Adding to the list of hospital executives who recently have run afoul of the law, C. David Morrison, the former administrator of 132-bed Logan (W.Va.) General Hospital, last week was sentenced to eight years and one month in prison for diverting the hospital's funds into development of a shopping mall and other fraudulent schemes.
Morrison's sentencing comes about two weeks after Joseph Michael Galvin Jr., the former president and chief executive officer of Memorial Hospital of Salem County, Salem, N.J., pleaded guilty to tax evasion (April 16, p. 12). Galvin's sentencing is scheduled for July 27.
U.S. District Judge John Copenhaver in Charleston, W.Va., ordered Morrison to pay $692,318 in restitution to the hospital and its foundation and a $15,000 fine, said Hunter Smith, assistant U.S. attorney in Charleston. Morrison will face five years of supervised release after the prison sentence.
Attempts to reach Morrison and his Charleston attorney, James Lees, were unsuccessful.
A federal grand jury convicted Morrison last November of 23 counts of embezzlement, tax fraud, money laundering, conspiracy and other crimes involving misuse of hospital funds. Prosecutors alleged that Morrison did not turn over to the Internal Revenue Service $4.5 million in taxes withheld from hospital employees, and that Morrison embezzled hospital money to pay for a private airplane and personal debts on property.
These actions, plus the use of hospital funds to help build the strip mall outside Logan, helped push the hospital into bankruptcy in 1998, from which it has yet to emerge. Morrison has made several claims against the hospital in the bankruptcy proceedings, which could be credited against his restitution, Smith said.
"The harm from these crimes is more than just depriving the United States of the tax revenue; the crimes are more related to the way Morrison ran the hospital and ran it into the ground," Smith said.
Morrison remains free on bond pending appeal to the 4th U.S. Circuit Court of Appeals in Richmond, Va.
Earlier this month, Donald Gene Cabell, Logan General's former credit and collections manager, was sentenced to a six-month term of electronically monitored home confinement and three years of probation for his involvement in the fraud schemes. Cabell, who pleaded guilty last November and testified against Morrison, also was ordered to pay $344,029 in restitution to the hospital within a year.