Whistleblower

In a cafe near his Pacific Heights home, David Kessler — who weighs maybe 160 pounds soaking wet — is expounding in a scholarly fashion on the causes of obesity, the subject of the book he is writing, while he waits for the omelet and Diet Coke he has ordered for breakfast.

But within minutes, it is apparent that the recently fired former dean of the medical school at the University of California at San Francisco has something else on his mind.

"What troubles me is how the university can continue to say that [their financial books] were accurate when they weren't," he says. "Why do they insist on that?"

The rhetorical question punctuates a long and earnest explanation of the spreadsheets and other papers he has brought with him and stacked neatly on the table. Kessler, the esteemed former commissioner of the U.S. Food and Drug Administration under two presidents, who earned his chops as the man who took on Big Tobacco, is plainly unafraid to punch back when he feels his integrity has been impugned.

And he's feeling it, big time.

UCSF landed a big fish when it hired Kessler as vice chancellor and dean of the highly regarded medical school in the summer of 2003. With its ambitious plans for a new Mission Bay campus taking shape alongside San Francisco's emerging role as a hub for stem-cell research, the university hardly could have chosen a more high-profile — and, many say, capable — dean. The university lured him from Yale, where he had spent six years as dean of its school of medicine after a triumphant seven-year run at the FDA.

But if it seemed like the perfect marriage, it ended bitterly. To the shock and dismay of many of his colleagues, Kessler was unceremoniously dumped in December by UCSF chancellor and Nobel laureate J. Michael Bishop after Kessler had spent nearly three years complaining behind the scenes about alleged financial malfeasance at the institution he was hired to lead.

At its root, the breakup stemmed from a dispute about the level of resources Kessler says UCSF promised to the dean's office as an inducement for his taking the job — money he and his supporters say is vital to keeping the medical school ranked among the nation's best. But Kessler's complaints involve more than allegedly unfulfilled promises. He contends that after he arrived in San Francisco, he discovered that the financial books of the dean's office were a mess, and that it was on a trajectory to run out of money within several years.

UCSF officials dispute that, saying that the materials provided to Kessler before he took the job were merely "pro forma" documents for internal planning purposes. They insist that the medical school's finances remain solid.

Bishop, the renowned immunologist who has been UCSF's chancellor for 10 years, and who pulled the plug on Kessler, has said little about the matter publicly. He declined to be interviewed for this article, but designated two other high-ranking university officials to address the issue on his behalf.

"The chancellor has taken Dr. Kessler's allegations very seriously," executive vice chancellor Eugene Washington says. "We've had three analyses and exhaustive reviews that come to the conclusion that the school of medicine is in strong financial condition ... and we find no evidence to substantiate [Kessler's] allegations."

But nearly four months after Kessler's dramatic ouster, there are still more questions than answers about why he was fired (he insists he has never been told). And, in some quarters, at least, there is mounting suspicion that in firing him in such a manner, the university may have left itself open to accusations of retaliating against a whistleblower.

In public pronouncements, neither Bishop nor Sam Hawgood, who replaced Kessler as interim dean, have suggested — even remotely — that the deposed dean was remiss in his stewardship of the medical school.

On the contrary, Bishop's state-of-the-university message to the UCSF community in January praised several new research initiatives and other milestones in which the ousted dean played a key role. And just two weeks after Kessler's departure, Hawgood described the state of the medical school in glowing terms while assuring faculty and staff that "the outstanding programs" begun under Kessler "will continue with my full support."

Indeed, Kessler appeared to enjoy a remarkable four-year run. In 2007, as in earlier years of his tenure, the medical school — already considered among the nation's elite — inched up in several categories in U.S. News & World Report's annual survey. It was one of only two schools in the country ranked in the top 10 for quality of training in both research and primary care; seven of its eight specialty programs scored in the top 10 of their respective fields.

Kessler earned praise for the quality and diversity of the nine department chairs and other faculty he recruited. Under his tutelage, the school ranked first in the nation among public schools of medicine in funds received from the National Institutes of Health. Individual endowments also approached an all-time high on his watch. He was credited for landing huge donations from several first-time donors to UCSF. Among them, sources say, was a $25 million gift, yet to be announced, from Los Angeles billionaire Eli Broad for stem-cell research.

Not surprisingly, Kessler's dismissal stunned the UCSF community. The day the news got out, physician and medical school professor Bob Wachter, who blogs about university affairs, summed up the mood: "Today the great mecca of medical care and innovation that is UCSF all but ground to a halt."

The manner in which Kessler was let go also caught many of his colleagues by surprise. In academia, deposed executives are typically accorded genteel treatment, not uncommonly finding new jobs elsewhere while leaving behind little public hint of dissatisfaction. In Kessler's case, things were different. "The university applied every sort of humiliation technique you would normally associate with a corporate firing," says one faculty member, who, like several others who were asked to comment for this article, spoke on condition of anonymity. "It was really kind of shocking."

Kessler declined to discuss the events of the day of his firing on Dec. 13, citing confidentiality constraints. But others say it took place at a downtown law office during a marathon 15-hour session presided over by a professional mediator flown in from the East Coast. Bishop, flanked by several lawyers, represented the university. Kessler was accompanied by his wife, Paulette, and Keith Yamamoto, a prominent UCSF medical researcher. In 2003, Yamamoto, the medical school's executive vice dean, headed the search committee that recommended Kessler for the job.

Just what there may have been to "mediate" remains unclear, since none of the participants contacted by SF Weekly were willing to discuss what took place. Sources close to Kessler say he attended the session in hopes that the discord stemming from his many months of having expressed concern about the perceived problems with the school's finances might still somehow be resolved.

The university apparently felt otherwise. Shortly before midnight, one of its lawyers handed Kessler a letter from Bishop declaring that he was terminated, effective immediately. It was a Thursday; Kessler was ordered to clean out his administrative office at UCSF's Parnassus Heights campus by the weekend. As a further indignity, his friends say, the university canceled his parking privileges (they were later restored), despite his remaining on the faculty as a tenured professor.

Bishop's was one of two letters Kessler received that evening. The other was from UC president Robert Dynes, removing him from his dual role as vice chancellor for medical affairs at the San Francisco campus. Conspicuously absent from either letter, copies of which were obtained by SF Weekly, is any stated rationale for Kessler's dismissal.

The next day, Bishop announced the changing of the guard via campuswide e-mail without mentioning that Kessler had been fired. The chancellor said only that Kessler had "left office as Dean" and thanked him for his "energetic service" and "substantial achievements" on behalf of the university.

Had Kessler been so inclined, he still might have left quietly. But that wasn't in the cards, as evidenced by another campus e-mail communiqué half an hour after Bishop's — this one from Kessler.

"Shortly after arriving at UCSF as Dean, I discovered a series of financial irregularities that predated my appointment," he began. Kessler explained that he had tried without success for nearly three years to press his concerns about the school's finances with university officials, and that "yesterday, Chancellor Bishop terminated my appointment as Dean."

For an institution unaccustomed to public melodrama, it was as if a bomb had gone off.

Those closest to Kessler may have been the least surprised. "David made it clear that he wasn't interested in a financial deal to allow him to walk away if it meant he couldn't speak up about the threat he saw to the future of the medical school," Yamamoto says. "To do otherwise isn't in his nature."

Although Kessler hasn't accused anyone of criminal misconduct such as embezzlement, his allegations go to the heart of UCSF's ability to remain competitive among top-tier medical schools. As the only UC campus devoted exclusively to the health sciences, UCSF — with six locations around San Francisco and another in Fresno — occupies a unique and lofty place in the University of California system. Its four schools — medical, nursing, dental, and pharmacy — and graduate division are all highly regarded.

Among them, the medical school is clearly first among equals, and the locus of UCSF's resources and prestige. As one university staffer puts it, "When the medical school sneezes, the rest of the place gets a cold."

As the medical school's strategic nerve center, the dean's office plays a critical role. Money set aside for use at the dean's discretion allows the school to recruit prominent faculty, launch innovative research, and otherwise support educational programs. The tens of millions of dollars available each year may appear small compared to UCSF's total budget of $2.6 billion. But, as at other institutions, the dean's funds can make or break the school's ambitions.

In 2003, UCSF sought a replacement for then-Dean Haile Debas, who was retiring. With the 43-acre Mission Bay expansion taking shape, it seemed logical that the university would turn to someone of Kessler's stature. Having overseen a huge expansion of both research and clinical care facilities at Yale, he was eager for a new challenge. But the decision to come to San Francisco didn't come easily, friends and associates say.

"He was excited about the [UCSF] situation, but of course one of his first priorities was to assess what resources he could expect if he took the job," recalls Irwin Birnbaum, the Yale medical school's former chief operating officer. Birnbaum was among the "kitchen cabinet" of Kessler advisers at Yale who helped him vet the UC offer.

The compensation package the university presented was never a sticking point. To get Kessler, the university offered a salary unprecedented for UCSF — $510,000, plus perks, while allowing him to continue to serve on several for-profit and nonprofit boards that would enable him to earn several hundred thousand dollars beyond his UC pay. Still, Kessler hesitated while seeking assurances about the level of resources he would have, Birnbaum and others say.

In June 2003, Kessler got the answer he was waiting for. It came in a spreadsheet produced under the imprimatur of Jaclyne Boyden, UCSF's then-vice dean for administration and finance. It suggested that the prospective new dean could expect at least $48 million a year to spend at his discretion. Kessler was so pleased, associates say, that the only other item for which he negotiated, and to which UCSF's chancellor acquiesced, was that the dean's office retain the institution's full share of patent settlements emanating from medical school research.

But the rosy picture soon faded. In December 2004, after barely 16 months at the helm, Kessler received disturbing news from Boyden's successor, Jed Shivers, whom Kessler had hired away from Yale. Shivers had ordered an in-house analysis of the dean's office finances, and the numbers he got back were shocking. Instead of $48 million being available to the dean, the projected figure was closer to $28 million — adding up to a whopping $100 million difference extrapolated over five years.

Worse, as Shivers soon confided, the financial books were in disarray, with the university inexplicably booking fund balances as income, making the dean's office appear to be flush when it wasn't. Moreover, the analysis showed that in four of the five years before Kessler arrived, the office had spent more than it was taking in. As internal e-mails and other correspondence from late 2004 and early 2005 show, Kessler shared the grim discovery with the chancellor and the university's finance office.

Yet it was Kessler who was soon on the defensive. In February 2005, the university received an anonymous "whistleblower" letter accusing him of lavish spending habits that threatened to wipe out the dean's office reserve funds. It specifically took aim at Kessler's pay and that of about a dozen of his academic appointees.

But for someone suggesting that the dean might have something to hide, the letter writer had a peculiar complaint: "We are now forced by Dean Kessler to open the financial books of the Dean's Office."

From the anonymous letter until Kessler's firing nearly three years later, the drama played out almost entirely in secret, with colleagues and even close friends unaware of the details. "He didn't talk about what was going on, and remarkably it didn't seem to affect the high-quality work he was doing as dean," says Jeanne Robertson, a Kessler friend and former chair of the UCSF Foundation.

But to a handful of people in the know, there were disturbing signs that after persisting in raising questions about the school's finances, Kessler was set up for a fall.

For one thing, there was UCSF's handling of the anonymous letter-writer's complaints. UC auditors found them to be without merit, clearing Kessler. But it took nearly two and a half years, as opposed to the several weeks UCSF officials first announced as a likely timeframe when news of the whistleblower appeared in the press.

"The effect was to damage his reputation internally by dragging out the process," says Nicholas Gimbel, a friend and former assistant U.S. attorney in New York. Kessler retained Gimbel to parse the dean's office numbers before deciding to go public with his allegations.

Kessler's first meeting with Bishop to share what Shivers had uncovered was in late February 2005, Kessler says. Bishop ordered the university auditor, who had already begun to examine the whistleblower's complaints, to review the matter. But the findings were less than compelling. The auditor concluded that while it was "certainly possible" that the dean's interpretation of the information Boyden provided led him to expect a level of resources different from what was intended, there was no "intentional effort" to mislead him.

Meanwhile, in the spring of 2006, the UC general counsel's office informed Kessler that, considering the nature of his allegations, by law the university now considered him a whistleblower.

That September, with Kessler persisting, Bishop appointed an ad hoc group headed by vice chancellor Eugene Washington to look into the allegations. It concluded that the financial condition of the dean's office was currently sound and that Kessler's claims that controls had been lacking were "not supported by the facts."

But something was missing. Based on the deficit spending Kessler had alleged to have uncovered, he projected that unless something was done, the dean's office could run out of money in as little as two or three years. Bishop entrusted the group to project revenue and expenses for five years, "or whatever alternative future horizon the group might find appropriate." Washington's group projected five years' worth of revenues, but disbanded without determining the expense issue, leaving a key question unanswered. Neither could the group reconcile its numbers with those presented to Kessler in 2003.

Kessler's representatives, Shivers and Yamamoto, became so exasperated that for a time they stopped attending the group's sessions. Asked about the findings, Washington said that expense projections weren't produced because a "majority" of the group "could not accept the Kessler [expense] assumptions."

Even before the group packed it in last spring, Kessler sought permission from the chancellor to hire outside accountants to get to the bottom of the mess. Bishop refused, records show. (Months later, the university authorized a review by the accounting firm KPMG, but its report, released in February after Kessler's departure — and which UCSF initially refused to make public — was hardly a ringing endorsement of the university's position. Among other things, the firm's auditors acknowledged that they were unable to reconcile financial statements from the dean's office with the university's general ledger, or list of expenses, and concluded that UCSF needed to improve its reporting methods.)

Then, last year, with the dean and the chancellor privately at loggerheads, Kessler instigated a series of events that may have hastened his departure.

In April 2007, he fired off an e-mail to a university lawyer, accusing the UC auditor of "obfuscation or worse." He then convened a meeting of medical-school chairs and senior school leaders to lay bare the financial condition of the dean's office. Although Kessler declines to discuss it, citing confidentiality, associates say he also alerted two members of the UC Board of Regents, including its influential chairman, Richard Blum.

Kessler provided Blum (who is married to Senator Dianne Feinstein) with spreadsheets and other documents, says one university source who insisted on anonymity. After subordinates at Blum Capital Partners, the investment firm he heads, reviewed the documents, Blum "appeared to be in Kessler's corner," the source says. (Blum declined comment through a spokesman.)

But there was no one in Kessler's corner when he arrived to meet with Bishop in late June. To his surprise, the chancellor handed him a letter asking for his resignation by year's end. "I was stunned," recalls Kessler, who says he had expected that he might receive an apology from Bishop for the way the university had handled the dispute.

Bishop did apologize — a week later. "In retrospect, I can see how these presentations might have misled you and influenced your decision to accept the offer from UCSF," he wrote via e-mail. "I regret this circumstance and apologize on behalf of the university."

Despite Kessler's refusal to quit, his relations with Bishop continued to be cordial and collegial, those who know the men say. They met often to discuss medical school business, with no further mention of the resignation request, Kessler says.

Even at the last such meeting three days before Kessler was ousted, there was no tension between them and no hint of what was to come. "Things were going swimmingly with the medical school," one UCSF insider says. "In his heart of hearts, David was convinced that everything was going to be okay."

Anyone who thought Kessler might disappear quietly may not have paid attention to his résumé. As head of the FDA from 1990 to 1997, he was the longest-serving and arguably the most embattled commissioner the federal agency has ever seen.

Best known for taking on Big Tobacco, Kessler constantly irritated conservative members of Congress in his zeal to protect consumers from tainted food and dangerous drugs. In an early act, he authorized the U.S. Attorney's office in Minnesota to seize a large quantity of Citrus Hill Fresh Choice orange juice after concluding that parent company Procter & Gamble's use of the term "fresh" was false and misleading. The company changed the product's label.

Such actions earned Kessler widespread admiration as well as scorn. House Speaker Newt Gingrich called him a "bully and a thug" and the "worst appointment ever."

Kessler's move to rein in the tobacco companies, which began shortly after he was appointed by President George H.W. Bush and picked up steam after he was held over in the Bill Clinton administration, was long and combative. Although the U.S. Supreme Court voted five to four to thwart regulation of tobacco as a drug in 2000, Kessler's campaign helped bring cigarette manufacturers to heel and set the stage for billions of dollars in tobacco settlements.

"The joke at FDA was that David was renting because he thought he could be fired at any moment," says Washington, D.C. attorney Bill Schultz, a top policy aide to Kessler at the agency. "It's not in his nature to walk away from something, especially if he thinks there's wrongdoing."

His colleagues describe Kessler as private, intensely focused, and extraordinarily free of ego for someone whose pedigree includes having run a large government agency.

Yet his management style didn't suit everyone. "David can be in the middle of a conversation and hear something that he thinks is brilliant, and will say, 'Hold that thought,' and come down the hallway to your office and say, 'Can you come with me for a minute? I want you to hear this idea so-and-so has,'" says one faculty member who worked closely with Kessler. "Some people find that endearing; others are put off by it."

Kessler as dean carried two cell phones and a BlackBerry; friends and associates marveled at his ability to glide between conversations. "No time is wasted," one said. "It doesn't matter if he's getting into a cab or grocery shopping."

His multitasking has also exhibited itself in other ways. Kessler acquired a medical degree as a pediatrician at Harvard and a law degree from the University of Chicago within the same year, thanks to overlapping studies for each. "I thought it was some kind of mistake when I first saw the résumé," says Jeanne Robertson, the ex-UCSF Foundation chair. Kessler soon doubled up again, doing a medical residency at the Johns Hopkins University hospital in Baltimore while commuting to Capitol Hill to work as a Senate Labor and Human Resources Committee staffer for Republican Senator Orrin Hatch.

"David is blessed with a lot of energy," says Paulette Kessler, a University of Chicago–trained attorney who has practiced law off and on during the couple's 34-year marriage. They met when she was an undergraduate at Smith College in Massachusetts and Kessler was at Amherst nearby. (Their daughter is in her second year of law school at Georgetown; their son works for a government relations firm in the nation's capital.)

"This is someone of extraordinary righteousness," says John Greenspan, director of UCSF's AIDS Research Institute and one of the few university colleagues willing to speak about Kessler for the record. "From my observations, I've found him to be of impeccable integrity."

Yet insiders who praise Kessler's stewardship of the medical school are similarly complimentary of the man who fired him, the mild-mannered Bishop, who is credited with helping UCSF make great strides during his 10 years as chancellor.

Colleagues describe Bishop as a voracious reader with an engaging sense of humor who is "enormously erudite." Like Kessler, he has a compelling personal story. Growing up in rural Pennsylvania, he spent his youth banging out hymns in the Lutheran church where his father was the minister. According to his official biography, he attended a two-room school from the first through the eighth grade before studying medicine at Harvard.

Bishop's work in the mid-'70s with fellow UCSF professor Harold Varmus (which earned the pair the Nobel Prize in Physiology or Medicine in 1989) involved the study of ocogenes, genes that control growth in living cells and which, under certain circumstances, can go haywire and turn cancerous. It led to great strides in the diagnosis and treatment of certain cancers.

Friends say it was Varmus who introduced Kessler to Bishop. Asked to comment for this article, Varmus, who heads Memorial Sloan-Kettering Cancer Center in New York, and who is a friend of both men, said he would prefer to "take a pass."

That echoes the reticence at UCSF, where the initial shock of Kessler's ouster has given way to guarded resignation. "David's firing has created a chilling atmosphere," one veteran staffer said. "People who might have been relatively free with their opinions aren't so comfortable right now."

Still, this most extraordinary tiff involving renowned players at one of the nation's leading medical institutions may be headed for the kind of public airing that UCSF officials seem to want to avoid.

In January, Republican state Senator Abel Maldonado, an influential member of the Senate Education Committee and frequent critic of how the UC system conducts its affairs, wrote to Bishop complaining that the circumstances surrounding Kessler's dismissal were "extremely disturbing" and calling the financial documents at the center of the dispute "nothing short of alarming."

Meanwhile, his colleague, Democratic state Senator Leland Yee, was so angered by what he described as the university's attempts to keep the KPMG report from becoming public by initially suggesting that it couldn't be released without the firm's permission that he introduced special legislation to force UC to be more open in the future. "I think it's fairly obvious that [UCSF] tried to hide behind its [outside] accountants because the results weren't flattering to their argument," Yee says.

Last month, after honoring Maldonado's request to turn over hundreds of pages of materials related to the Kessler matter, Bishop sent a delegation to Sacramento to press the case that Kessler's claims are without merit. But the senator was unimpressed, and now says more needs to be disclosed. "Obviously the regents have the right to let someone go, but the more you peel the onion, the more this smells," Maldonado says.

Kessler, who remains a tenured professor at UCSF, isn't saying whether he may sue the university. For now, at least, he appears content in his role. On April 2, UC Berkeley's School of Public Health honored him as a National Health Hero for his leadership in challenging the U.S. tobacco industry. Former Vice President Al Gore presented the award via video.

Kessler lectures, remains active on several nonprofit boards, and has resumed work on the obesity treatise begun in 2002 but set aside by the heavy demands of the dean's job. He has also acquired some in-house counsel. "Obviously what has happened [at UCSF] is incredibly personal," Paulette Kessler says. "I'm not saying we don't take it personally, because we do. But David has his work and his research, and he's moving forward."

Her take is that the university isn't talking about the circumstances of her husband's dismissal for a reason: "They think that by stalling even now in being forthcoming that David will take another job somewhere and be out of their hair."

If so, David Kessler says, that could be a miscalculation: "I'm not going anywhere."