Rothenberg will not face litigation over controversial payments

Posted: 1:09 pm Wed, December 22, 2010
By Steve Lash
Daily Record Legal Affairs Writer

Karen H. Rothenberg will return $311,398 in controversial compensation she received while dean of the University of Maryland School of Law, under a settlement that closes the Maryland attorney general’s investigation of the payments.

Between 2007 and 2009, Rothenberg received $410,000 in bonuses, including compensation for sabbaticals she never took and for teaching summer-classes, according to a legislative audit released in February. She has already repaid some of that money.

Under the settlement, Rothenberg and the University System of Maryland, represented by the attorney general’s office, agreed not to sue each other over the payments.

“In reaching this agreement, we took into account professor Rothenberg’s service to the School of Law and that there were good-faith misunderstandings relating to matters of compensation that resulted in these payments being made and accepted,” Attorney General Douglas F. Gansler said in a statement Wednesday.

In announcing the settlement, Gansler’s office said the payments to Rothenberg were approved by then-University of Maryland, Baltimore President David J. Ramsay. But Ramsay, who resigned just days after the audit was released, lacked the authority to approve the payments, the office added.

Rothenberg, who served as dean from 1999 to 2009, did not return telephone and e-mail messages seeking comment Wednesday. Her attorney, Shale D. Stiller of DLA Piper U.S. LLP, could not be reached for comment.

Rothenberg will return to the law school’s full-time faculty next month and teach a course on biotechnology regulation, the school announced. She spent the past year as a scholar-in-residence at Columbia Law School, visiting professor at Johns Hopkins University’s Berman Institute of Bioethics and special adviser to UMB President Jay A. Perman, consulting on stem cell issues and other healthcare innovations.

Phoebe A. Haddon, current dean of the University of Maryland School of Law, welcomed the settlement.

“I was very pleased to learn today from the attorney general of the settlement of the dispute between the university and Karen Rothenberg,” Haddon said in a message sent Wednesday afternoon to faculty and students. “Karen Rothenberg’s many contributions as a scholar, teacher and dean are greatly valued. We are looking forward to her return to the faculty in January.”

Michael Millemann, a professor at the law school, praised Rothenberg for reaching an agreement that removes a cloud over the institution.

“It shows her devotion to the law school,” Millemann said in an interview.

The University System of Maryland referred the payment controversy to Gansler when the regularly scheduled legislative audit of USM was released.

The audit uncovered bonuses of $410,000 to Rothenberg, on top of her $360,000 salary, including $350,000 for sabbaticals she never took and $60,000 in summer-teaching compensation over three years.

Rothenberg repaid the $60,000 amid USM’s contention that year-round, full-time faculty members cannot receive extra compensation for teaching summer classes.

“She did not want any misunderstanding about the approval process of these summer payments to harm the School of Law and the university,” Stiller stated in a letter last winter explaining her decision to return the money.

The $311,398 she pledged to pay under the agreement represents the outstanding amount from the audit, less taxes already paid on the funds, the attorney general’s office said.

USM Chancellor William E. Kirwan issued a joint statement with Gansler, but declined to comment further.

“The University System of Maryland and UMB are looking forward to the return of professor Karen Rothenberg to the University of Maryland School of Law’s full-time faculty,” Kirwan said. “She was an extremely effective dean during her tenure, leading the School of Law to a significant rise in national rankings and to new fundraising heights. Her well-respected expertise will continue to benefit both students and colleagues as she resumes full-time faculty responsibilities in January.”

Rothenberg, who serves on the Maryland Stem Cell Research Commission, will teach the course Health and Science Policy Workshop: The Regulation of Genomic Research, the school said.

Under the agreement, Rothenberg promised to repay $200,000 by the end of the year and the remaining $111,398 by the end of June. If she fails to meet these deadlines, the remaining debt will “be due and payable immediately,” the agreement states.

Rothenberg denied any liability or wrongdoing in agreeing to the settlement.

The agreement states that “payment is being made in settlement of a disputed claim.”

When the audit was released in February, Kirwan told legislators that the improper payments resulted from the “failing of two individuals” — Rothenberg and Ramsay.

Kirwan acknowledged at the time that bonuses, or retention payments, are occasionally paid to a “modest” number of valued faculty members to dissuade them from leaving for other schools.

But USM policy requires that those payments be disclosed to system officials, which Ramsay did not do in Rothenberg’s case, Kirwan told a House Appropriations subcommittee.

USM policy also does not permit payments for unused sabbaticals, Kirwan said. In addition, the $20,000-per-summer compensation for teaching or research is available only to 10-month teaching staff members, not year-round salaried faculty members, Kirwan told the Subcommittee on Education and Economic Development.

At that Feb. 25 hearing, Kirwan announced that Ramsay would resign the following Monday, March 1, not in July 2010, as Ramsay had planned. E. Albert Reece, dean of the UMB’s medical school, served as interim president until Perman took office July 1.

The legislative audit faulted UMB for making $22.8 million in bonus payments to employees in fiscal year 2008 without sufficient policies in place to govern them.