An independent audit released by MetroHealth confirms and expands upon previous findings that the system's former president and CEO, Dr. Akram Boutros, circumvented rules and processes to pay himself $1.9 million in bonuses, resulting in the concealment of this compensation.
The audit by BDO identifies a lack of formalized policies and procedures and failure to implement effective controls and offers recommendations to the system's board and management. The board plans to consider these recommendations at its next meeting, according to a news release.
Related: Dr. Akram Boutros defends bonus practices
MetroHealth's board of trustees in November fired Boutros, citing the bonuses and the mechanism through which he awarded them to himself. Boutros maintains he had that authority and has filed multiple lawsuits against his former employer, including for breach of contract.
Tucker Ellis, the law firm that conducted the initial investigation that led to Boutros' firing, retained national accounting firm BDO to review these issues and its policies and practices.
At issue is a "Supplemental PBVC (Performance Based Variable Compensation) program," or SPBVC for short. This is distinct from the PBVC program that the board sanctioned.
The BDO audit found that while the board had exclusive authority to approve all forms of compensation for Boutros, he initiated and implemented the SPBVC program, and included himself as an eligible employee without board approval.
"Dr. Boutros controlled the creation, implementation and execution of the SPBVC program, resulting in the concealment of supplemental compensation," the audit stated.
Boutros also, according to the BDO findings, excluded human resources from variable compensation plan development and from SPBVC metric assessment and employee evaluations.
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Boutros did not disclose the supplemental program despite numerous opportunities to do so, according to the audit, which found that in employment agreement negotiations in 2020 and in 2021, and in response to a public records request by The Plain Dealer, he provided incomplete compensation information that failed to disclose the SPBVC payouts.
Jason Bristol, an attorney for Boutros, did not immediately respond to a request for comment.
Additionally, the audit stated that Craig Richmond, who recently resigned as MetroHealth's executive vice president and chief financial and system services officer, established no controls for the supplemental PBVC program. He refutes this, according to a statement provided by his attorney.
Richmond resigned on Feb. 20 because he believes the information the BDO report "is inaccurate, incomplete, and misleading," said Steven B. Potter, attorney with Dinn, Hochman & Potter, a firm representing Richmond.
"Mr. Richmond adamantly disagrees with many of the findings of the report, including the insinuation that the supplemental incentives were not Board approved and that no controls existed," Potter wrote in a provided statement. "Although Mr. Richmond urged MetroHealth and the Board of Trustees to address the inaccuracies in the report over a week ago, it chose to do otherwise. Furthermore, the BDO report disparages Mr. Richmond and impugns his reputation and integrity."
Richmond was the only person to determine calculations for the supplemental program with Boutros, according to the audit, which noted that "The CFO is the financial control gatekeeper for the System and, as such, should have implemented controls to ensure proper segregation of duties related to the SPBVC program."
Richmond didn't obtain documentation or confirmation of the board's authorization of the program, and in BDO's interview, "he stated that he assumed the (board of trustees) approved Dr. Boutros' participation in the SPBVC program."
Potter disputes this, stating that many departments were involved in preparing and executing the overall incentive program, including PBVC, one-time recognition and supplemental incentives.
"Controls existed from the origination of information, independent data inputs from senior leadership, and the Board authorization of the overall incentive program funding," Potter said. "Further support that the Board approved supplemental incentives was included in a published Q&A from the Board in December 2022 that stated, 'The Board approved the strategic PBVC metrics and determined the funding limits for the supplemental bonus programs.'"
MetroHealth CEO Airica Steed announced Richmond's resignation in a memo to staff on Wednesday, March 1.
Based on the findings of both this audit and the original investigation by Tucker Ellis, MetroHealth and its board are taking a series of steps to improve oversight and policies, according to a release, which lists those it already has taken:
- The MetroHealth CEO's annual PBVC compensation (or any bonus compensation) is now subject to a separate board of trustees resolution and will be audited to assure compliance with all MetroHealth compensation policies and requirements.
- Compensation consultants hired by MetroHealth must now verify details of the CEO's pay and benefits with MetroHealth human resources, rather than relying on data provided by the CEO alone.
- The board will receive actual payroll data for all senior executives at least once annually.
- The board has created a standalone compensation committee to manage all policies and procedures related to executive pay.
- MetroHealth is conducting a national search for a Chief People Officer, whose duties will include supervising human resources and providing regular updates to the board.
- MetroHealth has issued an RFP for and is in the process of negotiating an agreement with a compensation consultant.
