Roger Williams hospital, which hired convicted State Sen. John Celona and paid him $700 to $892 a week, is working to convince federal officials that they shouldn't be indicted.

10:22 AM EDT on Sunday, September 25, 2005

BY MIKE STANTON
Journal Staff Writer

In his nine years as a state senator, John Celona was never at a loss for words.

After a fire at his house in North Providence, he issued a press release thanking the firefighters, his government colleagues, his in-laws and the company that rushed to the scene to clean his family's clothes.

After he went to work for Roger Williams Medical Center's assisted-living center in 1998, he cranked out hundreds of faxes to his bosses. He reported on his efforts and sought guidance on matters including health-care bills at the State House.

Now, Celona is talking again -- this time to a federal grand jury investigating influence-peddling at the Rhode Island State House.

The recent topic has been a consulting job that Celona held with The Village at Elmhurst, the hospital's affiliated assisted-living center, from 1998 to last year.

In December 2003, The Providence Journal reported on Celona's financial dealings with CVS, the national drugstore chain based in Woonsocket, and Blue Cross & Blue Shield of Rhode Island.

The stories led to the resignations of Celona and the Senate president, William V. Irons, an insurance salesman who had also had business dealings with Blue Cross and CVS.

In February 2004, Roger Williams ended Celona's contract. In March, detectives from the Rhode Island State Police searched Celona's house in North Providence and seized his computer and boxes of files, including the Roger Williams faxes.

Last month, Celona pleaded guilty to federal mail-fraud charges, admitting that he sold his public office to Roger Williams, CVS and Blue Cross.

Celona chaired the Senate committee that controlled health-care legislation. He admitted in court that he used his political clout on behalf of Roger Williams: influencing legislation, lobbying municipal officials to increase ambulance runs to Roger Williams, and pressuring health insurers with bills before his committee to increase their payments to Roger Williams.

In his six years as a consultant, Celona earned $260,000 -- $700 a week at the outset, rising to $892 a week in the last few years.

Federal investigators are using Celona's faxes in an attempt to build a case against Roger Williams Medical Center and its executives for alleged extortion and the "theft of honest services" of a public official.

Celona is cooperating in the investigation in hopes of receiving a lighter sentence. Still, his lawyer says, Celona expects to go to prison.

Prosecutors have told the president of Roger Williams, Robert A. Urciuoli, and a former vice president, Frances Driscoll, that they are targets of the investigation, according to their lawyers.

Roger Williams' lawyers say they have been told the hospital could also be indicted. A conviction would jeopardize Roger Williams' ability to participate in Medicaid and other federal programs, and threaten the hospital's very survival. Roger Williams, a nonprofit that has operated for 127 years, employs more than 1,450 people and provides millions of dollars in free health care to Greater Providence's poor.

William P. Devereaux, the lawyer for Roger Williams, recently gave the U.S. Attorney in Providence an extraordinary 89-page "brief" that argues why the hospital, Urciuoli and Driscoll should not be indicted.

The hospital's lawyers have also pressed their case in meetings with U.S. Sen. Lincoln Chafee and U.S. Rep. James Langevin.

If prosecutors decide to seek indictments, the lawyers have vowed to appeal to the U.S. Department of Justice in Washington.

Roger Williams' advocates say there is no evidence that Celona was hired for his legislative clout. They say the senator had little or no clout when he was hired: for the first three years, Celona was out of favor with the Senate leadership.

Celona was hired, the hospital argues in its brief to the U.S. Attorney, not as a "legislative pocketboy," but as someone who could promote the hospital's assisted-living center, The Village at Elmhurst.

"Although it may be said that John Celona was known, during his political career, for hyperbole," the brief says, "one thing about him was real -- he had developed a warm and devoted relationship with the elderly."

If Celona "did cross ethical lines," the brief says, "it was not at the request of [Roger Williams] employees."

The biggest challenge the defense lawyers face may be Celona's own admission of guilt.

"Celona is under a lot of pressure and in trouble over his dealings with other entities [CVS and Blue Cross]," said Robert G. Flanders Jr., the former state Supreme Court justice who represents Urciuoli. "The government has chosen to throw this all into the pot, and Celona is under pressure to do what he has to do to mitigate it."

Looking for votes

IN THE SUMMER of 1997, Bob Urciuoli was patrolling the halls of the Rhode Island State House. He was searching for General Assembly votes in support of Roger Williams' controversial proposed merger with an out-of-state, for-profit hospital chain, Columbia HCA of Tennessee.

Sen. John Celona, a onetime fellow parishioner at St. Anthony Church in North Providence, was looking for a job. He had recently sold his family's lawnmower and power equipment shop on Mineral Spring Avenue.

Publicly, Celona supported the merger, for the sake of his elderly constituents who received their medical care from Roger Williams. A key vote loomed in July.

Urciuoli's appointment calendar for that summer shows that the hospital president had several meetings with Celona. On July 10, for example, he met with Celona and Philip W. Noel, the former governor and Columbia HCA lobbyist. And the week before the crucial vote, Urciuoli and Celona had lunch at the private University Club, on Providence's East Side.

On July 23, the day after the legislature thwarted the merger, Urciuoli's calendar shows a 10 a.m. appointment with "Sen. Celona."

According to the federal case against Celona, he admitted asking Urciuoli for a job in July of 1997.

The hospital's brief to the U.S. Attorney says that Celona's request for a job didn't come until about one month after the General Assembly vote.

The hospital denies that the job was a reward for Celona's support in the merger debate.

Initial objections

URCIUOLI WANTED to hire Celona, the hospital says, but others were less enthused.

Driscoll, the hospital's vice president for public relations, "was cool to the idea," according to the hospital's brief to the U.S. Attorney.

The hospital's lawyer, James McGuirk, raised concerns about Celona's position as a senator and a possible conflict of interest.

And Roger Williams' partner in The Village at Elmhurst, Peter Sangermano, told Urciuoli that he didn't need Celona, and refused to pay his salary, according to the hospital's brief.

"Sangermano was concerned about extra costs and felt he already had assembled an established marketing team," the hospital's brief says.

Urciuoli felt so strongly about Celona's value in promoting The Village at Elmhurst, which was planning to expand, that he told Sangermano that Roger Williams "would absorb the cost for Celona's compensation by having the village charge the payments of Celona's services" to the hospital's real-estate subsidiary.

"Thereafter," the brief says, "Sangermano warmed to the concept."

Sangermano's lawyer, Thomas G. Briody, responded: "Several statements made concerning Peter Sangermano are factually inaccurate. . . . Roger Williams Hospital does not speak for Mr. Sangermano. . . . We prefer that the grand jury proceed in the ordinary course, so that the rights of innocent parties are protected."

Celona's consulting agreement called for him to "heighten awareness among seniors" of The Village at Elmhurst and the hospital's Elmhurst Nursing Home. Celona was also to "keep abreast of legislative issues" affecting The Village at Elmhurst.

Celona was "anxious" to start working, the brief says, and kept asking Urciuoli and Driscoll when he would start.

He started in February 1998. In April, the hospital sought guidance from the Rhode Island Ethics Commission about how Celona should deal with health-care legislation.

Celona did not believe he needed an ethics opinion, the brief says, but Driscoll and McGuirk felt it necessary "to protect both the Hospital and Celona."

According to Driscoll's lawyer, Kevin J. Bristow, she and McGuirk dragged their feet in drafting a consulting contract, hoping that Urciuoli would drop the idea. When he persisted, they hoped that the Ethics Commission would rule against Celona.

"They [Driscoll and McGuirk] joked that maybe the Ethics Commission would only let him attend Bingo Night," said Bristow.

The Ethics Commission ruled that Celona could not participate in legislation affecting The Village at Elmhurst or any assisted-living facility. He could vote on "broad-based" health-care legislation, but would have to file notice stating why he was able to be objective.

Prosecutors, in the Celona conviction, alleged that Roger Williams and Celona "misrepresented the true identity of his employer and misrepresented the true nature of the work he would be performing."

The hospital says that it was straightforward with the Ethics Commission, and described Roger Williams' relationship with The Village at Elmhurst.

In the spring of 1998, the hospital trustees had hired a Boston law firm to look into unrelated allegations of financial improprieties. After some employees raised concerns about Celona's contract, the firm was asked to look into whether the senator had been rewarded with a "no-show" job for his help on the merger bill the previous summer.

According to the law firm's report, Urciuoli said that Celona had been active in elderly affairs, and was qualified. The law firm also reviewed records reflecting that Celona had performed work.

"Under the circumstances," the July 1998 report concluded, "we find no basis for concluding that the contract was illegal or unethical."

Using his influence

WHILE CELONA'S job came without an office, the hospital says that he did his work out in the community, at the senior centers and the expansive network he had developed throughout his political career.

Federal prosecutors say that he did his real work for Urciuoli and Driscoll, using his influence as a senator.

Investigators have questioned former hospital employees about the amount of time that Celona spent at the hospital versus the assisted-living center.

Roger Williams, in its brief, acknowledges that Celona dealt with Urciuoli on matters including legislation -- but that's not what he was paid for.

"Celona's consulting relationship . . . did not cause [the hospital] or its executives to forfeit their First Amendment rights to communicate with Celona in his capacity as a state senator," the brief says.

One of his first actions concerned ambulances.

Roger Williams felt that it was not getting enough ambulance business from North Providence and East Providence.

Urciuoli and others at the hospital asked Celona if he could "assist on this issue by asking municipal officials in North Providence and East Providence to distribute the rescue runs in a more balanced manner," the hospital's brief states.

Since many of the patients requesting transport were elderly, and could wind up at the hospital's nursing home or assisted-living center, and "Celona was a consultant for those programs," the brief says, "it did not seem to be an inappropriate topic for him to address."

Celona met with the North Providence fire chief, Bernard Charello, on March 6, 1998, to discuss rescue runs and point out the state regulations regarding patient choice, the hospital says.

One week later, Celona wrote a memo to Driscoll saying that he was trying to set up a meeting with East Providence officials.

North Providence agreed in December 1998 to distribute more rescue runs to Roger Williams. And in May 1999, East Providence agreed to send more rescue runs to Roger Williams and Miriam Hospital, also in Providence, as the city added a third ambulance.

Terry Patinkin, the former head of emergency medicine at Roger Williams, testified before the federal grand jury in Providence in July. He told The Journal that the prosecutor showed him a letter from Driscoll informing him that Celona was "working on" the ambulance problem.

Patinkin, now the director of urgent care at the Neighborhood Health Center in East Boston, also said Urciuoli told him that he had Celona working on the problem.

Unintentional and unknowing'

CELONA HAS also admitted in court that he took direction from Roger Williams Medical Center on legislation.

In 1998, the charges said, Celona opposed a bill prohibiting directors and officers of an existing hospital from serving on the board of a newly converted hospital. In 1999, he voted to establish a Rhode Island Cancer Council, but secretly tried to influence another lawmaker to oppose it. And in 2000, he opposed a bill permitting cities and towns to collect payments in lieu of taxes from nonprofit organizations, such as Roger Williams.

The hospital, in its brief, argues that none of those three bills were "off limits" to Celona because none dealt with assisted-living facilities.

Additionally, the hospital says, there was no conflict on the Cancer Council bill because Celona voted contrary to Roger Williams' position.

From 1999 through 2001, the charges said, Celona "introduced, amended and supported" bills that extended a moratorium on new nursing-facility beds in Rhode Island -- with guidance from the hospital and the assisted-living center.

The hospital, in its brief, argues that Celona filed proper notice with the Ethics Commission identifying his potential conflict of interest and recusing himself from any participation.

However, according to the hospital's brief, government investigators charge that Celona asked other legislators to introduce or amend the bills, to conceal his participation in matters that the Ethics Commission had told him to avoid.

In a fax to Driscoll, Celona wrote that Peter Sangermano, the co-owner of The Village at Elmhurst, "contacted me re: 2 bills, both the same that extend the moratorium on licensing of new nursing home beds to July 1, 2001. He has asked that I have a rep + a senator introduce the attached amendment in committee. . . . Please advise."

The hospital, which quotes the fax in its brief, does not say whether or how Driscoll may have responded to Celona's fax. "If her interactions with Celona contributed to his violation of the Ethics Code, it was certainly unintentional and unknowing," the brief says -- even if her actions, in hindsight, were "imprudent."

The hospital concedes that Celona may have committed a "technical" violation of the Ethics Code -- but that nobody at the hospital did anything criminal.

Celona steps up

IN 2001, there was a leadership change in the Rhode Island Senate. Celona became the chairman of the powerful Corporations Committee, which controlled health-care legislation.

That year, Celona admitted in federal court, he used his newfound power to pressure Blue Cross to pay higher reimbursement rates to Roger Williams.

The hospital says it talked to many public officials about Blue Cross, including Celona.

Celona also arranged some meetings in his State House office between Urciuoli and other hospital officials and representatives from Blue Cross.

Dennis W. Moore, a former hospital executive who has been questioned by the FBI, said that Urcioli told him, " 'Let's see if John [Celona] can use his relationship with Blue Cross' -- his relationship as a senior-level legislator."

The hospital, in its brief to the U.S. Attorney, said that the meetings were purely educational and that Celona did not pressure anyone.

"Celona played no substantive role in resolving any of the reimbursement issues," said the brief. "Essentially, Celona facilitated and occasionally attended meetings so that . . . [Roger Williams] and Blue Cross could negotiate among themselves. . . .

"To think that John Celona could 'strong-arm' Blue Cross is, frankly, a stretch of the imagination," the brief said.

"In any event, in no way was Celona being paid any consideration whatsoever" for his role, the hospital's brief says. "There was simply no fraud, no threats of coercion, and no deprivation of honest services."

Two years later, in 2003, Celona again intervened when Roger Williams disputed its reimbursements from another insurer, UnitedHealthcare of New England. Celona has admitted in court that he used his position to pressure UnitedHealth.

On Aug. 29, 2003, Celona held a meeting in his State House office with Urciuoli and UnitedHealth executives.

The hospital again denied any pressure by Celona. Its brief says that Urciuoli knew that Celona was "well acquainted" with United's lobbyists, Robert Goldberg, a former senator, and Kelly Sheridan.

Celona, according to the brief, "had a custom and practice of asking parties who were on opposite sides . . . to meet face to face with one another in his presence, either in his office or elsewhere, so that they could attempt to resolve their differences."

Rather than defrauding the public of his honest services, the hospital argues in its brief, Celona "was helping to achieve a useful public end by doing the public's business"

'A good friend to the hospital'

WHEN DENNIS MOORE arrived at Roger Williams Hospital in the summer of 2000, he says, he wasn't aware that Celona was on the payroll.

Moore, who succeeded Driscoll as vice president for public relations and development, said that Celona was a familiar face around the hospital, dealing with Urciuoli on legislative matters and on the Blue Cross reimbursement issue. Celona also was visible at hospital-related charitable events and golf tournaments. Moore said that he also served with Celona on a hospital panel to administer a federal grant studying the health habits of union retirees.

Celona also had his own cable-access television show, and Moore worked with the senator to promote the visibility of Roger Williams by arranging for Urciuoli and doctors to appear as guests.

"I honestly thought that John Celona was doing all that stuff because he loved Roger Williams Hospital," said Moore. "I thought John was a good friend to the hospital."

Shortly after going to work for the hospital, however, Moore said that he learned that Celona was a paid consultant to The Village at Elmhurst. Urciuoli told him that Celona had asked for a raise, and directed Moore to draft a new contract paying Celona $892 a week, up from $700 -- about $46,000 a year.

That fall, the Senate revolt had placed Celona in the inner circle. The hospital says that Celona's raise had nothing to do with his political fortunes, but with his success at The Village at Elmhurst.

Celona generated $200,000 to $400,000 a year in revenue, based on bringing in three to five new patients a year, the hospital says.

Moore said that Urciuoli asked him to keep tabs on Celona.

"Bob was on me a lot to get John to file reports of what he was doing," said Moore. "Bob was concerned if we ever got questioned about Celona and what he did, that we needed to be sure that we had a history of him doing things for us."

Urciuoli, through a hospital lawyer, said he requested the reports because he was sensitive to the 1998 allegations of a "no-show" job.

But Moore, who left Roger Williams in early 2003, said, "I never got any reports."

Making the rounds

IN RECENT MONTHS, as witnesses have appeared before the grand jury and defense lawyers have debated the case with prosecutors, Roger Williams Hospital has reached out to Rhode Island's congressional delegation.

During the summer, defense lawyers met with U.S. Sen. Lincoln Chafee and U.S. Rep. James Langevin.

As the state's lone Republican senator, Chafee recommended the appointment by President Bush of Robert Clark Corrente as U.S. Attorney for Rhode Island. Corrente's office is running the Roger Williams investigation.

John R. Pagliarini, Chafee's state director, said that he and the senator met with William Devereaux, representing the hospital, and Kevin Bristow, Driscoll's lawyer. He said that the lawyers briefed them on the investigation and stressed the hospital's importance to the community.

"They said they were concerned with the direction that the investigation was taking, and that if they received an unsatisfactory outcome, they would likely appeal it to the Department of Justice in Washington," said Pagliarini.

"We just sat there. We're not going to take any action in a federal investigation. After the meeting, the senator and I looked at one another and said, 'What's that all about?' "

A few weeks later, Devereaux and Terry Fracassa, a law partner who is a childhood friend of Langevin's, met with Langevin and his deputy district director, Tim DelGuidice.

According to Langevin spokeswoman Joy Fox, Devereaux said that Roger Williams would "weather the storm" and that prosecutors were "way too aggressive."

Devereaux also sought a meeting with U.S. Rep. Patrick Kennedy, but he declined because of the investigation, said a spokeswoman. They did not approach U.S. Sen. Jack Reed.

Devereaux said that the meetings were intended to educate the congressmen about the hospital's views on the investigation, since a significant portion of its budget is derived from federal grants.

"We certainly didn't ask anyone to do anything inappropriate," said Devereaux. "This investigation will run its course. The more we educate people to what we believe are the facts, that only puts the institution in a better position."

The hospital has also hired a public-relations consultant, Joshua Fenton, a former aide to the late Sen. John Chafee and a former Providence city councilman.

Devereaux said that he hopes to meet with the U.S. Attorney, Robert Corrente. He said he has already had a "healthy dialogue" with prosecutors and the lead FBI agent on the case, W. Dennis Aiken.

Corrente declined to comment on a pending investigation.

"The toughest decisions for a prosecutor to make are when not to charge a case," the hospital's brief to Corrente concludes. "Agreeing with the advocacy of a law enforcement officer is oftentimes the easier decision for a prosecutor. However, the respected prosecutor is the one who recognizes that his or her job is . . to seek justice, not merely to win a conviction.

"This case, very sincerely, cries out for the use of prosecutorial discretion."

Mike Stanton can be reached at (401) 277-7724, or at mstanton [at] projo.com

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Digital Extra: Read the full brief detailing Roger Williams Medical Center's arguments against indictment, at:

http://projo.com/rwmcbrief