Hutcheson hospital halts former CEO Charles L. Stewart's severance pay

Hutcheson hospital halts former CEO Charles L. Stewart's severance pay

December 14th, 2011 by Mariann Martin in News

Hutcheson Medical Center President and CEO Charles Stewart

The former CEO of Hutcheson Medical Center should not have been given a severance package because he improperly managed the hospital and may have left it vulnerable to federal sanctions, Hutcheson board Chairman Corky Jewell said Tuesday.

The board of directors of Erlanger at Hutcheson voted during a board meeting on Nov. 30 to stop severance payments for former President and CEO Charles L. Stewart.

"He [Stewart] failed to take care of business," Jewell said. "There some oversights, occasions of improper management by the previous administration."

When Stewart resigned in February, the previous Hutcheson board approved a 15-month package, which would have been worth as much as $407,000. The money was paid out monthly.

Paul Chambers, who served as the board's vice president when the severance package was granted, said Tuesday he believed Stewart's contract required the board to give him the severance pay.

"We asked for his resignation and under the circumstances, I didn't feel we had an option but give him the severance pay," Chambers said. "I don't know what the board now may have found out so I can't comment on their vote."

Stewart could not be reached for comment Tuesday.

Other board members declined to comment on their vote, referring all questions to Jewell.

The move to suspend Stewart's pay comes after Erlanger announced CEO Jim Brexler's resignation on Nov. 17. The Erlanger board of trustees voted on Monday not to grant Brexler a more than $700,000 severance package, although board members said negotiations are ongoing.

Erlanger Health System took over the management of the struggling Hutcheson Medical Center in May and extended up to $20 million in credit. The hospital has been renamed Erlanger at Hutcheson.

The publicly funded hospital had reported $1 million monthly losses, defaulted on a $35 million bond and laid off 75 employees before the deal with Erlanger was struck.

After Erlanger assumed management, boards for both Hutcheson Health Enterprises and Hutcheson Medical Center were asked to resign, Chambers said.

Hutcheson Medical Center. Staff Photo by Angela Lewis/Chattanooga Times Free Press

The nine-member board of the Hospital Authority of Walker, Dade and Catoosa Counties now makes up those two boards, with four additional members named to serve on both 13-member boards.

Jewell said an internal investigation after Erlanger assumed management of Hutcheson showed various issues with Stewart's management.

Contracts with physicians were not executed properly and problems were not self-reported to federal agencies, Jewell said.

Overpayments from Medicaid and Medicare also were not reimbursed correctly, he said.

Those issues have now been reported to federal agencies, but Jewell said he does not know if the hospital will face sanctions or fines because of the issues.

The failure to report the problems in a timely manner may lead to additional fines, he said.

The U.S. Department of Justice said Tuesday that it was not aware of any investigation of Hutcheson.

Stewart's contract stipulates he would not receive severance if he terminated his employment contract voluntarily, but at the time of his resignation, Stewart said a section in the contract said a "change of control" at the hospital would allow him to resign, but still receive severance pay.

The pending agreement with Erlanger at the time of his resignation was a change of control, Stewart said.

In a news release Tuesday, Hutcheson's board said "it is the mission of the current board to not enter into agreements with future leadership promising severance packages for performance below the standards expected."

Staff writer Ansley Haman contributed to this report.

Contact staff writer Mariann Martin at 706-980-5824 or mmartin@timesfreepress.com.