City-owned Bartlett Regional Hospital paid a total of $291,191.45 in severance costs to its top three executives when they left the hospital at the end of 2013, according to separation agreements obtained by the Juneau Empire.
Former hospital CEO Christine Harff and human resources director Norma Adams announced their resignations in September 2013, followed by former CFO Ken Brough’s announcement two months later.
According to the documents, Adams and Brough both signed their separation papers Aug. 9, with each signing the other’s agreements as witnesses and given final approval by then-CEO Harff.
Harff resigned her position Sept. 16 and signed her separation agreement with the BRH Board of Directors on Sept. 30. Then-board President Linda Thomas signed off on the agreement, which was the only one to go before the city. All three executives worked at the hospital for about one year.
According to the documents obtained Friday:
• Harff walked away from the job with a total of $47,060 in severance pay and health insurance, with the city paying about $1,000 in payroll tax on the amount. Her annual salary had been $262,500.
• Adams ended her employment with $90,193 in severance pay and health insurance, with the city paying an additional $3,952 in payroll tax. Her salary had been $138,350.
• Brough’s agreement promised $140,915 in severance pay, health insurance and retirement, with the city paying an additional $8,003 in payroll tax. His salary had been $200,000.
The BRH board is responsible for hiring the hospital’s CEO, and negotiated Harff’s separation agreement, board President Kristen Bomengen said Saturday. Harff hired Brough, and was responsible for creating the severance agreements of Brough and Adams, she said.
“The city was not involved at all in the separation agreements for Ken Brough and Norma Adams,” CBJ and BRH HR director Mila Cosgrove said. “Those were done by Chris Harff.”
The city released the documents about a week after the Empire filed its open records request.
Cosgrove said that a lawyer could have helped draw up the separation agreements of Brough and Adams but she wasn’t part of the process and couldn’t say for sure.
Bomengen said the BRH board does not get “involved in day-to-day operation” of the hospital; the CEO was in charge of managing her staff, including Brough and Adams. The way the hospital is set up, it was Harff’s call as to what was stipulated in the agreements, she said.
“We don’t know what happened in that conversation,” Bomengen said, adding that Harff signed off on the agreements and informed the board later.
“We were informed after the fact,” she said. “We were informed that it was an agreement, it was (Brough and Adams’) wish to leave. That was what we had to work with.”
Per the employment contracts of Harff and Brough, if their “employment is terminated by CBJ for its convenience or without cause during the first year of your employment, CBJ will tender to you severance. The amount of the severance will be equal to six month’s base salary if termination occurs during the first year of your employment, and one year’s base salary if termination occurs after completion for the first year of employment ... If you resign voluntarily, or if your employment is terminated by CBJ for good cause... no severance will be due or payable.”
Severance was not mentioned in Adams’ position acceptance letter.
To Bomengen’s knowledge, all three executives left the hospital voluntarily. Bomengen and Cosgrove said that, in the health care industry, severance is commonly paid to higher-ups regardless of how the person leaves the job.
“There is severance when you leave a job in this industry,” Bomengen said. “It costs money to run a hospital, and to manage it well.”
Although the employment contracts of Harff and Brough state no severance would be paid if they left their positions voluntarily, and Adams’ acceptance letter doesn’t address severance, things can change from the beginning to the end of employment, Cosgrove said.
“When you write an employment contract, that’s on the front end of a relationship,” she said. “And a severance agreement is on the back end. Things shift and things change and you have to be adaptable to that. In this case, I think a severance agreement with Ms. Harff was completely appropriate.”
The three executives were reimbursed for relocating to Juneau. These amounts were paid out by the hospital in stages when the three were hired.
Harff’s original contract stipulated she must pay back her relocation costs of $23,027 if she chose to leave BRH within four years. Brough’s contract stated he would have to pay back relocation costs of $30,000 if he chose to leave within three years. Adams’ relocation agreement stated she would have to pay back $15,000 in relocation costs if she chose to leave within two years. All three were forgiven “the repayment of any relocation expenses” in their separation agreements.
Bomengen said she was surprised when Harff announced at a meeting that she was leaving the hospital, and she didn’t know why all three executives resigned within weeks of one another.
“We know it was a tense place for a while, we know there was some tension, but we don’t know what contributed to interactions between the top team there,” she said.
Cosgrove said hiring the right person for a job is always a challenge, especially with Juneau’s quirks — the rain, the darkness and the isolation can all come into play.
“You do the absolute best job you can when you hire people, and you don’t always get a homerun,” she said.
Cosgrove said Juneau’s “fish bowl” environment can be difficult for people who move to the capital city for a job.
“Bringing anyone into the community can be challenging,” she said. “Juneau is a lovely town in that its citizenry is so engaged and so interested in what’s going on around them. Sometimes when people come from down south, that’s a surprise for them.”
Mayor, assembly weigh in
The resignations themselves came as a surprise to several city leaders who had been briefed on the personnel report that concluded a week prior to Adams’ and Brough’s separation agreements being signed.
“The report said there wasn’t anything to substantiate the claims of misconduct or managers doing things to other employees that would justify firing them,” Mayor Merrill Sanford said of Adams and Brough. “It is standard in the industry to do severance packages when someone is going to quit or is being forced out for personnel reasons,” Sanford said.
Still, the majority of Assembly members contacted by the Empire knew nothing of the severance payouts, and a few said they want to know the details of why the separation agreements were signed and how the terms were decided.
“I am surprised to hear that this was renegotiated so close to their leaving,” Assemblyman Randy Wanamaker said. “I am definitely asking the city manager, the city human resources manager and the city attorney to give us a briefing on what’s happened here.”
The hospital has no obligation to consult the Assembly to spend money, so long as supplemental money is not needed from the city.
“The Assembly has ultimate financial authority for the city, even for Bartlett,” Wanamaker said. “We need to understand what happened here. This is a public policy matter for the city and for Bartlett.”
This situation may lead to policy change proposals when the dust settles and more answers are known, Wanamaker said.
“Policy and administrative changes may be necessary to better safeguard the public interest,” he said.
As an enterprise board of the CBJ, Bartlett’s human resources policies are largely consistent with CBJ practices — and nothing about Adams’ and Brough’s separation agreements or the means at which they came about violates those policies.
For municipal employees, any changes to contract must be approved by the city manager and the director of human resources — the concept is consistent at Bartlett.
As the director of human resources, Adams acted within the scope of her employment when she signed — in cooperation with the chief executive officer — the separation agreements for herself and Brough, Sanford said.
Looking to the future
Bomengen said the hospital board “will probably do some things a little differently” when it comes to hiring a permanent CEO, and it would be “one of the major things we’re looking at this year.”
The hospital is also looking to hire an interim CFO. Once the permanent CEO is brought in, he or she would hire a permanent CFO, Bomengen said.
The hospital is now receiving HR services from the city’s Human Resource Risk Management department, headed up by Cosgrove, through a shared services agreement approved earlier this week. It also recently began a legal services agreement with the city, Bomengen said.
“We found this HR department brought a lot to our process last time, and we need that in our process,” she said. “This is the most viable way to proceed.”
Cosgrove said that her department and the city’s legal department would probably oversee any future hospital separation agreements.
Bomengen said the Board of Directors plans “to do an in-depth study” of industry standards for compensation for hospital executives.
“We want to make sure we’re fully informed about such things... on how to structure compensation for this very particular industry,” she said.
With the city taking over the HR at the hospital, Sanford said there will be greater “visibility” in future operations.
“Our oversight is getting stronger and stronger, and we knew that was going to happen,” Sanford said, “but you don’t just jerk power from a board that’s had it for years and years.”
• Contact reporter Katie Moritz at 523-2294 or at firstname.lastname@example.org. Follow her on Twitter @katecmoritz.
TIMELINE OF EVENTS
Jan. 9, 2012 — CBJ Assembly approves new contract with Quorum Health Resources that switches Bartlett CEO and CFO from being QHR employees to city employees.
Jan. 31, 2012 — John Vowell takes over Bartlett as interim-CEO following contract change.
May 2012 — Norma Adams joins staff as Director of Human Resources.
Aug. 15, 2012 — Chris Harff takes over Bartlett as permanent CEO.
September 2012 — Ken Brough joins Bartlett as CFO.
Oct. 23, 2012 — Bartlett Board of Directors votes unanimously to terminate contract with Quorum Health Resources.
June 7, 2013 — CBJ hires outside contractor to conduct an investigation into complaints of harassment, verbal threats and an overall hostile work environment at Bartlett.
Aug. 2, 2013 — Investigation concludes.
Aug. 9, 2013 — Separation agreements for Adams and Brough are signed by each other and Harff.
Sept. 16, 2013 — Harff hands in letter of resignation.
Sept. 30, 2013 — New separation agreement for Harff is signed by Harff and then-Bartlett Board of Directors Chair Linda Thomas.
Sept. 30, 2013 — Adams’ last day as director of human resources. Resignation came earlier in the month.
Oct. 31, 2013 — Harff’s last day as chief executive officer.
Dec. 31, 2013 — Brough’s last day as CFO. Resignation came in November.