by James C. Sherlock
Scandals are sometimes overrated. Not this one.
I am not an attorney, but I will project today the significant legal jeopardy into which the process may have put the group that got together to coordinate and plan that merger without EVMS participation.
Not to mention the legal and personnel mess that it puts on the desk of Virginia’s Attorney General and the Governor.
The participants in the planning that went on without EVMS included:
- Manatt Health Strategies, a consultant paid by ReInvent Hampton Roads and Sentara;
- ReInvent Hampton Roads, a tax exempt 501(c)(3) public charity according to the IRS and the Commonwealth. Howard Kern is a Director. Kern’s involvement with ReInvent was not disclosed to EVMS even when, late this summer, the planning was disclosed. EVMS did not find out about this until October and is substantially concerned about this conflict of interest.
“ReInvent funded the bulk of a $175,000, four-month study to “identify options of cooperation/relationship among Eastern Virginia Medical School (EVMS), Sentara Healthcare and Old Dominion University (ODU).”
- Sentara Healthcare also a federal and state tax exempt 501(c)(3) public charity, or at least that is how it is designated by the IRS and the Commonwealth. Howard Kern is CEO. His compensation in 2017 was $5,200,000;
“However, according to records obtained by Checks and Balances Project, the scope of the study soon expanded, with Sentara Healthcare paying for most of it. EVMS leadership was largely cut out of the process.”
To connect the dots, Kern’s ReInvent Hampton Roads paid for the study until Kern’s Sentara picked up the tab.
- Old Dominion University, a state-supported university. ODU has a governor-appointed board, Rector and Attorney General-appointed University Counsel. The current Virginia Assistant Attorney General and University Counsel at ODU is Earl Nance. He is brand new to the position. He succeeded Pat Kelly. It is not clear whether Mr. Kelly knew this was going on. If he did, the University Counsel’s office should publish the legal advice he provided.
EVMS was not among the secret planners for nearly a year. That organization also has a Governor-appointed Board and Rector, who have fiduciary responsibility to protect the interests of EVMS.
So before we start we have a conflict of interest among two of the three voluntary actors in this planning who formed an admittedly secret cabal to keep EVMS in the dark.
Now let’s review what the reported goals of the planning included:
- to get Sentara out from under its $26 million annual contribution to EVMS and to transfer that responsibility to ODU, and thus the state.
“As early as December 23, 2019 Homan wrote EVMS Board of Trustees Member Wayne Wilbanks of his suspicion that Sentara was maneuvering to free itself from an obligation of financial support”
“I suspect one potential outcome of the “consult” will include a push for affiliation with ODU. As we discussed, this path will provide the facade of state financial support …. and reduce/absolve the obligation of financial support to EVMS from Sentara.”
- to transfer EVMS Medical Group to Sentara to increase its domination of medical services in South Hampton Roads;
Checks and Balances cites a meeting with Governor Northam.
Two weeks after the revelation that John (Dubby) Wynne (heads ReInvent and huge political donor) had been secretly working with Sentara, at a meeting set up by Wynne with Virginia Governor Ralph Northam and Secretary of Finance Aubrey Layne, (EVMS President) Homan learned of Manatt’s final recommendation: It was to dismantle EVMS’s (separate governance) and combine it with Old Dominion University.
“From EVMS Rector Theresa S. Emory, MD to Manatt’s Thomas Enters on Nov. 5:
“I have reviewed the document. While EVMS agreed to participate in the engagement despite the fact that it was already underway before our knowledge, Manatt’s recommendation to dismantle EVMS’ independent governance without a single communication or the entire EVMS Board of Visitors is unacceptable and not under consideration.”
Finally, from EVMS Rector Emory to President Homan on November 10:
“Is it possible that the consulting arrangement with Manatt, which was positioned as a neutral, agenda-less effort funded by ReInvent, was actually driven by Sentara CEO Howard Kern in his capacity as a member of ReInvent’s Board? I wonder if the study was predominantly funded by Sentara Health System with the sole purpose of pushing EVMS’ costs to ODU and Virginia’s taxpayers, while retaining all the benefits Sentara enjoys from being associated with a nationally ranked medical school? The only conclusion I can reach is that this has all been for the sake of a merger that will prove lucrative for Sentara.”
The potential legal issues that may arise include:
- Every organization that the plan deals with is a major recipient of federal and state funds. Not a good place to start.
- The Commonwealth won’t sue because Sentara swings too big of a bat here and because the AG had an Assistant Attorney General in place as University Counsel at ODU.
- ODU also has a Governor-appointed Rector and Board. Did they know how this was done?
- Virginia’s Attorney General is obligated to defend ODU in any legal proceeding. Not sure what happens if he finds out his Assistant AG at ODU was kept in the dark. Reasonable question.
- The federal Department of Health and Human Services and its Centers for Medicare/Medicaid Services may not be amused and certainly will not be awed. The Centers spend a fortune supporting both undergraduate and graduate medical education. The Justice Department is responsible to prosecute any federal case brought for HHS.
- The anti-trust implications of a Sentara capture of EVMS Medical Group and of, if proven, attempting to shed its EVMS funding responsibilities in this manner are clear. The Justice Department Anti-Trust Division will be interested.
- The Federal Trade Commission is considering a planned merger between Sentara and a North Carolina hospital system. They will certainly take note.
- The Justice Department may see this sequence of events as a conspiracy to defraud EVMS, a federally funded and certified medical school.
The Southern Association of Colleges and Schools accredits ODU. Its Commission on Colleges has six core values. They are:
- Peer Review/Self-regulation
- Student Learning
- Continuous Quality Improvement
Integrity, Accountability, Transparency.
Finally, if the federal government sues for any reason, then the planners, having conducted their planning in secret without notifying EVMS and once revealed, having concealed from EVMS the conflict of interest between two of the planning organizations, may be considered conspirators.
What the Governor will do with this situation is unclear. His own appointees are in charge at EVMS and are an injured party. His own appointees are in charge at ODU. Some of his biggest donors were behind the effort. That is called a dilemma.
What Virginia’s Attorney General will do with this hot mess is yet to be seen. One of his personally appointed Assistant Attorneys General is a person of interest in this sequence of events. Given the mess he is in if federal legal action is brought, this may not be Mark Herring’s best Thanksgiving.
But then I’m not a lawyer.