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Lawsuit over Grady Hospital authority chair’s ouster is part of power and money debate

Grady Hospital. (Photo by Kelly Jordan.)

By John Ruch

The authority that owns and funds Grady Memorial Hospital has spent $350,000 and counting fending off an increasingly testy lawsuit from its former board chair, who alleges she was ousted in an illegal meeting.

That’s just one rarely surfacing tip of an iceberg of power and money struggles at the Fulton-DeKalb Hospital Authority (FDHA). Defenders of Dr. Sharon Harley, the former Board of Trustees chair, say she was booted last year amid disputes about selling Grady Health System real estate and the fate of community grant programs. Current board leadership says Harley was an obstructionist to plans to refocus the FDHA on supporting Grady, partly in the wake of little-noticed state legislation that restricted its spending. The FDHA is now rethinking the grants, rebuilding a staff apparently shaken by the turmoil, and anticipating the settlement of an alleged $80,000 embezzlement case involving two employees under previous leadership.

In short, a lot has been going on behind the scenes of Atlanta’s famous public hospital and health programs in DeKalb and Fulton counties. And it comes at a time when FDHA and Grady may be asked to do even more with talk of a multi-million dollar rescue of a South Fulton private hospital.

Harley did not respond to a comment request, but her attorney, Wayne Kendall, had a lot to say. Describing a “Republican-Democrat divide going on in the subtext,” he said Harley was concerned about a board faction that wanted to sell Grady clinic properties for “sweetheart deals for their buddies. So there became a tension on the board.”

Kendall said that faction booted Harley in a Jan. 29, 2021 “emergency” meeting that violated the Georgia Open Meetings Act in several ways. He claimed that rather than settle the lawsuit for a portion of his fees, the FDHA and its powerhouse attorney, Robbie Ashe of Bondurant Mixson & Elmore, are continuing to fight out of spite and profiteering. It’s an increasingly wild legal battle that includes Kendall’s allegation that the chief judge of Fulton County Superior Court is biased.

“They could’ve gotten out of this case for 15 grand,” said Kendall. “But as Robbie Ashe told me, ‘We’re gonna milk this sucker. Because the board hates Harley, they hate her, and they don’t want to pay you, so that means we make a lot of money.’”

Ashe, better known publicly as treasurer of the MARTA Board of Directors, declined comment beyond pointing to court papers questioning Kendall’s “veracity.” FDHA board chair Kathryn Flowers-Glasco said the organization did nothing and is prevailing in the case so far.

“The fact is that the FDHA Trustees had lost confidence in Dr. Harley’s leadership and took appropriate action to remove her as chair,” Flowers-Glasco said.

“The FDHA Trustees are very interested in wrapping up the lawsuit with Dr. Harley,” she added, “and focusing exclusively on the health and welfare of the citizens of Fulton and DeKalb Counties by supporting Grady and its initiatives.”

History of spending questions

Exactly how the FDHA provides that support has changed over the years and frequently has been a bone of contention, as it is once again in the Harley controversy.

Many hospitals have an authority that serves merely as a pass-through legal entity for receiving public funds. That’s a function the FDHA serves as well, funneling DeKalb and Fulton taxpayer dollars into the Grady system. But the 80-year-old FDHA long had the unusual, old-school function of directly operating Grady, and has its own funding mechanisms. Besides running Grady, the FDHA has long funded various community health programs with its own money.

A 2008 financial crisis for Grady brought major controversy and reorganization. The separate Grady Memorial Hospital Corporation (GMHC) was created to operate the hospital and clinics, while FDHA continued to serve as its property owner, supervisor and public money pass-through entity. The FDHA gets about $3 million a year in lease payments from the GMHC and another $450,000 from a Georgia State University parking garage and has built an endowment of around $25 million. The FDHA sends unspent funds to Grady but often spends a lot.

The FDHA’s independence has sometimes caused political grumbling about duplicating Grady’s services and diverting money from the system, especially from pension funds, while authority leaders have often said they are supporting preventative services that help to keep people out of the hospital in the first place. In 2013, The Georgia General Assembly passed legislation aimed at restricting the FDHA’s spending.

The tip of that iceberg resurfaced again in early 2021. Fulton County commissioners had an unusual clash and stalemate over a proposal to appoint the son of former longtime FDHA board chair Thomas Dortch to the board. Harley was reportedly viewed as a Dortch ally.

Then came House Bill 370, a piece of “joint hospital authorities” legislation that did not name the FDHA but whose language applied only to it. Filed by state Rep. Jan Jones (R-Milton), the House speaker pro tempore, it again aimed to limit the FDHA’s spending. Jones provided SaportaReport with her notes from the time, which said the FDHA was providing only $700,000 a year toward Grady’s $5 million pension obligation, “which also diverts funds away from indigent care and other critical services.” The new restrictions, she estimated, mean $1.2 million a year going back to Grady. The bill was requested by current and former FDHA and GMHC members, she said.

The bill had another provision: instituting term limits for FDHA board members. Harley wasn’t named, but that ensured she would roll off after serving a decade. “The only person in the whole state of Georgia that applies to is Sharon Harley,” claimed Kendall.

Jones says she is generally unaware of the FDHA’s membership, including who is serving as chair and knew nothing about Harley’s lawsuit.

The board chair game of thrones

Meanwhile, some FDHA board members were not waiting to oust Harley, who had served as chair since January 2019. The immediate issue, according to FDHA statements in lawsuit documents, centered on the hiring of CEO Javon Gibson. The FDHA says Harley “waged a months-long campaign of delay, inaction, and obstruction of Board business.” That allegedly included failing to nominate new board officers, not attending meetings and refusing to sign Gibson’s employment contract. Gibson, who started work on Jan. 4, 2021, said in an affidavit that Harley never even spoke to him after his hiring.

“Already, the sense of dissention [sic] between the majority of the Board members and Dr. Harley has contributed to the departure of several senior staff members and significantly impaired the performance of the FDHA generally,” Gibson said in the affidavit.

On Jan. 29, 2021, the board held a special called meeting and voted Harley out without her in attendance. Shawn Graham, then the FDHA’s chief financial officer, says she was in the room when the “coup” happened. “My mouth just hit the floor because I was just in complete disbelief that was even allowable,” said Graham.

Graham says Harley was not obstructive but rather cautious in seeking more vetting of Gibson. Graham said the hiring process was conducted through many special called meetings and was concluded so quickly that she was unable to run a background check and payroll onboarding that were among her responsibilities.

There were other issues as well, Graham said, including the question of selling part of Grady’s Ponce de Leon Center property at 341 Ponce de Leon Ave. and shuttering and selling a clinical building on Martin Luther King Jr. Drive. “[Harley] did not want to sell it. She would rather renovate it to keep that property in the community,” said Graham.

Flowers-Glasco said the MLK site “is currently under discussion with Grady to be redeveloped into a new facility to service community medical needs. The FDHA is interested in increasing healthcare access for Fulton and DeKalb County residents, not decreasing the number of facilities.” She added that FDHA “will look at each site that it owns with a critical eye” for community impact and healthcare service needs.

The biggest issue, Graham says, is the community grant money. “It’s about control of the grants,” as well as the endowment, Graham said. She said the grant spending – which included about $375,000 to $500,000 a year in long-term grants – ended as a result of the new state legislation, at least as a formal program. However, she said, she understands that some individual board members have become involved in distributing small grants.

Flowers-Glasco agrees that the grant program was the target of the legislation and said the current board agrees with the intent of refocusing on Grady’s needs. But the door also isn’t closed. “Regarding grants, the FDHA has considered a few grants recently, but is in the process of updating the program and the process for submission/approval,” she said.

Graham said the FDHA had its issues under previous administrations, including the alleged embezzlement that she said she discovered, and which Flowers-Glasco says is undergoing restitution talks with the Fulton County District Attorney’s office. Graham said the legislation’s impact on the grant funding was among the reasons that she and other staff members left last year, though the “coup” of Harley and other board members voted off in the same meeting was the primary reason.

The lawsuit

Another chunk of the FDHA’s current spending is on lawyers. A recent financial statement shows it went nearly 235% over budget on legal fees in 2021, spending more than $540,000. Most of that was on the Harley lawsuit, with the rest going to its general counsel.

Harley’s case is rooted in the claim that the FDHA violated public meeting laws in various ways in the gathering that ousted her. The FDHA says that’s not true, but covered its bases immediately after hearing the complaint by quickly holding a re-vote meeting that apparently satisfied the law. That made the core of the case moot, but Kendall says the FDHA violated the law in other ways and still should be on the hook for at least some of his legal fees, which are in the neighborhood of $89,000.

The FDHA has some counterclaims, including that Harley and her “agents/co-conspirators” have tried to “intimidate and harass” witnesses, including with a “threatening message” to be a “nightmare.”

More unusual is a dispute over a Georgia Open Records Act request that Ashe filed with Kendall to gain documents from Harley about her official actions and legal spending. The open records law only applies to government bodies and such requests are typically made to a specific keeper of such records, not individual officials. Kendall characterizes the move as a kind of legal trolling, but Chief Judge Christopher Brasher ordered a production of the records after Kendall mistakenly failed to file a response to the counterclaim. Kendall says he never got a notice of the record-production order, though the other side did, and only heard of it when the FHDA lawyers filed a motion to hit him with sanctions, including $128,000 in legal fees. Kendall tried claiming he didn’t get the order because Brasher had improper communications with Ashe and should recuse himself from the case – a thus far unsuccessful move. However, Brasher also conducted a do-over by reissuing the order, and Kendall complied, saying he had produced all of the records months before anyway. But the motion for sanctions is still pending.

There’s an old saying in government that in a legal battle, the lawyers always win. There’s also a saying in law firms that it takes a good attorney to win a judgment but a great attorney to collect it. In short, the legal bills are getting longer, with both sides blaming the other and saying they should get paid.

“They decided they were gonna buffalo this situation and rip these folks off,” says Kendall of the FDHA lawyers.

“The FDHA has already partially prevailed in the lawsuit and is entitled to an order that Dr. Harley must pay part of the FDHA’s attorney fees, in the range of $100,000,” said Flowers-Glasco.

Soon that will be for the judge to decide. A bench trial in the case — and a hearing on the FDHA’s sanction motion against Kendall — are scheduled for May 25.

 

Correction and update: A previous version of this story incorrectly reported that the court already ruled on sanctions against attorney Wayne Kendall, rather than the motion still being pending. This story also has been updated with information about the trial date, which was scheduled the day of this story’s publication, and the latest amount of attorney’s fees sought by Kendall, as well as to clarify former CFO Shawn Graham’s primary motive for leaving the FDHA.

 

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