UCSF dean is fired, cites whistle-blowing

Dr. David A. Kessler, dean of the UC San Francisco School of Medicine, said Friday that he was fired from his post after raising questions about alleged financial improprieties at the school, one of the nation’s most prestigious.

Kessler, formerly a high-profile commissioner of the U.S. Food and Drug Administration, said he was asked to resign in June and to keep his concerns private. He refused, he said.

“I couldn’t resign quietly,” Kessler said in an interview with The Times. “I wasn’t going to do that.”

In a statement, UCSF Chancellor Dr. J. Michael Bishop acknowledged that Kessler had been fired on Thursday and that he had appointed Dr. Sam Hawgood as interim dean. He also said two separate reviews -- one by university officials and another by an outside accounting firm -- “found no evidence of financial irregularities” at the medical school and concluded that it was in “very strong financial condition.”

Bishop, who personally wooed Kessler to come to UCSF in 2003, did not provide a reason for the termination but said in the statement that Kessler’s appointment was at will, “meaning Dr. Kessler held the appointment at the pleasure of the chancellor.”

Officials from the campus and the University of California Office of the President declined to comment further.

Kessler said he was told by Bishop this summer that the university wanted to seek “new leadership.” He said Friday that he believes he was fired for blowing the whistle on financial irregularities.

Kessler said he was asked to clear out his office by the weekend. He said he will remain a tenured professor of pediatrics and epidemiology.

Kessler, who stressed that he still has great respect for the work done at UCSF, would not address whether he would challenge the firing.

As FDA chief, Kessler was well-known nationally for his aggressive regulatory approach, particularly his campaign against the tobacco industry and teen smoking. Before taking over at UCSF, he was dean of the Yale University School of Medicine.

Kessler said UCSF officials from the time of his recruitment misled him about the financial health of the so-called central medical school, which provides funds available for use by the dean. Kessler provided The Times with several internal memos, financial spreadsheets and letters to support his contention.

The central fund’s financial health affects the school’s ability to remain competitive, recruit prominent faculty and launch innovative research.

According to a financial spreadsheet dated April 5, 2007, supplied by Kessler, the school’s finance unit projected that the central medical school would run out of money in the 2008-09 fiscal year. By June 2011, it is projected to have negative net assets of $49 million.

According to financial estimates given to Kessler in June 2003, the school was projected to have revenue of $46 million to $47 million each year. In reality, Kessler said, the school’s revenue was far below $40 million every year since he arrived, except in fiscal year 2006 because of a one-time patent settlement.

“If you had $47 million a year, you wouldn’t be in a hole,” Kessler said in an interview.

In a letter dated July 5, 2007, Bishop acknowledged to Kessler that the financial data provided to him during his recruitment “did not accurately portray funds available to the dean for discretionary use. In retrospect, I can see how these presentations might have misled you and influenced your decision to accept the offer from UCSF. I regret this circumstance and apologize on behalf of the university.”

Kessler himself came under university scrutiny for alleged financial irregularities. In January 2005, an anonymous source contended he “spent or formally committed all of the reserves of the dean’s office and has also incurred substantial long-term debt in the form of lavish salary increases and exponential growth in new, highly compensated faculty and staff directly reporting to him.”

In July, the University of California said it was unable to substantiate any of the allegations against Kessler.

Kessler, 56, led the FDA from 1990 to 1997. During his tenure, he made a point of addressing issues that affected the lives of average consumers, saying he would not cater to special interests.

He targeted misleading food labels and unsubstantiated advertising claims, and sought to allow earlier access to treatment for catastrophic diseases, including AIDS.

Most important, perhaps, were his efforts to investigate practices of the tobacco industry. He sought to regulate nicotine like any other drug, urging dramatic action on how cigarettes were sold and advertised.

Critics charged that the high-profile leader was motivated by politics and publicity, and that he was overzealous in his testing of new products. He was also criticized for overbilling the government for expenses and repaid about $850.

As UC San Francisco wooed Kessler in 2003, he said he asked many questions about the school’s finances, wanting to know if he’d have the necessary resources.

“I was just doing due diligence,” he said. “I was trying to do my job. . . . In our work, when you recruit somebody, if a place is in deficit or has problems financially, that’s the time when you negotiate with the university for additional resources.

“This place looked in OK shape,” he said.

Kessler said he relied upon detailed financial information shared with him by Jaclyne W. Boyden, who was then the medical school’s vice dean for administration and finance. In a letter dated March 31, 2003, she said the dean’s office had about $50.6 million in available funds in 2001-02 and was projected to receive about the same amount the following year.

That June, the school provided him with updated figures showing revenue was actually $46.4 million in 2001-02 and projecting revenue of $47.1 million in 2002-03.

But in December 2004, after Kessler had hired his own chief financial officer, he said he received new financial statements that greatly troubled him. The actual revenue in 2001-02 was only $28.3 million and revenue in 2002-03 was less than that.

“I get the December spreadsheet and I say, ‘What’s going on here?’ ” he said. “This thing looks all negative now.”

Not using university funds, Kessler said he brought in an attorney, R. Nicholas Gimbel, to review the situation. In August 2006, Gimbel wrote a letter to university officials questioning the school’s honesty with Kessler.

“The actual historic and projected revenue of the School of Medicine was substantially less than what was presented to Dr. Kessler during his recruitment,” Gimbel wrote.

In May 2007, University Counsel Jeffrey A. Blair wrote a letter refuting Kessler’s allegations. “There is no evidence that any revenue was misreported in any audit or official financial statement,” Blair wrote. “Dean Kessler simply chooses to ignore the facts and irresponsibly asserts that they depict ‘financial incompetence,’ ‘cooking the books,’ and ‘double booking’ gift revenues. These are provocative accusations to be sure, but ones that are simply not supported by the facts.”

When Kessler was hired, he was given a salary of $540,000 a year, a one-time relocation allowance of $125,000, plus his first six months rent. He also received a low-interest home loan up to $1.8 million, and he was reimbursed for his family’s moving costs from Connecticut.

On his termination, Kessler’s offer letter calls for him to receive $25,000 per year of service as dean, which amounts to $100,000. As a tenured professor, he will earn $325,000 per year.

charles.ornstein@latimes.com