Trustees for the public hospital voted Dec. 4 to approve bonuses for 99 managers, including more than $234,000 for CEO Kevin Spiegel.
The Hamilton County legislative delegation -- which appointed three trustees to the 11-member board -- harshly criticized the move, saying the hospital had not proven it could afford such bonuses after ending the last three years in the red and relying on a federal funding pool to end this year with a profit.
Legislators also questioned whether the board discussed the bonuses privately before the vote, possibly violating the state's open meetings law.
"In light of those questions and in the spirit of cooperation, the board and management decided to hold payments until this issue has been addressed," hospital officials said in a statement Thursday night.
Hospital trustee Jennifer Stanley said the decision to have an internal legal review is the "appropriate action" in order to be "respectful of a dialogue with our legislators."
But state Sen. Todd Gardenhire, R-Chattanooga, who has led criticism of the board, said an internal review of the process is "like a fox determining the security of the hen house."
"[The hospital attorney] is on the payroll of Erlanger. He's one of the people that gets a bonus. He is not impartial," Gardenhire said. "The board needs to hire a truly independent outside counsel who will rule on it and give them an opinion."
A hospital board member on Friday defended the process, saying that though the review will be internal in nature, a third-party attorney will conduct the review rather than the hospital's in-house counsel.
Gardenhire said he was pleased the hospital was pausing to review its actions, but said "they should have thought about it last week instead of trying to sneak it through."
Erlanger's statement made clear that board members still support the bonuses, which trustees say were tied to predetermined benchmarks that hospital management met.
"Due to the hard work and efforts of our management team, physicians, nurses and all other associates, Erlanger has achieved one of the most remarkable turnarounds in the healthcare industry -- rebounding from $8 million in losses last year to $18 million in operating income this year," board Chairman Donnie Hutcherson said in a prepared statement.
The decision will not affect the 2 percent raise employees are to receive in January 2015, the statement said.
Contact staff writer Kate Harrison Belz at email@example.com or 423-757-6673.
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