published Tuesday, December 13th, 2011

Erlanger trustees reject severance package for outgoing CEO Jim Brexler

Ron Loving, second from left, speaks to trustees of the Chattanooga-Hamilton County Hospital Authority during a Monday meeting held to discuss the transition plan for outgoing CEO Jim Brexler. The trustees voted to accept Brexler's resignation and agreed to continue negotiating a possible severance.
Ron Loving, second from left, speaks to trustees of the Chattanooga-Hamilton County Hospital Authority during a Monday meeting held to discuss the transition plan for outgoing CEO Jim Brexler. The trustees voted to accept Brexler's resignation and agreed to continue negotiating a possible severance.
Photo by Dan Henry.
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Costly departures

Since 1998, Erlanger Health System has agreed to pay hundreds of thousands of dollars to top executives after they resign or were ousted.

  • Skip Reeder, Erlanger CEO from November 1994 to March 1998, was paid $518,000 after he resigned as hospital head.
  • Dennis Pettigrew, CEO from October 1998 to February 2003, was paid $131,000 in a court settlement from a lawsuit he filed after he was fired.

Poll
Should outgoing CEO Jim Brexler receive a severance package?

Erlanger hospital's board of trustees rejected a severance package worth about $727,000 in salary and benefits for outgoing CEO Jim Brexler Monday, but the board voted unanimously to accept his resignation.

Now board members, who deadlocked in a 4-4 vote on the severance, must decide if they want to revisit the issue of severance for the seven-year CEO, board Chairman Ronald Loving said after Monday's meeting.

Brexler's resignation is effective Dec. 31. The hospital announced Brexler's resignation Nov. 17, but the board did not officially vote to accept it until Monday.

On Nov. 29, the board appointed Charlesetta Woodard-Thompson, chief operating officer of the hospital, as the temporary president and CEO.

Behind the scenes, trustees and Erlanger officials continued to hash out what, if anything, Brexler would be entitled to.

Brexler's contract states if he was let go without cause, he would receive 18 months pay and benefits as severance. If he was fired with cause, he's entitled to nothing. And other scenarios would come into play if he voluntarily terminated the contract.

One of the contract terms allows the board and Brexler to come to a voluntary agreement, and that provision was cited in the deal rejected Monday.

Eight of 11 trustees attended Monday's meeting. Loving, who took his post as chairman on Nov. 17, led the meeting.

Gregg Gentry, senior vice president human resources at Erlanger, presented a proposed transition agreement, saying the document was formulated after "numerous discussions" with Brexler. Loving declined to provide information about who was involved in those discussions, citing attorney-client privilege.

The proposed agreement would have provided 15 months of severance for Brexler, worth about $713,000. In addition, he would keep his Erlanger health coverage for 18 months, paying his employee portion, a benefit worth about $15,000, Gentry said.

Payments would have been biweekly.

The agreement would have paid Brexler about $185,000 less than the maximum he's entitled to in his contract, Gentry said.

And Brexler would continue to receive severance payments if he took a job elsewhere, he said.

Trustee Kim White made a motion to approve the agreement, and Loving seconded the motion. But before the vote, several board members voiced their opposition to the severance package.

"In my opinion, Mr. Brexler's executive performance justifies a termination, not a costly severance," board member Richard Casavant said.

RESOLVED

  • Monday's board of trustees vote did not authorize a severance payout for outgoing CEO Jim Brexler.
  • Trustees said a medical staff survey showed a lack of confidence in hospital leadership among physicians.

STILL PENDING

  • Negotiations for a severance package between the hospital and Brexler could resume.
  • Trustees have not said what steps they will take to begin a permanent CEO search .
  • Board members have yet to discuss November financials, which will be released Dec. 19

Casavant listed Brexler's rocky relationship with the board of trustees and professionals at Erlanger as two reasons. He also said the financial situation at Erlanger warranted Brexler's termination.

In October, the hospital lost about $2.1 million, compared to last October, when it made about $400,000. The hospital lost $1.1 million in the first quarter of the fiscal year.

November financials won't be available until Dec. 19.

Trustee James A. Worthington seconded Casavant, saying, "I, too, feel that Mr. Brexler failed to serve in the best interest of Erlanger."

Worthington said a recent survey of physicians highlighted Brexler's strained relationship with the hospital's doctors.

"The survey indicated what we thought -- the physicians at this hospital are not happy and the physicians are what bring money to this hospital," he said. "Brexler is not warranted compensation."

The results of that survey were not available Monday.

Former board Chairman Dan Quarles confirmed that he initiated the physician survey earlier this year. Quarles, an eight-year board member whose replacement was appointed last week by Hamilton County commissioners, declined to comment about the results of the survey, which he said had not been analyzed when he finished his term.

But Worthington said Brexler "fought even obtaining a survey. The board of trustees finally had to mandate a survey on its own."

Voting for the agreement that included the severance package were trustees Loving, Donnie Hutcherson, Kim White and Dr. Phyllis E. Miller. Trustees who voted against it were Casavant, Worthington, Jennifer Stanley and Russell King.

Members voting in favor of the agreement did not publicly state their reasons during the meeting.

Trustees Dr. Charles F. Longer, Michael Griffin and Patrick E. Quinn were absent from the meeting. Quinn, co-chairman and president of U.S Xpress, and Longer did not attend due to health reasons.

Griffin, who will replace Quarles on the board, is out of the country.

After the vote, Stanley proposed another action to accept the Dec. 31 resignation but remove the severance package.

THE DECISION MAKERS

Voting for the agreement that included the severance package were trustees

Ron Loving, appointed by the city

James D. Hutcherson, appointed by the city

Kim White, appointed by the city

Dr. Phyllis E. Miller, appointed by state legislators

Trustees who voted against it were

Richard Casavant, appointed by Hamilton County

Jim Worthington, appointed by the city

Jennifer Stanley, appointed by Hamilton County

Russell King, appointed by Chancery Court judges

"I do think it's imperative that we have clarity ... for exactly who is in charge," she said. "We need to accept."

After some questions about exactly what the board would be voting on, Dale Hetzler, the board's general counsel, said the vote would accept the resignation, then Erlanger could determine "whether he would be entitled to any payment under his contract."

Stanley restated her motion, saying, "The motion is to accept Mr. Brexler's resignation as of Dec. 31. We're merely accepting his resignation and moving forward with any discussion."

The motion passed unanimously.

The board then adjourned.

Hutcherson said after the meeting he isn't sure who would "take the lead" in negotiations.

"We will just continue to negotiate in good faith," he said.

Loving said he voted to approve the severance package because he thought the wording of Brexler's contract warranted the severance.

"I thought it is the best way to move forward and in the best interest of the health system," he said.

Woodard-Thompson served as interim CEO for 13 months after the previous CEO resigned in 2003 and before Brexler was hired in 2004.

Erlanger paid out a lump sum of $131,000 to the previous CEO to settle a lawsuit that dragged on for five years.

Dennis Pettigrew resigned in February 2003 and filed a lawsuit in July 2003, alleging the hospital violated his severance agreement and had not paid him the $380,000 he had been promised. The suit was settled in May 2008.

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about Ansley Haman...

Ansley Haman covers Hamilton County government. A native of Spring City, Tenn., she grew up reading the Chattanooga Times and Chattanooga Free Press, which sparked her passion for journalism. Ansley's happy to be home after a decade of adventures in more than 20 countries and 40 states. She gathered stories while living, working and studying in Swansea, Wales, Cape Town, South Africa, Washington, D.C., Atlanta, Ga., and Knoxville, Tenn. Along the way, she interned for ...

about Mariann Martin...

Mariann Martin covers healthcare in Chattanooga and the surrounding region. She joined the Times Free Press in February 2011, after covering crime and courts for the Jackson (Tenn.) Sun for two years. Mariann was born in Indiana, but grew up in Pennsylvania, Tennessee and Belize. She graduated from Union University in 2005 with degrees in English and history and has master’s degrees in international relations and history from the University of Toronto. While attending Union, ...

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He resigned, he is giving up his job....why does he get a parting gift? It's time to eat your own dog food....you know, budget pressures and deficits right? We can't give you a cost of living raise this year, sorry, there is no Pell Grant money to help you go to school...if no assistance for the working poor then certainly no GIVEAWAY for the already RICH. WTH?

December 13, 2011 at 7:05 a.m.
Facts said...

To Board Member Casavant: The loss of money by a charity hospital in a down economy obviously escapes you through reason. My wife works in the Emergency Room at Erlanger. The dumping of those who don't pay for care by other area hospitals is common place. So, why don't you march your high-minded, lettered importance to the Emergency Room, the Trauma units and other areas of Erlanger that have no choice but to accept the meth-heads who blow themselves up, the gunshot victims to the imaginary gang problem Mayor Littlefield refuses to address, and the idiots who drink and drive ATVs wearing no helmets. Then, march on over to the ER of Memorial or Parkridge, where my wife has pulled some extra time. You'll see insurance cards galore with upset stomachs, heart attacks, and minor injuries. The incompetence of a handful on this board demonstrates why Erlanger will continue to be a joke. Mayor Coppinger, you need to give the board a flush of folks like Richard Casavant.

December 13, 2011 at 7:25 a.m.
StylishJeff said...

The Tennessee I came from honors their commitments - if eight years ago they said they would pay you if we get rid of you cause we don't like you, then why isn't that good enough now". stand up and honor your commitments!

December 13, 2011 at 8:58 a.m.
StylishJeff said...

I read in an article quoting Board member Worthington "we have a responsibility to be fair with Mr Brexler" and this is your idea of being fair? Enter into a contract and then refuse to honor it! I read in the same article "I and other board members wanted to extend Mr Quarles term" curious who were the "others"? Did they have the same point of view as Worthington?

December 13, 2011 at 8:58 a.m.
NormalParkGuy said...

Comes in the door with $40 mil in fines, 7 out of 8 years profitable,$80+ million in indigent care and he did what wrong? I suspect the God complex docs got him!

US News and World report top ranked hospital in the region, who did he tick off?

By the way, it seems weird that for every Yes vote above, a no vote gets cast at the same time, but not the other way around.....

December 13, 2011 at 9:06 a.m.
QuarrelingDan said...

What I would like to know is who is left on this board that signed the contract guaranteeing this pay out several years ago? Seems they should be the ones the tax payers should be complaining about.

All over again - didn't this same thing happen several years ago? Wasn't the end result a $40 mil fine from the feds?

I'm still not sure I've heard the reason Brexler was fired.

December 13, 2011 at 9:11 a.m.
ExecAsst said...

NormalParkGuy hit the nail on the head above (as well as Facts comments), Jim Brexler walked into a mess, but did a lot of good things for Erlanger. I've worked there, he is a good guy. The reason he was forced to resign is because some of the "high and mighty ones" didn't like something he did or said. It happens over and over, and you will see it again in the future.

December 13, 2011 at 9:52 a.m.
formeremployee said...

I am not one to regularly, if ever, make posts, especially in what seems to be a possible hit piece against one individual, but I had to finally speak up, for the good of Erlanger hospital and for the good of the community.

As I see it, what this all amounts to is a dispute as to the level of due diligence Brexler has performed in his duties. What must be asked is:

1)Has he performed, 2)Could someone else have performed better, and 3)Where would we be today with someone else?

Personally I believe this hospital and the community of Chattanooga is far better off than it ever could have been without Brexler. I believe he has performed better than anyone else could have and without him Erlanger would have been in a much worse situation. Brexler has tackled a near impossible task of running a hospital with a history of problems, both in its administration/board and in its target demographic, and he has done quite well. Brexler has been recognized nationally by Presidents, statewide by the Tennessee Hospital Association and important stakeholders, and locally by numerous charity and special interests groups for his outstanding work and tireless dedication. He has brought an entire body of work with him that is rivaled by few with an entire career in bettering public hospital systems. Never being afraid of challenging the status quo, never backing down from from personal interests that would benefit at the public's expense. While I have never worked in this particular hospital those I have met that have/do are always pleased with its direction and Brexler's leadership.

That aside, as far as his severance packet, a deal is a deal and it seems very wrong to renege on a deal made in good faith. Which brings up a comment by one of the board members regarding physicians... is there more to this dispute than what meets the eye? Why is the CEO of a major organization being judged more by the opinions of a group of people with a financial interest in controlling the CEO rather than the outstanding performance outcomes of a major charity hospital in the greatest economic calamity since the Great Depression and a vested community at-large? Whats more, if the board does not grant this package to Brexler, what will the eventual costs be in terms of lawsuits and loss of Goodwill to the hospital and the community and how will the hospital be able to recruit strong leadership in the future if this is what Erlanger and specifically its board is known for? What does this say? I know if I were in this man's shoes Id want to be dealt with fairly and devoid of any petty emotional ploys by an apparently lethargic board. I believe the proposed package made Monday was a fair deal.

Pay the man his due. Pay the man his fair, rightful due, and then lets move forward.

December 13, 2011 at 10:01 a.m.
Ouzzy88 said...

I say: "Let him take the Six figures from the past, and leave with the 'ONE' finger he earned"!

Put your 'One' finger in, Write in Ouzzy88 in 2012!

December 13, 2011 at 10:30 a.m.
opinionmeister said...

What's with giving CEOs at any level a severance package? I don't see companies giving their employees a severance package when they leave. So, why should companies do the same with outgoing CEOs? That's why capitalism is not a perfect system. It rewards outgoing people who sit at the top, regardless of the results they post - negative or positive. Which is also what is wrong with so many Boards of Directors. Some of these boards are so overburdened with other responsibilities that they don't really know what has been going on with the companies these members represent and for whom the CEO reports. You're paid to do a job for a company - not to receive a severance package on the way out from leaving the company. Imagine what would happen if the money that went for severance packages, instead, went for other services that could impact a community. Paying someone a severance package does little to the economy. Investing the money, instead, into the community brings back more to the community.

December 13, 2011 at 10:38 a.m.
baer6 said...

Lets pump the brakes a bit here guys and get some perspective...

How much did Jeff Fisher receive in severance when he left the Titans? This is a common occurrence in contracts with top executives. Dont punish Brexler, punish the board that signed the contract.

December 13, 2011 at 10:54 a.m.
KJTG777 said...

Ditto to the above comment by Formeremployee. Our society is full of news, which never seems to tell all sides. As a society we enjoy negative untruthful comments about people who are on a certain level. Why, because it helps people feel better about themselves and their own short falls. If you are one of these people who enjoy to comment and like to put your two cents in when you really only are going on what you read, as the old southern saying goes "Bless Your Heart". Throw your stones without knowing all the truths, but while you are doing that hope Karma does not come back to you.
The truth is Jim Brexler is a good and caring person. He has done great things for Erlanger. The truth is also that Erlanger signed a contract. Contracts need to be honored. I dare say the board members who decided to form an alliance for their own greater good and gain did not read the contract or did not know enough to understand it. Prayers for us who love Erlanger we will need them without a Leader like Jim Brexler.

December 13, 2011 at 12:03 p.m.
Lr103 said...

If it's in his contract he's entitled to it. Otherwise, you howling my-tax-dollar group might find yourselves paying out even more in the way of lawsuits.

December 13, 2011 at 12:10 p.m.
jel said...
December 13, 2011 at 1:28 p.m.
JJester said...

Jim Brexler, nor any head of a non-profit, tax payer institution should be paid 3/4 of a million dollars to NOT work. He quit. Even if he felt they were forcing him out he still resigned. That should end any financial support due him. Hamilton Co. loves to pay for ridiculus contracts, think Jim Scales.There should be no further benefits or monies extended after his final day of employment. Do not forget they will also have to pay who ever takes over as CEO. Erlanger needs a board who can be better stewards of our insurance and tax payer moneies.

December 13, 2011 at 9:52 p.m.
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