The former CEO of Haywood Regional Medical Center will get $150,000 from the hospital after settling a lawsuit claiming he was wrongfully fired.
David Rice was at the helm during a near meltdown of the hospital in 2008. At the time, Rice publicly said he resigned, but in a lawsuit filed two years later he claims he was forced out.
Settling the suit was a business decision, according to the current CEO Mike Poore.
“We felt that it was best not to spend any more money on attorneys and complete that chapter,” Poore said.
In his suit, Rice demanded 20 months of his salary, back pay for accrued vacation and sick time, bonuses he had been promised and lost benefits. While Rice’s salary was $199,000, benefits included a car and health insurance, extra bonuses and other perks.
Although Rice left in the spring of 2008, he claims the hospital board verbally promised him his salary and benefits through the end of 2009 when his contract expired. In exchange, they asked him to publicly announce that he resigned instead of labeling it a termination.
Rice claims he was tricked, however, and that the hospital board had no intention of keeping its verbal promise. Rice had been the CEO for 15 years.
Many in the community blamed Rice for the hospital crisis back in 2008. The hospital failed federal inspections causing it to lose its Medicare and Medicaid status, triggering an exodus of private insurers as well. The hospital essentially shut its doors for five months except for the most essential services.
Rice kept the brewing crisis a secret, attempting to quietly fix the underlying issues, but it eventually imploded. Observers believe that Rice’s failure to address the citations early on led inspectors to make an example out of Haywood, pointing to other hospitals with more egregious problems that didn’t get shut down.
Regardless, hospital board members and community leaders said they were blindsided and condemned Rice for failing to keep them in the loop.
The hospital leveled a countersuit against Rice. Even though the hospital maintained that Rice resigned, the countersuit claimed there was good cause to fire Rice had that not been the case.
The countersuit claims Rice failed to “communicate with the board, medical staff and administration in an effective and timely manner, or otherwise concealing and distorting material facts and circumstances concerning the operation and affairs of HRMC.”
In the countersuit, the hospital claimed Rice’s actions leading to decertification caused “significant loss of HRMCs patients and revenue placing the future operation of the hospital in jeopardy.”
The hospital shutdown had major economic consequences for the community. For starters, the hospital burned through more than $10 million in reserves it had built up over the years.
Doctors lost business when patients went elsewhere. Many of the nurses and staff were put on temporary unemployment. The county saw a substantial increase in ambulance costs for ferrying patients to hospitals in Asheville or Sylva. Patient numbers still have not fully returned to normal.
Last month, a group of emergency room doctors was awarded $1.6 million in a lawsuit against the hospital dating back to Rice’s reign. Haywood Emergency Physicians were wrongfully ousted by the hospital in 2006 and replaced with a corporate physician staffing company. Rice helped orchestrate HEP’s replacement because he saw them as a threat to his insular power structure, according to the doctors involved.
Settling the suit with Rice marks the final chapter in the saga, allowing the hospital to move forward with its mission, Poore said.
“We are moving forward and focusing on our hospital’s mission of providing compassionate, quality and cost-effective healthcare,” Poore said.
The two sides went to mediation in November. The only ones present were Poore, Rice and his wife, and their respective attorneys.
While out-of-court settlements are not publicly filed in the court record, Poore elected to share the information in the interest of transparency.