McHugh connection to Adult Home Scandals

Lobbying for Leniency
Scandal-Scarred Adult Homes Buy Pataki Protection
by Wayne Barrett
May 15 - 21, 2002


Pataki: Lax state supervision of adult homes has led to unnecessary eye and prostate surgery for the mentally ill.

A web of lobbyist intrigue, with ties at the highest levels of the Pataki administration, surrounds the privately run adult-home industry that houses thousands of mentally ill patients and was exposed by The New York Times in a recent four-day front-page series.

This cozy intertwining may in part explain the state's hands-off policies about the for-profit homes despite the alarming evidence of neglect and misconduct that has surfaced repeatedly throughout Governor Pataki's two terms. The Times series, written by Clifford Levy after a year-long investigation, offered a chilling account of life in the homes, with nearly a thousand deaths since Pataki took office, only three of which resulted in the filing of the death reports mandated by law. A Times editorial cited the "callous indifference" of state officials to the plight of these 15,000 residents, though the homes receive $600 million a year in subsidies.

Patrick McHugh, whose Albany law firm, Coppola, Ryan & McHugh, represented the industry for many years, is married to Martha McHugh, the $104,000-a-year assistant commissioner for intergovernmental affairs at the State Department of Health (DOH), the agency that oversees the homes. McHugh, who is also the brother of upstate Republican congressman John McHugh and was an aide to two Senate GOP majority leaders, has been affiliated with the firm for years, but was not made a name partner until 1996, soon after Pataki took office.

While another partner, James Ryan, also has Republican ties in Albany, McHugh's elevation was seen by insiders as an attempt to strengthen the firm's clout with the Pataki team. Martha McHugh was at the time working on the second floor of the Capitol Building as the governor's director of scheduling. She moved over to DOH in 1998, a year after the department assumed full responsibility for the homes, which had previously been regulated by another state department.

The Empire State Association of Adult Homes and Assisted Living Facilities was the McHugh firm's largest lobbying client until its $150,000-a-year retainer abruptly ended last spring. The contract was so large that it was listed among the State Lobbying Commission's top 10 in 1997. The firm's filings with the commission, which were sometimes signed by McHugh, listed DOH as one of the agencies it lobbied for Empire State. Martha McHugh dealt with some adult-home issues, according to several sources familiar with the agency.

Reached at his home Sunday night and asked about this overlay of relationships, Patrick McHugh called it "innuendo," said he did not know when his wife started at DOH, and even denied, contrary to the congressman's office, that they are brothers. He, Coppola, and Ryan did not return Voice messages at the office, and neither Martha McHugh nor DOH would answer questions about her activities at the agency.

The association's arrangement with the McHugh firm was so close that its longtime executive director, Susan Peerless, operated out of the firm's offices, even moving with it from North Pearl to Pine Street in Albany. Peerless, too, is now at DOH, serving since April 2000 as the $97,000-a-year special assistant to the commissioner for long-term care and advising on adult-home matters. Before leaving the association in 1998, Peerless was said by observers to have had ready access to Pataki administration officials, actually serving on a Pataki task force that examined the financing of long-term care facilities in 1996-97. Sources with firsthand knowledge of the Empire State's lobbying pitch say its primary message was simply: "Leave us alone."

The association Web site claims that it "commands a powerful, respected, established presence before state legislative and regulatory bodies," citing several achievements during the early Pataki years, while Peerless and McHugh were still associated with it. The Web site says the association got the state to revise "its inspection protocols to effect a more reasonable, outcome oriented survey process" that has "produced positive, sweeping changes in providers' experience in undergoing a survey or responding to a written summary of citations." Indirectly confirming this lobbying success, a 1999 audit by State Comptroller Carl McCall identified a half-dozen significant inspection/enforcement failings—most of which were acknowledged in the DOH response.

Peerless was married to Leonard Weiss, an ex-judge and chair of the Albany Democratic Party who was friendly enough with the Pataki administration that the governor named him to the powerful Public Service Commission in 1999 (Weiss and Peerless are now divorced). Weiss and Peerless were close personal friends of Ryan and of Veronica Coppola, the lead partner in the firm, daughter of legendary Albany lobbyist Victor Condello, and Ryan's wife. Though Peerless left Empire State to run a consulting firm that apparently did business with association members, relations have gotten so frosty that Empire State filed a lawsuit against her last December.

Among other charges, the pending suit alleges that the McHugh firm understated its association lobbying fee in a 1996 filing with the commission, claiming it was $125,000, and that it diverted $25,000 to Peerless. Contending that Peerless "breached her duty of loyalty" by accepting consulting fees from the lobbyists she urged her organization to hire, the group is seeking $8 million in damages. Peerless does not dispute the $2000 a month she collected from the firm, responding that the Empire State board, not she, hired the lobbyists, and that the association's chair knew about the payments.

In April 2001, the adult-home association replaced the McHugh firm with two lobbyists—Hinman Straub Inc. and Brian Meara—each of whom is paid $60,000 a year. Meara is especially close to Democratic Assembly Speaker Sheldon Silver, and Hinman is regarded primarily as a Republican firm though Jim Clyne, one of its lobbyists on the association account, worked on adult-home matters as a Democratic assembly staffer for years. McHugh and others at his firm have contributed $17,955 to Pataki, the State Republican Committee, and the senate GOP committee since 1995, while Hinman Straub's political action committee has donated $68,000 to the same entities. Meara has given $25,000 to Silver committees. Empire State donated $31,000 to the three Republican committees.

In addition to the association, other elements of the adult-home industry have also hired Albany lobbyists with Pataki ties. The New York Psychotherapy & Counseling Center, which receives millions in state funding for providing mental health services to residents of the homes, pays $75,000 a year to Davidoff & Malito, whose senior partner, Bob Malito, was once special counsel to former U.S. senator Al D'Amato. Another major outside mental health provider, New Hope Guild Centers, was represented until recently by Bolton St. John's, a firm headed by former Democratic Speaker Mel Miller.

The state's gross indifference to adult-home abuses—turning them into what the Times called "psychiatric flophouses where untrained workers looked after severely ill people and medical fraud was common"—may well have been principally due to the powerlessness of the marginalized population it serves. But this level of high-wire lobbying wasn't just the pointless and excessive expenditure of fat-cat state capitalists. The Pataki administration has fed the homes with thousands of patients forced out of state-run psychiatric centers, cut construction of the far more successful mentally ill housing program launched by Mario Cuomo, slashed adult-home inspections dramatically, shifted oversight to the industry-friendly DOH, and ignored enforcement mandates put in place by the legislature just before Pataki took office.

The result is the worst scandal of the Pataki era, downplayed so far by tabloids and television. It may still take center stage in the general election campaign to come, a shrill reminder of the governor's infamous detachment, and the social price of the insider politics that dominates his Albany.

Research assistance: Annachiara Danieli, Jen Dimascio, Peter G.H. Madsen

FROM the Village Voice