The Chattanooga Times Free Press has reported several stories about a local hospital board’s possible Sunshine Law violations related to deliberations to award $1.7 million in executive bonuses. The hospital board’s actions have drawn criticism from state Sen. Todd Gardenhire as well as some employees of the hospital whose benefits were slashed in cost-cutting moves this year.
The Board of Trustees for Erlanger Health Systems says it needs to be able to meet privately or competitors could cherry-pick opportunities that the board discusses. At issue is whether Erlanger’s board misused an exemption in the state law that allows hospital boards to discuss marketing or strategic plans in a private session.
Under the exception (T.C.A. 68-11-238), before a meeting can be closed hospital board members have to vote in public on whether it needs to meet in private. A simple majority vote of members of the board in attendance at the meeting is required.
The exemption says nothing else shall be discussed during the closed meeting, and “Action by the board of the hospital adopting a specific strategy or plan shall be subject to the open meetings laws and the adopted strategy or plan, and the studies that were considered in the adoption of the specific strategy or plan, shall then be subject to the public records laws. The records shall be available for public inspection at least seven (7) days before any vote to adopt such strategy.”
The Times Free Press gave TCOG permission to reprint its most recent story, by reporter Kate Harrison Belz, here:
As Erlanger Health System’s board of trustees freezes its plan to give $1.7 million in executive bonuses, the question of whether trustees violated the state’s open meetings law when planning the payout has taken center stage.
Erlanger board Chairman Donnie Hutcherson said trustees will work with a third-party attorney to help the board re-examine the process trustees used when they voted Dec. 4. The decision outraged local officials and rank-and-file hospital workers.
Employees said the move was insulting after a year when their benefits were slashed in the name of financial stability, and local lawmakers used words such as “secretive” and “illegal” to describe how the incentives were added to Erlanger’s board agenda at the last minute and voted on with minimal public discussion.
Hutcherson said the allegations prompted him to ask hospital management to stall the bonus payouts to 99 managers.
“That’s a serious allegation,” said Hutcherson. “I’m going to make sure that is vetted, and then we will take the right steps after that. It is the appropriate thing to do.”
Hamilton County Mayor Jim Coppinger, who appoints some trustees to the board and who criticized the incentives, said the freeze was “reasonable and logical” given the questions raised by the vote.
The questions of legality center on what occurred during the board’s customary pre-board meeting dinner on Dec. 4, when trustees discussed the planned incentives.
Hutcherson said he has “been assured that everything we discussed in the meeting was appropriate.”
A 2008 state law allows public hospitals to discuss strategic plans in closed meetings to keep competitors from having an unfair advantage. Erlanger often closes meetings under that law.
But Deborah Fisher, executive director of the Tennessee Coalition for Open Government, said those exceptions “have nothing to do with compensation plans.”
Even if part of the board’s discussion were to be classified as strategy, the law says, the board must vote formally to close the meeting. And once the closed meeting is adjourned, the hospital must record whatever action was taken and make it public seven days before the board can take a vote.
“It appears they’re not just violating the law in one way, but in many ways,” said Fisher.
The fact that the board added the bonuses to the agenda just hours before the meeting “is not in line” with what the Tennessee Open Meetings Act requires, Fisher said.
“You need to put it on the agenda ahead of time, especially if there’s going be significant public interest.”
Another question centers on how long talk of such incentives has been in the works, and what was contractually promised to executives.
Trustees have said bonuses are tied to hospital earnings, and that they promised hospital managers over a year ago that they would see bonuses if certain financial benchmarks were reached. Since the goals were met, the board are obligated to honor that commitment, they said.
But those goals were never discussed or voted on during a public meeting.
While hospital officials began conversations with consultant Sullivan Cotter about executive incentives last fall, the financial goals that would determine bonuses were not formalized until February, trustee Jennifer Stanley explained Thursday.
Stanley says that according the board’s bylaws, such goals do not have to be voted on. The board has historically been inconsistent in making those goals public.
Stanley said she is trying to make the incentive process more consistent and public, which is why she introduced a resolution last week that set the new goals for management this coming year.
Coppinger said while “the timing is horrible” for the incentives to be offered, “if they were written into a contract and agreed upon — and if they’re approved in a legal realm — I think that, unfortunately, [the board] will go ahead with them.”
Contact staff writer Kate Harrison Belz at [email protected] or 423-757-6673.
