A Miami federal judge threw out a lawsuit by Mount Sinai Medical Center accusing Chicago-based headhunter Heidrick & Struggles of botching the search for a chief executive officer who saddled the Miami Beach, Fla., hospital with nearly $65 million in losses.
The suit, dismissed by U.S. District Judge Jose Martinez, alleged that the search firm failed to adequately investigate the background of Bruce Perry, hired in December 1998 as president and CEO of the 1,109-bed hospital. Perry was fired in October 2001 after less than three years on the job.
Mount Sinai, which paid Heidrick & Struggles $169,000 for the search that led to Perry's hiring, charged in a January 2003 complaint that the recruiters breached their contract by misrepresenting Perry's qualifications and past performance (Jan. 27, 2003, p. 6).
Martinez granted a motion for a summary judgment in favor of Heidrick & Struggles, ruling that there was no evidence that the international recruiter "intentionally misrepresented or omitted critical information" about Perry. The central part of the contract between the hospital and the recruiting firm, the judge said, called for Heidrick & Struggles to present potential CEO candidates to Mount Sinai's search committee. It met that responsibility by presenting five candidates to the hospital, he wrote.
"There is no duty under the contract," the judge wrote in a seven-page ruling, "that (Heidrick & Struggles) perform an investigation, extensive background research or background check" on candidates.
"Isn't that what we paid them for?" asked a Mount Sinai spokeswoman.