PROVIDENCE — In the fall of 2001, the political fortunes of state Sen. John A. Celona were soaring.

The North Providence Democrat was chairman of the Senate Corporations Committee and his name was being bandied about as a strong candidate for lieutenant governor.

Celona’s surging popularity, especially among senior citizens, worried Bob Urciuoli.

Urciuoli, the president and chief executive officer of Roger Williams Medical Center, wondered whether a Lt. Gov. Celona would be able to remain on the hospital’s payroll as a consultant, according to court testimony yesterday.

Urciuoli summoned Kimberly O’Connell, the hospital’s legal counsel and vice president, to his office. He wanted to know whether they could give Celona a pay raise and keep him on board as a consultant if he was elected to higher office.

Details of the meeting surfaced yesterday in the federal corruption trial of Urciuoli and Frances P. Driscoll, the hospital’s former vice president of external affairs. They are accused of hiring Celona in exchange for legislative action he would take on behalf of the financially strapped hospital.

Celona, who pleaded guilty to corruption charges for his relationship with Roger Williams, CVS and Blue Cross & Blue Shield of Rhode Island, is serving a 2½-year federal prison sentence. He is not expected to testify in this trial. Nonetheless, rarely does a moment pass without his name being mentioned.

O’Connell, a witness for the prosecution, testified that, until she met with Urciuoli, she did not know that Celona was working as a paid consultant for The Village at Elmhurst, an assisted-living center in Providence affiliated with the hospital.

She said that Urciuoli posed to her a series of questions about Celona’s relationship with the medical center. He asked her if they needed approval from the state Ethics Commission to increase Celona’s weekly consulting salary from $700 to $892. She said that was not necessary.

O’Connell told him that, if Celona was elected lieutenant governor, the hospital would have to terminate his contract.

She said that Urciuoli also asked her whether it was OK for Celona to sponsor legislation that would allow the state to pay the hospital for bone-marrow treatments that its medical staff provided for the indigent, or those without health-insurance coverage.

O’Connell testified that she told Urciuoli that Celona could not be involved in the legislation because it directly impacted Roger Williams, the hospital that was paying him as a consultant to its affiliated assisted-living center. At the time, Roger Williams was the only hospital in the state performing the bone-marrow procedure.

An earlier Ethics Commission ruling stated that Celona could work as a consultant for Roger Williams, provided that he did not take action on legislation that solely affected his employer.

In December 2002, Urciuoli and O’Connell met again to “update” Celona’s contract and increase his pay to $1,000 a week.

Urciuoli also told O’Connell that Celona had arranged a meeting between Urciuoli and Ronald Battista, then president of Blue Cross & Blue Shield of Rhode Island. She said that Urciuoli was angry with Battista for “dragging his feet” about some $3 million in reimbursements that the insurer owed the hospital.

O’Connell testified that she was wary about Celona’s role in bringing the feuding bosses together. She warned Urciuoli that it would be wrong to get a state senator involved in negotiations.

“Be careful,” O’Connell said she told him. “It looks bad.”

Battista and a lobbyist for United Healthcare followed O’Connell to the stand yesterday and testified about Celona’s role in arranging meetings between the insurers’ chief executive officers and Urciuoli in 2002 and 2003 to help resolve Roger Williams’ concerns that it wasn’t being paid enough for medical treatment.

Battista testified that he attended a meeting at Celona’s State House office in the fall of 2002 regarding Urciuoli’s concerns that Roger Williams was in financial peril and needed Blue Cross to increase its reimbursements to the hospital.

Although Blue Cross already had a contract with Roger Williams, and Battista said that he did not normally involve himself in negotiations, he said that he agreed to attend the State House meeting. Prosecutors contend that he did so because of pressure from Celona, who chaired the Senate committee that handled health-care legislation.

Battista was not allowed to say why he attended the meeting when asked by Assistant U.S. Attorney Luis Matos, following defense objections. But in response to a question from Urciuoli’s lawyer, Battista said that he did so out of concern for a major Blue Cross partner.

According to Battista, Celona opened the meeting by saying that he understood Roger Williams was having financial difficulties, and “he hoped the hospital and Blue Cross could get together and solve those difficulties.” Urciuoli then outlined the hospital’s plight.

Battista said that he came to the meeting prepared with a three-point plan: that Roger Williams undergo an “accounting evaluation” and a review of its efficiency, and that it also agree to give Blue Cross a discount on costs if it charged other insurers less for various procedures.

That culminated in another meeting in Celona’s State House office, in early July 2003, during which independent auditors reviewed their findings that Roger Williams was entitled to an additional $3.6 million. Battista said that payment of the money was still contingent upon Roger Williams agreeing to the discount matching other insurers.

But a few weeks later, Blue Cross sent the hospital a check for $3.6 million, even though the discount issue had not been resolved. Battista explained that that was because Blue Cross still had “leverage” over Roger Williams by withholding an additional $2 million in reimbursements.

That summer, in August 2003, United Healthcare lobbyist R. Kelly Sheridan testified that he received a call from Celona on behalf of Roger Williams, regarding the hospital’s negotiations with the insurer over a new reimbursement contract.

“Senator Celona said that he understood from Mr. Urciuoli that negotiations on a new contract between United Healthcare and Roger Williams weren’t going well,” said Sheridan.

Celona said that the hospital was considering terminating its contract with the insurer, and that “termination would be bad for the hospital and for United Healthcare.” Celona then told Sheridan that United Healthcare’s negotiators “weren’t getting the message,” and that “Mr. Urciuoli thought it would be helpful to get the two CEOs together to try to work it out.”

Celona asked Sheridan, who estimated that he was tracking about 75 bills for United Healthcare that were in Celona’s Senate Corporations Committee, to arrange a meeting, and Sheridan testified that he did.

At the meeting, Celona opened by repeating that termination would be bad for both parties, and that he hoped the two sides could work things out.

But a few weeks later, Sheridan said, he received another call from Celona, who told the lobbyist that United Healthcare “was not making sufficient movement in terms of raising the number,” and that as a result the contract talks were still not on track.

As testimony wound down for the day, Urciuoli’s lawyer, Howard M. Cooper, challenged Sheridan’s memory of that second phone conversation with Celona, and whether yesterday was the first time Sheridan had recalled Celona telling him that United Healthcare’s offer was too low.

Following a flurry of objections from the prosecution, Chief U.S. District Judge Mary M. Lisi adjourned for the day.

Sheridan was expected back on the stand today, followed by the United Healthcare president, Steve Farrell, who also attended the State House meeting.

mstanton@projo.com