Memorial Hospital of Salem County in Salem, N.J., is close to reaching a settlement in a 1997 civil suit it filed charging former President and Chief Executive Officer Joseph Michael Galvin with bilking the hospital of more than $2 million in personal expenses ranging from fancy hotel accommodations to legal fees related to his divorce.
The agreement also would resolve related charges against Paul Fredricks, the hospital's former senior vice president of finance; Princeton, N.J.-based Smith, Stratton, Wise, Heher & Brennan, the hospital's former outside general counsel; two Smith, Stratton partners; and Wilmington (Del.) Trust Co., which provided banking and trust-related services for the hospital.
"We've reached settlements and are awaiting signatures from all the parties," said Ernest Jolly, board chairman of Memorial, which filed the civil lawsuit Dec. 17, 1997. "We're very hopeful that this matter can be concluded in a very short period of time."
Galvin's attorney, Walter Weir Jr. of Weir & Partners, Philadelphia, did not return phone calls. Fredricks' attorney, George Bochetto of Bochetto & Lantz, Philadelphia, could not be reached at deadline.
Galvin, a past winner of the American College of Healthcare Executives' "Young Executive of the Year" award, was fired from Memorial's top post June 5, 1996, for alleged improprieties discovered in a routine audit of 1995 financial results. Later that year the hospital issued a statement about the alleged misuse of funds and revealed that a federal probe into the matter was under way.
Jolly declined to comment on possible criminal charges in the matter, because of concern about jeopardizing the settlement. He conceded only that "we have (cooperated with) and continue to fully cooperate with all regulatory and governmental agencies." He also declined to disclose the terms of the settlement.
Memorial charged Galvin and his alleged co-conspirators with defrauding the hospital over five years through a series of misappropriations. They purportedly included $300,000 in divorce-related attorneys' fees, $357,000 in home renovations and $20,000 in furnishings for a beach home in Cape May, N.J.