Law firm cashes in on work for ECMC
Billed $3.1 million over 4ø-year period
When a fellow Hamburg Town Board member complained in January 2007 that Councilman Thomas Quatroche Jr. might be violating the federal Hatch Act because of his job at the Erie County Medical Center, the law firm of Colucci & Gallaher immediately responded.
Anthony J. Colucci III, the law firm’s co-founder and the hospital’s attorney, met three times in two days with Quatroche, the medical center’s senior vice president of marketing and planning.
Colucci attorneys Eric Mazur and Timothy Quinlivan spent hours researching the Hatch Act, which prohibits political activity by those who receive federal funds. They looked at every part of Quatroche’s job at the medical center as well as the Hamburg Town Board position he has held for 14 years.
In October, the U. S. Office of Special Counsel cleared Quatroche, who had not spent a dime in his own defense.
The law firm billed the hospital, which receives public subsidies from Erie County, $6,228 for 45 hours of legal work.
Why did the hospital do legal work for Quatroche? Why did he not pay for his own defense?
“It was directed at ECMC,” Colucci, 49, said of the Hatch Act complaint. “Mike Young [the hospital’s chief executive] asked if this applies to [Quatroche], does it apply to my other employees?”
The Quatroche case accounts for a small part of the thousands of hours that Colucci & Gallaher has billed ECMC since becoming its corporate counsel in 2004, when the hospital became a public benefit corporation.
When it was a county hospital, two assistant county attorneys had worked part time on ECMC business. Other work was farmed out to outside law firms.
But when it broke with the county, Colucci became the hospital’s lawyer.
Legal bills, which The Buffalo News obtained through a Freedom of Information request, show that ECMC paid Colucci & Gallaher $3.1 million from January 2004 through the first six months of this year for services that included the County Home.
By comparison, Kaleida Health spends more than $2 million a year on its legal staff for a much larger operation, running five hospitals, clinics and the Visiting Nurses Association.
Bills scrutinized
ECMC got not only Colucci, but also most of his attorneys. Thirteen of the firm’s 16 lawyers worked on the ECMC account, the records show, handling everything from hospital board business to consulting about public relations and collecting overdue debts. They sued the county for underfunding the hospital and the state Health Department over the approach to combining hospital operations with Kaleida Health.
The law firm billed ECMC $25,000 for fighting Kaleida’s Freedom of Information requests and nearly $20,000 in a trademark dispute with Kaleida over the use of a slogan.
Its lawyers looked into filing an ethics complaint against Sheila Kee, ECMC’s former chief, after she became a member of the county’s control board. No complaint was filed, and Kee said what they could complain about remains a mystery.
Colucci lawyers researched the possibility of suing Joseph J. Illuzzi, an Internet publisher who had criticized ECMC and its executives.
Colucci would not comment on which hospital official requested the Illuzzi research. But he later filed his own personal libel suit against Illuzzi, which remains pending.
In interviews with The News, Colucci, Quatroche and Sue J. McCarthy, the chief financial officer at ECMC, said that Colucci’s bills were closely examined before the hospital paid them. “I look over all his billing records,” Mc- Carthy said.
Colucci said he never did any work for the hospital that had not been requested. “We don’t initiate work,” he said. “We are asked to do something.”
Jody Lomeo, a financial consultant who was chairman of the ECMC board when the hospital broke from the county and is acting executive director since Michael Young’s departure, said the Colucci billings cover a vulnerable time for the hospital.
“It was a war, and the war is over, and that’s good on all fronts,” Lomeo said of ECMC’s battle with Kaleida.
He also said that ECMC’s transformation from the county hospital meant a fresh look at everything by Young and the board, and that Colucci’s firm often did the necessary research.
McCarthy and Quatroche attributed the extraordinary increase in the hospital’s legal bills to its fight to preserve itself. They also said Colucci’s work helped produce an agreement with Kaleida that protects ECMC’s future.
“I can’t really contest or deny their statement,” said Robert Gioia, chairman of the Western New York Health System, which oversaw the negotiations. “That’s their opinion.”
Gioia said the only substantive change resulting from ECMC’s fight against Kaleida was the addition of a physicians’ committee that will oversee the combination.
Big jump this year
But Gioia said the new arrangement should mean ECMC and Kaleida no longer need to incur such staggering legal bills.
“I will say to you, if the legal fees continue to be at the level they are today,” Gioia said, “then shame on us.”
An attorney in the health care field, who did not want to be quoted by name, said ECMC is getting a bargain.
Colucci and senior partners bill ECMC $160 an hour, while junior partners charge $130 an hour, below the firm’s rates for other legal work.
The health care attorney, however, said at those rates, the $500,000 that Colucci billed in the first six months this year represent an extraordinary number of billing hours. It works out to 132 hours a week during the thick of the ECMC-Kaleida fight.
Lomeo acknowledged that, and said if you stripped out the litigation expenses, Colucci’s bills would have been far less.
The firm’s work for the medical center dates back to the hospital’s days as a county facility.
Colucci had served as legal counsel to Joel A. Giambra’s transition team before Giambra took office in January 2000 as county executive. The following July, County Attorney Frederick A. Wolf asked a number of Buffalo firms if they were interested in becoming an outside counsel to the hospital.
Colucci’s firm was chosen and did increasingly more work for ECMC.
He helped draft the resolution transforming the hospital to a public benefit corporation, a way that Giambra proposed to make the hospital more independent from the county. It also raised much needed revenue for Giambra when the new corporation bought the hospital from the county for $100 million.
In 2004, at the first meeting of the new hospital board, Colucci was named the hospital’s outside attorney.
The following year, after cutting ECMC’s operating subsidy because of the county budget crisis, Giambra learned how independent the new corporation had become.
Colucci sued Giambra, who left office last year, and State Supreme Court Justice Joseph Makowski upheld the original county allocation for ECMC.
Only one challenge
A Colucci billing has been challenged only once — in January, when County Comptroller Mark C. Poloncarz examined the ECMC sale and the new operating agreement.
Poloncarz discovered Colucci’s firm had paid a $56,499 advertising expense for “Citizens to Save ECMC.”
Young, the hospital’s chief operating officer, said Colucci had paid the bill through his account so ECMC opponents could not discover it through a Freedom of Information request.
Colucci disputed that, saying: “I so wish he hadn’t said that. Why he said that is beyond me.”
Colucci said the money funded efforts by a group of ministers who wanted to protect ECMC in the merger. Several ECMC board members who were negotiating with Kaleida wanted to be insulated from the campaign, he said, so he had the hospital run the bill through his account.
mbeebe@buffnews.com and rmccarthy@buffnews.com
