Long-awaited testimony from former Schneider Regional board chairwoman June Adams — turned government witness after perjury and other related charges against her were dropped — was cut short Tuesday after she became ill and had to be helped out of the courtroom.
Adams was originally a co-defendant in the case against former Schneider Regional Medical Center (SRMC) officials Rodney Miller Sr., Amos Carty Jr. and Peter Najawicz, and had been charged with aiding and abetting the trio in a scheme to defraud the government of millions in hospital funds.
Adams was said to have approved several large payments to Miller that stemmed from a 2005 employment contract with the hospital that prosecutors have argued did not exist, since there is no record of it — or at least some of the benefits and perks included in it — being approved by the hospital’s board.
Under questioning by the prosecution Tuesday, Adams outlined how Miller came to Schneider Regional in 2002 and how the hospital had been functioning without a "leader" for several years and was in need of "someone to take charge."
"We were desperate," she said, adding that the two other candidates identified by the search firm hired by the board to find a new CEO either "had problems" or had turned down the hospital’s salary offer of $150,000. The board did not regret the decision, since Miller set about to meet its two top mandates — getting the Charlotte Kimelman Cancer Institute opened and getting the entire hospital accredited, Adams said.
Eventually, Miller’s original three-year contract came up for renegotiation, and the board ended up approving a contract that was drafted based on recommendations made by the compensation committee, which included a base salary of $265,000 for Miller.
Adams could not say, however, when the board approved the contract, though she did identify Tuesday that her signature is on the document.
"I’m looking at the contract, this is my signature, but I can’t recall who handed me the contract to sign," she said in response to questions from government attorney Esther Walters. Adams said she also could not recall where she signed it.
She did, however, remember that she had "never" before seen a schedule of benefits attached to the contract, which included, among other things, a provision for the establishment of a Rabbi Trust — or retirement account for highly compensated employees — for Miller. Prosecutors have argued that this particular benefits schedule was drafted by Carty and attached to Miller’s contract without the board knowing.
When asked by Walters when she first saw the benefits schedule, Adams said, "in your office, last week, when you presented me with it."
Adams said she recalled a few of the benefits recommended by the compensation committee for inclusion in Miller’s contract — education, housing and spousal travel allowances among them — but couldn’t say how much the entire package was worth. She appeared sure, however, that the board did not approve any provision for a Rabbi Trust, since Carty had promised them information about it that was never delivered.
"We took no action, there was no approval, there was no vote on it," Adams said of the trust provision.
Adams was also questioned on related payments made to Miller from a Scotia Bank account that prosecutors have said the former officials treated as their own "private slush fund," but that Adams said Tuesday was set up by the board for emergencies.
Prosecutors have questioned other witnesses about at least one $625,000 payment from the account, which no one has specifically identified except to say that at one point after Miller’s 2005 contract was executed, Carty came to the board and said that Miller was owed money since his retirement account had never been set up or funded.
Adams confirmed Tuesday her signature on a letter from Najawicz asking the board to pay "all outstanding amounts" due to Miller. But asked by Walters whether Najawicz had given the board an amount that was owed, Adams said no, and added that she had, at the time, "no idea" what the money was for.
"Why didn’t you ask?" Walters questioned.
"That is a question I have asked myself, and I can’t give you an answer on that, either," Adams responded.
Adams was also questioned about inconsistencies in the dates listed on the 2005 contract and a subsequent offer letter to Miller that Adams also appears to have signed. Again, Adams said she did not know.
Defense attorneys have argued that after Miller’s 2002 agreement expired, a temporary contract was drafted as a placeholder, including the same $150,000 salary and benefits, and was eventually replaced by the second 2005 contract, which witnesses have said was being renegotiated months after Miller’s 2002 contract expired.
Under cross-examination from Miller attorney Alan Teague, previous witnesses have confirmed that in the general course of contract negotiations, any documents amended and drafted later on would have been backdated to reflect when Miller’s 2005 contract was supposed to go into effect.
Turning to Miller’s 2007 contract with the hospital, Adams said the board reconvened its compensation committee to work on recommendations for a base salary, which was eventually bumped up to $310,000. While Adams said she could not say "offhand" what terms were brought to the full board for approval, she did add that there was still nothing included about a Rabbi Trust, or subsequent $125,000 contributions into it by the board.
Adams said that Carty gave her the 2007 contract to sign, but at the time, the benefits schedule, including the Rabbi Trust and $125,000 contributions, was not attached.
During the second week of the trial, Carty’s legal secretary, Allison Spencer, testified to a number of housing allowance vouchers submitted by Miller — a number of which were paid, according to documents submitted into evidence, from the same Scotia Bank account.
Among the payments is a $45,500 voucher that prosecutors have said Miller was not entitled to under the terms of his hospital contract. Defense attorneys, however, have said that Miller was advanced the money for a down payment on his Mahogany Run condo and that it was approved by the board.
Adams confirmed that Tuesday, saying that she had signed off on the payment, but that it was approved by the board first. She could not recall, however, discussions the board had about the advance and said under questioning from Walters that she did not realize that she had signed off on both the advance and Miller’s regular quarterly housing allotment in the same month.
"I never even looked at the dates on that," she said.
At issue for both sides Tuesday was why the board’s vote on the contracts, or even the appointments made by members to the compensation committee, were not included in the board’s meeting minutes from 2004 to 2008. Stepping up under cross-examination, Teague made the minutes a focal point of several of his questions but did not get far into his questioning since Adams appeared ill on the stand.
Superior Court Judge Michael C. Dunston, who is presiding over the trial, called a brief recess, but Adams was eventually excused for the day after telling the judge that she "would not be able to continue" through the rest of the afternoon. Adams was asked to come back again Wednesday at 9 a.m. and was asked to contact the court in the event she was unable to resume testifying Wednesday.
Taking the stand later, however, former SRMC board member Francis Jackson offered an explanation for why the board’s vote on Miller’s 2005 contract was not included in any meeting minutes.
"When did the board take a vote on the 2005 contract?" Walters asked Jackson on the stand.
"We never did," Jackson responded, adding that there was never any consensus on Miller’s benefits. Jackson also said there was never any direct negotiation between Miller and the board, since Carty was appointed by Miller as a liaison between the two parties during negotiations. Miller would send Carty in with a list of items he was considering, the board would respond, and after months, the board had gone through two, three or four drafts of the contract, Jackson said.
In the end, however, Jackson said the board decided — along with awarding Miller a base salary of $265,000 — to set a cap on the total value of his compensation package. With benefits, the figure was approximately $350,000, and Miller had the discretion of determining how much he received for what benefits as long as it did not exceed the ceiling, Jackson explained.
Funding a Rabbi Trust was not included in the specific benefits, though the board did have discussions on giving Miller a pension plan above that offered by the government, he added.
"His retirement plan was going to be funded, at least in part, by Mr. Miller’s own money," Jackson said. "To that extent, we didn’t care how much of his own money he put in there as long as it didn’t exceed the ceiling."
Jackson said neither the compensation committee nor the board had agreed on the various life and disability insurance policies included in the contract, nor the signing bonus.
The trial continues Wednesday in Superior Court.
