It was a tough week for Wuesthoff Health Systems' President and Chief Executive Officer Robert Carman.
The board of directors of the east Florida medical center fired Carman, 56, in a special meeting April 29 after indefinitely suspending him three days earlier for illegal political contributions. He also may face criminal charges for violating federal election laws, and his actions could imperil the hospital's tax-exempt status.
During the April 26 meeting, the board of 240-bed Wuesthoff Hospital, which has been engaged in a bitter antitrust case and certificate-of-need battle with rival Health First, replaced the controversial Carman with retired U.S. Air Force Major General Titus Hall.
Hall, 70, a board member, becomes acting president and CEO. He served 35 years in the military, twice commanding bases with hospitals, although he never managed a hospital.
Carman admitted in state and federal filings that he'd asked approximately 10 hospital employees to contribute more than $30,000 to Florida political candidates between 1992 and 1998. Carman later reimbursed the employees with hospital money in violation of state and federal election laws.
He has since repaid the hospital funds when contributing employees were unable to do so, said Wuesthoff spokesman Mark Cohen.
The actions also may violate Internal Revenue Service prohibitions against not-for-profit organizations contributing to political campaigns, which experts said could jeopardize the facility's tax-exempt status.
Carman, a 30-year hospital industry veteran, was hired by Wuesthoff in 1981. He could not be reached for comment.
And the imbroglio is far from over.
Cohen said the campaign contributions, while a mistake, were unintentional violations by a political neophyte. He said the hospital has never had a government relations bureau or anyone in-house who knew the law regarding campaign contributions. Wuesthoff dropped out of the state hospital association in the 1980s and again in the 1990s after some intense philosophical disagreements.
"When we dropped out, Mr. Carman realized the organization needed to be more political, and he made the decision to get more politically involved," Cohen said. "He knew corporations couldn't directly give money, but thought individuals could give money and get paid back as a reimbursable event. This was an overt, not a covert, action."
Cohen said that when Carman requested a contribution, the employee wrote checks to a candidate's campaign, filled out expense reports, attached copies of canceled checks and was repaid.
"It sat there in the file with the corporation's contributions to United Way and Heart Association," he said.
In late 1998, Cohen said, Carman read a Wall Street Journal article about the very kind of campaign contributions Wuesthoff was giving and believed for the first time it might be illegal.
A local law firm advised him to perform an audit and pay back the hospital and employees. Carman paid between $15,000 and $16,000 in reimbursements to the hospital and employees, Cohen said. Later another law firm advised the hospital to disclose the contributions to Florida's Agency for Health Care Administration, the Federal Elections Commission, HCFA and the IRS.
"The hospital voluntarily self-disclosed," Cohen said. "We are refiling our 1997 (IRS) Form 990s. We will pay a penalty. But we think it's incredibly unlikely given the small amount of money and the years over which it was spread that the IRS would revoke our tax-exempt status."
Some of the recipients of the contributions included prominent Florida Republicans, such as U.S. Rep. David Weldon and Attorney General Bob Butterworth.
Cohen said he didn't believe Carman's termination and the campaign contribution controversy will affect the pending antitrust lawsuit Wuesthoff is planning against Health First or the ongoing CON process.
Wuesthoff is seeking state permission to build a 50-bed hospital, medical building and outpatient center in Melbourne, Fla., to compete with Health First (April 19, p. 38).
Health First officials have publicly said they don't think Carman's misfortunes would affect the CON hearing.
Wuesthoff, which opened in 1941, posted net income of $11.1 million in fiscal 1998 on revenues of $270 million.
Spokespersons for the Brevard County state's attorney and the U.S. attorney's office in Orlando, Fla., said no charges had been filed against Carman or the hospital, but would not confirm whether they are investigating the case.
"There are a number of agencies that have been notified and have jurisdiction," said Wayne Holmes, Brevard County assistant state's attorney. "It raises a number of issues. There could very well be other things that come about as a result of this, but right now it's just too early to tell."
A spokesman for the Federal Election Commission said it is illegal under federal election laws to contribute in the name of another person or to reimburse someone for campaign contributions.
"It is also illegal for a corporation to make political contributions," said Ian Stirton, a spokesman for the FEC. "But it is up to the (six-member) commission to determine whether a violation has occurred and an enforcement is warranted."