood Johnson Medical School (RWJMS, in New Brunswick, NJ) and New Jersey Medical School (NJMS, in Newark, NJ).
In February, 2021, the private corporation, Robert Wood Johnson Barnabas Health (“RWJ Barnabas”) announced an Integrated Practice Agreement between “RWJ Barnabas Health and Rutgers University on behalf of its Robert Wood Johnson Medical School.” According to RWJ Barnabas, through this agreement, a “RWJ Barnabas facility [became] the principal teaching hospital of RWJMS.” This built on an earlier (2018) and broader Master Affiliation Agreement between RWJ Barnabas and Rutgers.
Fair enough: RWJ Barnabas, a private corporation, affiliates with RWJMS, a public medical school, for the benefit of both. Incidentally, it will shortly become relevant that this agreement “does not include clinical services provided by Rutgers New Jersey Medical School at University Hospital in Newark.”
December, 2022
Enter medical corporation’s CEO as Rutgers Board member
On December 6, 2022, the President and CEO of RWJ Barnabas, Mark Manigan, was installed on the Rutgers Board of Governors. Rutgers’ Counsel and Ethics Liaison Officer counseled him to:
“recuse on all matters involving RWJ Barnabas.”
Seems clear, right?
Apparently not: a couple of examples follow
February 2023
FAILURE TO RECUSE 1: RWJ Barnabas CEO votes for Rutgers $567 million expense on joint facility
A complex of buildings in New Brunswick, NJ is currently (2024) being constructed under the acronym, “HELIX”, short for “Health + Life Science Exchange.” HELIX is planned to include:
“a new medical school and research facility … Rutgers Health at the HELIX will be the new one-campus home to Rutgers Robert Wood Johnson Medical School and a Rutgers translational research facility equipped with a variety of labs to advance the work of 80 research teams.”
The first of these buildings is a joint facility that will house labs and offices for both RWJMS and RWJ Barnabas at an estimated cost of $732 million. The Rutgers’ Board resolution to fund the project even mentions RWJ Barnabas. In his capacity as president of RWJBH Mr. Manigan says:
“RWJBarnabas Health is incredibly proud to be associated with the HELIX project …
“We view the projects within this phase of the HELIX to be truly transformational for all of the collaborating organizations – particularly our academic partner Rutgers University …”
It seems undeniable that RWJ Barnabas’ CEO is keen on this joint facilities project with Rutgers. This is understandable. What’s less understandable in view of the pretty clear Recusal instructions is that:
On February 28, 2023, shortly after Mr. Manigan joined the Rutgers Board, he voted with the Board for Rutgers’ estimated $567 million share of the cost of the first HELIX building.
Well that’s a disappointment.
It’s said that you shouldn’t cheat if you’re winning, but Mr. Manigan seems to disagree, since he did much the same thing 6 months later.
July 2023
FAILURE TO RECUSE 2: RWJ Barnabas CEO votes to merge RWJMS and NJMS
On July 10, 2023, the Rutgers Board of Governors voted to merge RWJMS and NJMS in a formal resolution. This resolution also mentions RWJ Barnabas, but this evidently wasn’t a sufficient indication for Barnabas’ President and CEO to abide recusal instructions: Mr. Manigan remained present at the meeting and voted for the merger.
The merger of Rutgers’ medical schools merits its own discussion, but a few highlights regarding RWJ Barnabas include the following.
In August of 2023, nurses at RWJ University Hospital, part of the RWJ Barnabas system overseen by Mr. Manigan, began an unprecedented 4 month long strike. RWJUH responded in part by attempting to enlist medical students from RWJMS to fill some of the staffing shortfalls.
RWJMS and NJMS currently enroll about the same number of medical students, so a merger would nearly double the number of potential enlistees that a medical corporation willing to engage in such practices could draw upon.
This means that the merger could benefit Mr. Manigan’s corporation, though enlisting medical students would certainly be adverse to their and Rutgers’ interests in education and matriculation (see “adverse” below).
The allocation and availability of physicians and students would also be affected by the proposed merger.
For instance, a merger would allow low revenue, high risk training and clinical operations to be shifted to NJMS, retaining high revenue, low risk operations at RWJMS, where RWJ Barnabas would benefit.
By the same token, students and professors currently at NJMS but working in lucrative fields could be moved to RWJMS, which again would benefit Barnabas.
There are any number of other synergistic or competitive influences between a medical services corporation and a medical school that raise questions concerning whether the President of one is or is not acting in the interests of the other. A few examples:
more physicians in the merged school could refer patients to services in the corporation,
the corporation could sponsor students in the school with the recognition that this would influence patient care in the corporation,
as already mentioned, the hospital could leverage the schools’ students for its own staffing needs.
August, 2023 - “Nuanced” exception to precedent
It seems that Mr. Manigan didn’t abide either Executive Order 14 or the instruction to recuse from Rutgers’ Counsel. Rutgers’ Counsel appears to have anticipated this eventuality, and filed an exception from Executive Order 14 with the State Ethics Commission to allow Mr. Manigan to serve on the Board subject to an “exception” as described at the top of this post.
Note that this was on August 1, 2023, after Mr. Manigan had already voted on the board, but in any case the Commission’s decision explains that:
"Historically, where an EO 14 exception has been granted, the Commission has also always required that the member of the governing board recuse from all matters involving the entity which prompted the request for the exception. However, the Commission was asked to consider Rutgers’ request for a nuanced exception to this precedent."
The Commission decision emphasizes that notwithstanding this unprecedented “nuanced exception,” there remains an:
"obligation to recuse from matters involving the member’s employer ... where Manigan’s employment with and fiduciary duty to RWJ Barnabas may impair his objectivity and independence of judgment in the exercise of his official duties as a member of the Rutgers Board of Governors or might reasonably be expected to create an impression or suspicion among the public that he is engaged in conduct violative of his trust as a State official."
The Commission’s ultimately prescribed the nuance to Mr. Manigan by requiring that:
"he must execute and abide by a written recusal from official duties involving RWJ Barnabas, where the interests of Rutgers and RWJ Barnabas are adverse … including by way of example, but not limited to:
"… Establishment, negotiation, or termination of any
obligations or commitments between Rutgers and RWJ Barnabas"… Joint facilities projects between Rutgers and RWJ Barnabas,"
"… and must obtain prior approval to participate in matters where the interests are not adverse,"
Let’s recap
A conversation with Rutgers management on the precise issue of Mr. Manigan’s decision to not recuse focused on what constitutes an adverse matter, including whether or not the “HELIX” complex is a “joint facilities project.” These may be interesting questions, but it’s important reiterate that the HELIX and merger votes arose before the Aug. 1 “nuanced exception.” We clarify the dates here.
In December of 2022, the CEO of RWJ Barnabas joined the Rutgers Board of Governors, and was counseled by Rutgers’ Counsel and Ethics Liaisson Officer to recuse on all matters involving RWJ Barnabas.
In February of 2023, he did not recuse, but voted for Rutgers to spend $537 million on a joint facility to be occupied by Rutgers and RWJ Barnabas.
In July of 2023, again he did not recuse, but voted for a medical school merger that mentions RWJ Barnabas.
In August of 2023, the State Ethics Commission issued a “nuanced exception” that makes clear he must either recuse or obtain prior approval on matters before the Board that involve RWJ Barnabas.
Because of this well-recognized nature of conflicts of interest, when a Rutgers BoG member employed by a medical corporation votes in matters concerning an affiliated medical school, we cannot have confidence that their vote was in the interests of the school, or of Rutgers.
Conclusion:
We have seen from public records that the President and CEO of RWJ Barnabas joined the Rutgers Board of Governors, where he voted, twice, for actions that benefited RWJ Barnabas, though not necessarily Rutgers, its students, or its community.
He did so despite NJ State Executive Order 14, which prohibited him from acting as Board member while employed by an organization, such as RWJ Barnabas, that does business with Rutgers.
He also acted against explicit legal direction from Rutgers’ Counsel and Ethics Liaison Officer, to “recuse on all matters involving RWJ Barnabas.”
Even if the RWJ Barnabas CEO had voted after the Commission’s extraordinary “nuanced exception,” he would still be forbidden from acting without additional approval on RWJ matters.
Any case supporting this CEO’s actions would not be helped by his willingness to attempt to enlist medical students to replace striking workers, and - a story for another time - displace 750 students from a local elementary school, initially to a converted warehouse and subsequently to a building on an environmental cleanup site.
Either of these actions might, in the State Ethics Commission’s words “reasonably be expected to create an impression or suspicion among the public that he is engaged in conduct violative of his trust as a State official."