Modern Healthcare
October 26, 2009
by Joe Carlson (an excerpt)
Former CEO sues hospital for more pension pay
Reeling from sticker shock, executives at a Tallahassee, Fla., hospital say their former CEO may have intentionally misled them about the size of his lifetime pension plan. Duncan Moore, whose 15 years as President and CEO of Tallahassee Memorial Healthcare ended with early retirement in 2003, says the hospital agreed to calculate his "top hat" pension payments under a formula that comes out to $605,000 per year until he dies. Hospital officials have balked at the amount, saying the payment formula they agreed to comes to $228,000. The dispute, which is spelled out in an unusually detailed federal lawsuit Moore filed against the system in July demanding payments, essentially comes down to a question of whether Moore's first three years of severance benefits should be included in the calculation of his lifetime pension because of the way that such payments are reported on the Internal Revenue Service's Form 990 disclosure filings.
Ron Seifert, a healthcare sector leader at Philadelphia based compensation consulting firm Hay Group, said top hat pension plans—which are taxable and only available to highly compensated executives—are common among healthcare providers who are seeking to compensate executives beyond what is otherwise allowed by IRS regulations for not-for-profits. However, the type of calculations being put forward by Moore are "somewhat atypical" of what is commonly seen in the industry. Seifert said best practices would dictate that Moore's estimated post-retirement benefits would have been more clearly spelled out for the board that approved it, but it's not clear that failure to do so would amount to any wrongdoing on Moore's part. "It would be a reasonable expectation to have those numbers laid out. I don't know if that constitutes any malfeasance or fraud, that would be a different question," Seifert said.
For more information
