Erlanger trustees reject severance package for outgoing CEO Jim Brexler

Erlanger trustees reject severance package for outgoing CEO Jim Brexler

December 13th, 2011 by Mariann Martin and Ansley Haman in News

Ron Loving, second from left, speaks to trustees of the Chattanooga-Hamilton County Hospital Authority during a Monday meeting held to discuss the transition plan for outgoing CEO Jim Brexler. The trustees voted to accept Brexler's resignation and agreed to continue negotiating a possible severance.

Photo by Dan Henry/Times Free Press.

Costly departures

Since 1998, Erlanger Health System has agreed to pay hundreds of thousands of dollars to top executives after they resign or were ousted.

  • Skip Reeder, Erlanger CEO from November 1994 to March 1998, was paid $518,000 after he resigned as hospital head.
  • Dennis Pettigrew, CEO from October 1998 to February 2003, was paid $131,000 in a court settlement from a lawsuit he filed after he was fired.

Jim Brexler is seen in this file photo.

Photo by Patrick Smith/Times Free Press.

POLL: Should outgoing CEO Jim Brexler receive a severance package?

Erlanger hospital's board of trustees rejected a severance package worth about $727,000 in salary and benefits for outgoing CEO Jim Brexler Monday, but the board voted unanimously to accept his resignation.

Now board members, who deadlocked in a 4-4 vote on the severance, must decide if they want to revisit the issue of severance for the seven-year CEO, board Chairman Ronald Loving said after Monday's meeting.

Brexler's resignation is effective Dec. 31. The hospital announced Brexler's resignation Nov. 17, but the board did not officially vote to accept it until Monday.

On Nov. 29, the board appointed Charlesetta Woodard-Thompson, chief operating officer of the hospital, as the temporary president and CEO.

Behind the scenes, trustees and Erlanger officials continued to hash out what, if anything, Brexler would be entitled to.

Brexler's contract states if he was let go without cause, he would receive 18 months pay and benefits as severance. If he was fired with cause, he's entitled to nothing. And other scenarios would come into play if he voluntarily terminated the contract.

One of the contract terms allows the board and Brexler to come to a voluntary agreement, and that provision was cited in the deal rejected Monday.

Eight of 11 trustees attended Monday's meeting. Loving, who took his post as chairman on Nov. 17, led the meeting.

Gregg Gentry, senior vice president human resources at Erlanger, presented a proposed transition agreement, saying the document was formulated after "numerous discussions" with Brexler. Loving declined to provide information about who was involved in those discussions, citing attorney-client privilege.

The proposed agreement would have provided 15 months of severance for Brexler, worth about $713,000. In addition, he would keep his Erlanger health coverage for 18 months, paying his employee portion, a benefit worth about $15,000, Gentry said.

Payments would have been biweekly.

The agreement would have paid Brexler about $185,000 less than the maximum he's entitled to in his contract, Gentry said.

And Brexler would continue to receive severance payments if he took a job elsewhere, he said.

Trustee Kim White made a motion to approve the agreement, and Loving seconded the motion. But before the vote, several board members voiced their opposition to the severance package.

"In my opinion, Mr. Brexler's executive performance justifies a termination, not a costly severance," board member Richard Casavant said.

RESOLVED

  • Monday's board of trustees vote did not authorize a severance payout for outgoing CEO Jim Brexler.
  • Trustees said a medical staff survey showed a lack of confidence in hospital leadership among physicians.

STILL PENDING

  • Negotiations for a severance package between the hospital and Brexler could resume.
  • Trustees have not said what steps they will take to begin a permanent CEO search .
  • Board members have yet to discuss November financials, which will be released Dec. 19

Casavant listed Brexler's rocky relationship with the board of trustees and professionals at Erlanger as two reasons. He also said the financial situation at Erlanger warranted Brexler's termination.

In October, the hospital lost about $2.1 million, compared to last October, when it made about $400,000. The hospital lost $1.1 million in the first quarter of the fiscal year.

November financials won't be available until Dec. 19.

Trustee James A. Worthington seconded Casavant, saying, "I, too, feel that Mr. Brexler failed to serve in the best interest of Erlanger."

Worthington said a recent survey of physicians highlighted Brexler's strained relationship with the hospital's doctors.

"The survey indicated what we thought -- the physicians at this hospital are not happy and the physicians are what bring money to this hospital," he said. "Brexler is not warranted compensation."

The results of that survey were not available Monday.

Former board Chairman Dan Quarles confirmed that he initiated the physician survey earlier this year. Quarles, an eight-year board member whose replacement was appointed last week by Hamilton County commissioners, declined to comment about the results of the survey, which he said had not been analyzed when he finished his term.

But Worthington said Brexler "fought even obtaining a survey. The board of trustees finally had to mandate a survey on its own."

Voting for the agreement that included the severance package were trustees Loving, Donnie Hutcherson, Kim White and Dr. Phyllis E. Miller. Trustees who voted against it were Casavant, Worthington, Jennifer Stanley and Russell King.

Members voting in favor of the agreement did not publicly state their reasons during the meeting.

Trustees Dr. Charles F. Longer, Michael Griffin and Patrick E. Quinn were absent from the meeting. Quinn, co-chairman and president of U.S Xpress, and Longer did not attend due to health reasons.

Griffin, who will replace Quarles on the board, is out of the country.

After the vote, Stanley proposed another action to accept the Dec. 31 resignation but remove the severance package.

THE DECISION MAKERS

Voting for the agreement that included the severance package were trustees

Ron Loving, appointed by the city

James D. Hutcherson, appointed by the city

Kim White, appointed by the city

Dr. Phyllis E. Miller, appointed by state legislators

Trustees who voted against it were

Richard Casavant, appointed by Hamilton County

Jim Worthington, appointed by the city

Jennifer Stanley, appointed by Hamilton County

Russell King, appointed by Chancery Court judges

"I do think it's imperative that we have clarity ... for exactly who is in charge," she said. "We need to accept."

After some questions about exactly what the board would be voting on, Dale Hetzler, the board's general counsel, said the vote would accept the resignation, then Erlanger could determine "whether he would be entitled to any payment under his contract."

Stanley restated her motion, saying, "The motion is to accept Mr. Brexler's resignation as of Dec. 31. We're merely accepting his resignation and moving forward with any discussion."

The motion passed unanimously.

The board then adjourned.

Hutcherson said after the meeting he isn't sure who would "take the lead" in negotiations.

"We will just continue to negotiate in good faith," he said.

Loving said he voted to approve the severance package because he thought the wording of Brexler's contract warranted the severance.

"I thought it is the best way to move forward and in the best interest of the health system," he said.

Woodard-Thompson served as interim CEO for 13 months after the previous CEO resigned in 2003 and before Brexler was hired in 2004.

Erlanger paid out a lump sum of $131,000 to the previous CEO to settle a lawsuit that dragged on for five years.

Dennis Pettigrew resigned in February 2003 and filed a lawsuit in July 2003, alleging the hospital violated his severance agreement and had not paid him the $380,000 he had been promised. The suit was settled in May 2008.

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