Firing of UCSF dean a climax to years of disputes over finances

On Monday, three days before his ouster as the dean of UC San Francisco’s prestigious medical school, Dr. David A. Kessler met with the university’s chancellor for his regular weekly meeting. The two discussed such routine matters as spending on telemedicine programs and whether to bring medical students home from Uganda in light of an Ebola outbreak there.

“It was 100% cordial and productive,” Kessler said in an interview Saturday. “It was two colleagues working together.”

On Thursday, attorneys from the university handed Kessler, a high-profile former commissioner of the U.S. Food and Drug Administration, a letter saying he was fired.

The decision shocked faculty members and even some of the dean’s confidants, but it followed nearly three years of increasingly bitter disputes between Kessler and top university officials about accounting practices at the medical school and whether Kessler was misled about the school’s finances during his 2003 recruitment.

The dispute, while highly technical, goes to the heart of the top-ranked medical school’s ability to remain competitive. The money set aside for the dean’s use allows the school to recruit prominent faculty, augment educational offerings and launch innovative research.

Based on financial data he was given by officials in 2003, Kessler said he expected to have tens of millions of dollars in additional revenue at his disposal than he actually did. UCSF officials say Kessler was not misled and that he was never promised specific funds.

In the end, Kessler, who gained fame nationally as FDA commissioner by seeking curbs on tobacco marketing, was fired by the man who wooed him to UCSF, Chancellor Dr. J. Michael Bishop, a renowned immunologist and Nobel Prize winner.

In June, Bishop asked for Kessler’s resignation, saying he wanted new leadership at the medical school, but Kessler refused to leave. The dean said he was hoping to come up with a solution. But Thursday, during a confidential mediation session, Kessler was let go from his post, which carried a $540,000 annual salary.

“It’s very surprising to me that we have two people of great talent and high integrity and tremendous goodwill and that we’re in this position,” said Dr. Shaun R. Coughlin, director of UCSF’s Cardiovascular Research Institute, on Saturday.

John S. Greenspan, director of UCSF’s AIDS Research Institute, agreed. “A lot of the discussion is going to be, ‘We jolly well wish that whoever could have stopped this from happening had done so, so that we didn’t lose David,’ ” Greenspan said.

During a three-hour interview Saturday at a San Francisco-area hotel, Kessler described the behind-the-scenes tension that he said led to his termination. He pointed to three actions he took that he believed may have played a role.

First, in April, he sent an e-mail to a university lawyer accusing the UC auditor of “obfuscation or worse.” Then, he said, he provided a UC regent, whom he would not name, with documentation to support his allegations of financial improprieties. And finally, he called a meeting in April to share information about the financial position with medical school chairs and senior school leaders.

“It was clear that the university did not like us doing this,” Kessler said, referring to the chairs meeting. “The chancellor was very upset.”

Kessler shared with The Times memos, spreadsheets and letters to university officials -- some of which allege a coverup -- that demonstrate his increasing frustration as he tried to understand the truth about his school’s finances, something he said should not have been difficult at a public institution.

“What are you supposed to do when there are fewer resources available than you were told? You’re trying to run a world-class institution and you know that if it keeps on going at the rate it’s going, you’re going to fall off a cliff in a few years,” he said.

In a news release issued late Friday, UCSF acknowledged firing Kessler and said two reviews, one by a group of senior university officials and another by an outside auditor, found that the School of Medicine is “in very strong financial condition.”

Bishop was not available for comment Saturday, said UCSF spokeswoman Corinna Kaarlela, but in three separate written statements released late in the day, officials from UCSF and the University of California continued to defend their actions in light of Kessler’s accusations.

“I personally reviewed the facts and circumstances underlying the dismissal of Dr. Kessler,” UC General Counsel Charles F. Robinson said in a statement. “I can state unequivocally that I would have intervened to prevent his dismissal had I concluded the decision was motivated by retaliation for Dr. Kessler’s prior complaints about the School of Medicine’s finances.”

University Auditor Patrick Reed also defended his work, saying that the accounting firm PricewaterhouseCoopers worked closely with him to review the dean’s allegations. The same auditor determined earlier this year that allegations that Kessler squandered the school’s finances were without merit.

“During the course of the investigations, the dean and his financial staff performed extensive reviews and provided volumes of internal analyses of the accounts of the Central Medical School to the auditors,” Reed said in a written statement. “All of these materials were given careful consideration.”

Reed wrote that any analysis of the funds available for the dean’s use “requires judgments, estimates, allocations and assumptions as to which parties can disagree.”

Medical school Executive Vice Dean Keith R. Yamamoto, who was part of the UCSF group examining the school’s finances, said Saturday that the group never reached a conclusion about financial irregularities or whether the school would remain viable into the future.

“The numbers were not there,” said Yamamoto, who has worked at UCSF for more than 30 years, including as vice dean for Kessler’s predecessor. “They couldn’t have reached the conclusion. It was not possible.”

But in a statement Saturday, UCSF stood by its earlier statements. It said the group, chaired by provost Eugene Washington, examined revenue projections and data regarding expected expenditures and determined that the school was in sound financial shape.

Yamamoto and Jed Shivers, the medical school’s former vice dean for administration, finance and clinical programs, said Kessler was genuinely interested in finding a solution.

Shivers said he resigned in April to take a job in New York, in part because of the ongoing turmoil. He had worked with Kessler when Kessler was dean at Yale University School of Medicine, before coming to UCSF.

“My opinion is that they’ve resisted at every step of the way to really get to what occurred here,” Shivers said.

Yamamoto said he was baffled that the two sides couldn’t work it out.

“David did everything that he could to actually solve the problem, to reach a resolution without anything blowing up,” he said. “I believe he presented many options that could have gotten there, but they were rebuffed.”

Kessler said he thought a resolution was on track earlier this year after he shared his frustrations with the UC regent, who he said suggested that the chancellor would send him a letter of apology as a means of moving forward. Instead, when Kessler was summoned to a 4 p.m. meeting June 29 in the chancellor’s office, Bishop and UC provost Rory Hume were waiting for him.

Bishop was reading from a script, Kessler said, and said something like, “I’m sorry to have to do this” in asking for his resignation. Kessler said he was surprised.

“I met with the chancellor every week. Never once was there any criticism,” Kessler said. “I would end every meeting by saying, ‘Mike, is there anything you think I should focus on?’ ”

The apology did come weeks later when Bishop sent Kessler a short note acknowledging that UCSF provided information that “did not accurately portray funds available to the dean for discretionary use.” Bishop said in the letter that he could understand how Kessler might have been misled.

The two did not discuss the matter again before Kessler was fired, although they continued to meet weekly, Kessler said.

charles.ornstein@latimes.