Mayor Catherine Pugh displays a set of “Healthy Holly”-affiliated bibs and baby blankets. Still via live stream from Charm TV/Facebook.
Mayor Catherine Pugh displays a set of “Healthy Holly”-affiliated bibs and baby blankets. Still via live stream from Charm TV/Facebook.

Hours after The Sun first reported that Mayor Catherine Pugh accepted more than $128,000 in combined payments from city employee health insurer Kaiser Permanente and CareFirst BlueCross BlueShield for her “Healthy Holly” children’s books—in addition to her $500,000 arrangement with the University of Maryland Medical System—the mayor is stepping away “indefinitely.”

In a statement, the mayor’s office attributed her leave to the pneumonia she’s been fighting “for the past few weeks,” rather than the fallout surrounding the children’s book controversy.

Pugh “has been advised by her physicians that she needs to take time to recover and focus on her health,” the statement said. “At this time, with the Mayor’s health deteriorating, she feels as though she is unable to fulfill her obligations as Mayor of Baltimore City. To that end, Mayor Pugh will be taking an indefinite leave of absence to recuperate from this serious illness.”

Council President Bernard C. “Jack” Young will step in to fill her place, per City Charter rules.

“I am utterly heartbroken by the developments that have unfolded over the past several weeks,” Young said in a statement. “I pray that Mayor Pugh continues to recover from her illness.”

The Sun’s Ian Duncan first reported Pugh is stepping away starting at midnight tonight.

Earlier today, the newspaper aired that she accepted $114,000 for 20,000 copies of her self-published “Healthy Holly” books in orders from 2015 to 2018—just as the firm was seeking a contract to provide insurance to city employees—and another $14,500 from CareFirst BlueCross BlueShield for 2,000 books in 2011 and 2014.

(For its part, Kaiser Permanente said in a statement that it’s provided coverage to city workers since 1986 and its “Healthy Holly” deal with Pugh has “no connection” with their insurance services.)

At least two Baltimore City Council members are calling for Pugh to resign. First District Councilman Zeke Cohen noted that Pugh, who leads the city’s spending board, didn’t recuse herself from the vote when the contract came up for approval.

“I wish Mayor Pugh a speedy recovery as she takes a leave of absence due to her illness. However, I believe she should fully resign from office,” Cohen said. “Mayor Pugh has lost the moral mandate to govern and the public’s trust. Baltimore deserves better.”

Councilman Ryan Dorsey, of District 3 in Northeast Baltimore, called Pugh “an embarrassment to the city,” and is already saying he looks forward to Young serving as the city’s top executive.

I will continue to work to improve our government. I will soon be introducing legislation to further protect whistleblowers who report misconduct in City operations.

We must ensure we never repeat the turmoil our city is now experiencing.

— Ryan Dorsey (@ElectRyanDorsey) April 1, 2019

Second District Councilman Brandon Scott stopped short of calling for the mayor’s resignation, but said in a statement that “the ethical and financial allegations involving Mayor Catherine Pugh are extremely concerning and embarrassing for the City of Baltimore.

“I believe Mayor Pugh’s decision to take a leave of absence at this time is the right thing for Baltimore,” he said. “Baltimore must move forward and deserves a Mayor who is able to provide their full attention to the issues facing our city[,] most importantly the continued violence on our streets. I am fully confident that Interim Mayor Young is capable of providing the steady leadership our city needs during this unprecedented time.”

Councilwoman Shannon Sneed, of the 13th District, also said she wishes Pugh a “speedy recovery,” but called for the city’s Office of the Inspector General to investigate all contracts between UMMS board members and the hospital system while Pugh has been in office.

“As elected officials we have the responsibility to uphold integrity and transparency in our personal and professional lives,” she said.

Pugh more infamously also accepted $500,000 for five orders of 20,000 books apiece from UMMS, on which she had served as an unpaid board member since 2001. Under scrutiny, she initially said it was all legal, that she had reported the income on tax forms and that the topic had become a “witch hunt.”

Reporters have subsequently discovered UMMS mislabeled its payments to Pugh as “grants” on tax forms, and that Pugh created a company called Healthy Holly, LLC, which she used in part for political donations, including to her own campaign and to other local officeholders.

Upon being released from the hospital for pneumonia last week, a beleaguered-looking Pugh apologized publicly for the scandal for the first time, calling it a “regrettable mistake.” She also talked through her intentions for writing the books in the first place, saying, “the whole concept was to teach our children how to live healthy lifestyles,” and shared shipping documentation that accounted for a little under 60,000 books she said had been delivered; a fourth order was still underway, and a fifth order has been delayed to the illustrator falling ill, she said.

Pugh also surprised some by also unveiling a baby clothing and accessories line paired with the books.

The mayor resigned from the UMMS board when news emerged of her side deal with UMMS. The president of the hospital system, Robert A. Chrencik, has since been placed on a temporary leave of absence, two others have resigned and four more were also asked to take voluntary leaves of absence.

The board, nine of whose members were found to have cut deals with the health system, says it plans to bring in an outside accounting or law firm to examine contracts with its board of directors. Lawmakers are also considering emergency legislation to clear its ranks and start anew.

Pugh’s announced indefinite leave came after State Comptroller Peter Franchot called on her to resign, and after Gov. Larry Hogan asked the state prosecutor’s office to look into her book deals with UMMS.

This story has been updated.

Ethan McLeod is a freelance reporter in Baltimore. He previously worked as an editor for the Baltimore Business Journal and Baltimore Fishbowl. His work has appeared in Bloomberg CityLab, Next City and...