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Thursday, June 13, 2024 | Back issues
Courthouse News Service Courthouse News Service

Whistleblower Questions Hospital Sale

GRAND RAPIDS, Mich. (CN) - A Michigan hospital fired a whistleblower for reporting "unethical and illegal conduct" in a multimillion-dollar sale of a hospital, the former director of its charitable foundation claims in court.

Laura Sacha-Staskiewicz sued the Metropolitan Health Corp., Metropolitan Hospital, and the health system's CEO Michael D. Faas on March 25 in Kent County Court.

Staskiewicz claims she sent multiple anonymous letters to hospital, municipal and state officials accusing Faas of breaches of fiduciary duty and wrongful terminations.

She claims Faas did this during a proposed merger with Tennessee-based Community Health Systems, which stands to receive an 80 percent interest in the Metro system.

The purchase is subject to a review by the Michigan Attorney General's Office, because it would merge Metro, a nonprofit, into a for-profit, publicly traded company.

The standard in the past five such mergers was that the charitable foundation of the nonprofit receive the net sale proceeds if any remain after the hospital's liabilities have been paid, the complaint states.

In the Metro-CHS merger, this would mean an estimated $50 million in net proceeds to the foundation - a process Staskiewicz says Faas wants to disrupt.

Community Health Systems is not a party to the complaint.

"Beginning in October 2014, Staskiewicz learned that Faas sought to dissolve the foundation so as to divert the net proceeds of the Metro-CHS transaction defendant Metropolitan Health Corporation, a nonprofit entity which Faas could then control," the complaint states.

Months earlier, Staskiewicz claims, she discovered that Faas had been "engaging in a pattern of unethical and illegal conduct in connection with his position at Metro," including using company money for personal gain.

Staskiewicz claims she complained internally about Faas's conduct, and that eight other executives who did the same were terminated or forced to resign between Oct. 3 and Oct. 29. She claims that neither Metro nor its board did anything "to quell Faas' behavior."

"Seeing no other choice," Staskiewicz says, she sent letters to Metro's board and employees, to the attorney general, to the Michigan State Police and to the local police department.

"Staskiewicz drafted and sent these correspondences to the above individuals and authorities because she believed that Metro and Faas were violating and planning to violate Michigan law regulating nonprofit corporations, charitable assets and other laws including, but not limited to, statutes prohibiting embezzlement and criminal conversion," the complaint states.

"In addition, Staskiewicz believed that Faas had repeatedly breached fiduciary duties which he owed to both Metro and the Foundation by virtue of his membership on the Metro and foundation boards."

Faas told Staskiewicz that the foundation board had "no business" discussing the distribution of the proceeds from the pending merger and forbade it from doing so, Staskiewicz says. Shortly afterward, Metro's board voted to dissolve the foundation so that the money would go directly to Metro, the complaint states.

Staskiewicz claims that Faas retaliated against her by excluding her from meetings, curtailing her responsibilities, and suspending her pending an investigation into the authorship of the anonymous letters.

She was fired in a letter from Faas and the company's compliance officer, which called the letters alleging violations of state law the reason for her dismissal, according to the complaint.

Staskiewicz seeks damages for whistleblower violations, wrongful termination, breach of contract and civil conspiracy.

Her attorney, Daniel Swanson with Sommers Schwartz, did not immediately respond to a request for comment.

Ellen Bristol, Metro's director of communications, declined to comment.

Faas did not respond to a request for comment.

A public forum on the proposed merger will be held on April 23, according to the Michigan Attorney General's website.

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