UH’s Palafox linked to state, federal probe

Three months after Gov. Neil Abercrombie asked Dr. Neal Palafox to withdraw his nomination as health director, the University of Hawaii hired an outside law firm to help deal with a state and federal investigation involving the embattled physician and entities associated with him, according to UH documents.

The April 2011 contract outlining the scope of work the law firm was to do indicated that the investigation related to possible misuse of university-related resources by faculty members and to matters related to Wahiawa General Hospital and UH’s John A. Burns School of Medicine.

The school’s family medical practice, which Palafox used to head, is affiliated with the Wahiawa hospital.

The documents do not specifically say whether Palafox was suspected of wrongdoing, and he did not return messages left Thursday and Friday at the medical school, where he still is a faculty member.

The documents provide the first official confirmation that Palafox was linked to a state and federal investigation.

Abercrombie in January 2011 asked Palafox to withdraw as nominee to head the Department of Health, but the governor didn’t publicly explain why.

On April 18, 2011, UH hired Mark Bennett, a former state attorney general, to assist in the Palafox case, according to the UH documents, which were among hundreds of pages released by the Senate panel examining accountability issues at the university.

On the same day Bennett was hired, Palafox asked to step down as lead administrative director and chairman of the medical school’s Department of Family Medicine and Community Health, according to information previously released by UH.

Don Olden, chief executive officer of the Wahiawa hospital, confirmed that the investigation is ongoing. "It hasn’t gone away," Olden said Thursday, declining further comment.

Bennett also would not comment.

Dr. Jerris Hedges, the medical school’s dean, issued this statement to the Star-Advertiser: "JABSOM (John A. Burns School of Medicine) was made aware of an ongoing investigation that involved our family medical practice affiliated with the Wahiawa General Hospital and Mililani Physician Clinic. We retained counsel to assure JABSOM’s full compliance with the investigation. There is no known result of the investigation."

Before UH gave the Senate committee a copy of the contract between UH and Bennett’s firm, Starn O’Toole Marcus & Fischer, it redacted the names of the investigating agencies and who is being investigated "to protect the privacy of the individuals involved," UH wrote in a letter to the committee.

But another UH document listing active contracts with private law firms includes a summary that says Bennett’s firm was hired to provide advice and services in connection with an investigation by state and federal enforcement authorities concerning Palafox "and entities related to Dr. Palafox."

In the redacted contract, it refers to the possible misuse of UCERA resources by faculty members.

UCERA is the acronym for University Clinical, Education & Research Associates, a nonprofit organization that was established largely to provide billing and other administrative services for UH physicians who have hospital and clinic practices.

The organization has had a history of financial problems. On its most recent tax return, it reported net assets of $8.7 million and revenue of more than $30 million.