STAY­ING OUT OF HOT WATER

Modern Healthcare - - LEGAL -

him with­out just cause or if he left “for good rea­son.” Felici said he was asked to “grace­fully” re­sign from the sys­tem “so that the move would garner fa­vor­able public re­la­tions for all par­ties in­volved.”

“Upon the plain­tiff’s res­ig­na­tion, both Brian Felici and board mem­bers from the OVHS&E made pos­i­tive com­ments about the other as they had pre­vi­ously agreed,” Felici’s law­suit says. “De­nied,” the hospi­tal’s an­swer re­sponds. Hospi­tal of­fi­cials, Felici and Felici’s at­tor­ney all de­clined to com­ment or did not re­turn calls for this story.

The law­suit states that sys­tem ex­ec­u­tives told Felici orally and in writ­ing that they would make sev­er­ance pay­ments, and the hospi­tal no­ti­fied him in a July 8, 2010 let­ter that the sys­tem’s board of di­rec­tors had voted to cease all pay­ments and ben­e­fits. Felici ac­cused the sys­tem of fraud­u­lently breach­ing its con­tract and in­duc­ing him to end his em­ploy­ment.

Felici also sued Amer­i­can Health­care So­lu­tions for al­legedly com­mit­ting “tor­tious in­ter­fer­ence” with his em­ploy­ment con­tract by caus­ing the ces­sa­tion of pay­ments to him, and filed a claim of in­ten­tional in­flic­tion of emo­tional dis­tress against the con­sul­tancy and the hospi­tal sys­tem.

The firm is dis­put­ing the al­le­ga­tions in court, and its CEO, Jan Jen­nings, de­clined to com­ment. A trial date has been set for Fe­bru­ary 2013.

The sys­tem has re­acted in kind to Felici’s law­suit, deny­ing the al­le­ga­tions of fraud and then coun­ter­su­ing him to re­coup his salary be­cause it al­leged he con­cealed il­le­gal­i­ties that hurt the sys­tem fi­nan­cially—facts that would have caused it not to re­new his con­tracts.

The sys­tem said Felici en­tered into fraudu- lent con­tracts with physi­cians go­ing all the way back to his days at East Ohio Re­gional Hospi­tal and go­ing for­ward, in­clud­ing deals that re­sulted in mil­lions of dol­lars in ex­cess pay­ments to physi­cians that even­tu­ally trig­gered mil­lions in penal­ties to reg­u­la­tors.

The sys­tem agreed last Septem­ber to pay $3.8 mil­lion for al­leged Stark vi­o­la­tions that were dis­cov­ered by Amer­i­can Health­care So­lu­tions, Ge­orge Couch, who was then the sys­tem CEO, said in a Septem­ber 2011 in­ter­view with Mod­ern Health­care.

The sys­tem also en­tered a five-year cor­po­rate in­tegrity agree­ment with HHS’ in­spec­tor gen­eral’s of­fice re­lated to its busi­ness ar­range­ments with physi­cians.

In ad­di­tion, the sys­tem al­leged that Felici Ex­perts say most dis­putes be­tween CEOS and gov­ern­ing boards end up in set­tle­ments, not law­suits. Here are some tips for avoid­ing lit­i­ga­tion:

Em­ploy­ment con­tracts need spe­cific def­i­ni­tions of “for cause” when a board has power to can­cel sev­er­ance pay­ments for per­for­mance.

CEO can­di­dates should know some public hos­pi­tals might not be able to guar­an­tee mul­ti­year sev­er­ance pay­ments be­cause of com­mu­nity op­po­si­tion.

Boards should doc­u­ment CEO per­for­mance and fail­ures through an­nual re­views that cor­re­late with con­tract goals.

Con­sider re­quir­ing bind­ing ar­bi­tra­tion in a con­tract to sort out ques­tions about sev­er­ance pay­ments. Boards should re­quire CEOS to agree not to sue as a term of sev­er­ance. Since emo­tions can run high dur­ing sepa­ra­tion ne­go­ti­a­tions, it’s im­por­tant to im­me­di­ately doc­u­ment any terms in writ­ing af­ter such meet­ings. mis­man­aged a re­stricted char­i­ta­ble gift that re­sulted in a court-or­dered re­pay­ment, and then lied about it to the board.

In re­sponse to the coun­ter­claims, Felici said the sys­tem had not pro­duced enough in­for­ma­tion for him to re­but the claims, adding that the sys­tem has “un­clean hands” by blam­ing the for­mer CEO for al­leged acts of which sys­tem of­fi­cials and em­ploy­ees knew about and/or par­tic­i­pated in.

Haw­ley v. Slidell Me­mo­rial

In Louisiana, Robert Haw­ley’s law­suit is test­ing the lim­its of what an em­ploy­ment con­tract can stip­u­late.

Haw­ley started work­ing as CEO of St. Tam­many Parish’s Slidell Me­mo­rial Hospi­tal in 2000, and in 2006 started re­ceiv­ing two-year, re­new­able em­ploy­ment con­tracts that spelled out his terms of ser­vice and sev­er­ance.

What turned out to be his final con­tract was re­newed for two years ef­fec­tive July 1, 2011, dur­ing a June 27, 2011 meet­ing of Slidell’s Board of Com­mis­sion­ers.

The con­tract listed seven spe­cific rea­sons for which Haw­ley could be ter­mi­nated with­out sev­er­ance, in­clud­ing felony con­vic­tion and “pro­hib­ited con­duct.” Sec­tion 3.6 of the con­tract said that if Haw­ley was ter­mi­nated for any other rea­son, the hospi­tal dis­trict would pay him all com­pen­sa­tion due to him through the end of the two-year con­tract term.

Less than two weeks into his con­tract, on July 13, 2011, Haw­ley was ar­rested at about 4 a.m. by a Lake Pontchar­train Cause­way po­lice of­fi­cer as he was driv­ing his BMW 81 mph with the top down on the nar­row bridge, ac­cord­ing to a nar­ra­tive of the ar­rest re­leased by the depart­ment to Mod­ern Health­care.

He showed “ob­vi­ous signs of im­pair­ment,” was ar­rested and booked at St. Tam­many Parish Jail, ac­cord­ing to the po­lice re­port.

St. Tam­many Parish court records show Haw­ley pleaded guilty to one count of a sec­ond of­fense of driv­ing while in­tox­i­cated on Dec. 6. Haw­ley was fined $750 and sen­tenced to serve 26 days of com­mu­nity ser­vice.

The hospi­tal’s cen­sure, how­ever, came faster than the judge’s: the board voted to ter­mi­nate Haw­ley on July 29.

“Mr. Haw­ley’s re­cent ar­rest for sec­on­d­of­fense DWI made this decision nec­es­sary,” Slidell Chair­man Larry Eng­lande said in a July 29 writ­ten state­ment.

That Oc­to­ber, Haw­ley sued the public hospi­tal in St. Tam­many Parish Dis­trict Court for wages and ben­e­fits that would have been paid through June 30, 2013, say­ing the dis­trict did not ter­mi­nate him for a valid rea­son listed in his em­ploy­ment con­tract.

His salary was not dis­closed in le­gal records

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