The Franklin County Hospital Board voted Tuesday night to terminate its contract with CEO Hervey Davis.
The 4-3 vote came after the board met in closed session; and if the decision stands, the contract will end Aug. 31.
The decision to terminate, Chairman Brent Young says, is being challenged by Davis who believes ending his contract requires a vote of the full board. The board is made up of nine members, seven were present at Tuesday’s meeting.
Davis made the point of the full board requirement while speaking to the members after the vote Tuesday.
Young said that on first read, the hospital’s attorney, Edwina Warner, said that Davis appears to be correct. Although the hospital board’s bylaws only require a majority vote of members present in a legal meeting, Davis’ contract seems to require the full board’s vote, or at least a majority of the nine, or five votes, the chairman said.
Young added that Warner is reviewing the contract to determine if her initial reading is correct.
The hospital's chief operating officer, Derek Johnson, provided a media release on Wednesday corroborating Davis' opinion and Warner's reading of the contract.
"According to a clause in Mr. Davis’ employment agreement, the board action taken last night may be invalid," Johnson said. He provided a paragraph from the agreement to support his opinion.
"The Board may at its discretion terminate the CEO’s duties as Chief Executive
Officer. Such action shall require a majority vote of the entire Board and become
effective upon written notice to the CEO or at such later time as may be specified in
said notice," the agreement reads.
Johnson concurred that "further clarification is being sought."
The board decision came a week after the hospital answered a lawsuit filed in April, and that also named Davis and Johnson, charging that financial information was reported to the board about Morthland College Health Services of West Frankfort and Dr. Tim Morthland. The alleged erroneous information led to the board terminating its contract with the health services group in February, a full seven months before it expired on July 31, according to the lawsuit.
Young said the lawsuit, he believes, was not the catalyst for the board deciding to part company with Davis.
“For the last three years, he’s talked about retiring,” Young said. “For me, the lack of communication with the board is the main reason."
He added, “We believe a change is needed; we need to move that process along.”
Young said the hospital has a new chief financial officer, Jim Johnson, who was brought in this year.
Johnson offers the “fresh eyes” the hospital needs, Young said. It’s a new vision that is required for the board to continue keeping the hospital around for another 15-20 years, the chairman said.
Concerning the lawsuit, it will remain active if the board makes good on its decision.
Davis is named in the lawsuit as both the hospital CEO and as an individual, said attorney Bryan Drew, who represents Morthland.
“Terminating his contract doesn’t affect (the lawsuit) at this time,” Drew said. “But his being done could facilitate a resolution.
“It’s never been the Morthland Group’s goal or Dr. Morthland’s intention to hurt the hospital but rather to help provide better healthcare for the people of Franklin County.”
The board is expected to discuss terminating Davis’ contract during its regular June meeting, if a special meeting is not called before.
Young said if the need comes for a full board vote, it would be a challenge to bring all nine board members together for a single meeting. Getting the fifth vote, in any case, is a good possibility, the chairman said, but not a given.
Davis’ contract actually ended in 2014. But it automatically renews each year and did so in January 2015 and 2016. The contract will renew again in January 2017 unless the board is successful in terminating it.
Phone calls to Davis for comment on the board action Tuesday and on the lawsuit have not been returned.
