With one of their key witnesses still absent from the courtroom Wednesday, both prosecuting and defense attorneys spent their time grilling two other former Schneider Regional Medical Center (SRMC) board members about their involvement in negotiating a 2005 employment agreement for Rodney Miller Sr.
Former hospital board chairwoman June A. Adams took the stand Tuesday but was excused minutes into her cross-examination with Miller defense attorney Alan Teague. Appearing ill, Adams said she could not continue her testimony and was asked by the judge to see if she could make it in early Wednesday morning.
Attorney Francis Jackson, who also sat on the board while Adams was chair, was subsequently called to testify, and was called back to the stand after it was learned that Adams would not be back to testify Wednesday.
Adams was formerly a co-defendant in the ongoing case against Miller, who, along with former hospital officials Amos Carty Jr. and Peter Najawicz, has been accused of conspiring with one another to siphon off large sums of money from hospital accounts for their own personal use. The trio is also charged with padding each others’ contracts with benefits that took their salaries above and beyond what was listed in official government documents.
The past few days have focused on a 2005 employment contract for Miller listing a $265,000 base salary and a schedule of benefits prosecutors have contended Carty added on without the board’s knowledge. On Tuesday, Jackson said that the compensation committee appointed by the board to evaluate and make recommendations on Miller’s contract had agreed to an increase Miller’s salary but did not make any final approvals since many of the benefits were still being negotiated.
The board did agree to set a "definite ceiling" on Miller’s contract — between $350,000 and $400,000 — that could not be exceeded, and Miller had discretion in allocating how much money outside the base $265,000 could be put toward his choice of benefits, Jackson said.
A sticking point for the prosecution has been the provision of a Rabbi Trust — a retirement fund for highly paid executives — that was included in a benefits schedule attached to the contract that Jackson said the board had discussed, but not approved since they did not receive any information about it, as promised, from Carty.
Carty, Jackson testified, had been appointed by Miller to act as a liaison with the board during the negotiations.
Teague picked up with cross-examination Wednesday, asking Jackson why none of the discussions about Miller’s contract, or the $400,000 ceiling, did not appear in the official minutes of the hospital board’s meetings — even after executive session, when a summary was included about what had happened.
"We were still in the negotiation phase, so we may not have put the ceiling in the minutes," responded Jackson, who said that he was also the board’s secretary at the time.
Jackson added that the board could have kept better minutes, but at the time, his practice was more to record its "ultimate decisions," instead of a play by play.
Teague then pulled out a transcript of an interview Jackson had with prosecutors in August 2008, spending at least an hour going over pieces of testimony that were different from what Jackson had said on the stand — including his statement that the board had not seen the 2005 contract in question until the release of a joint local and federal draft audit report outlining various instances of financial mismanagement at the hospital.
Referring to the transcript, Teague noted that Miller had, after the negotiations were complete, come to the board and "thanked" the members for being "so generous" with his contract. Teague said that while Jackson appeared "surprised" by the statement, he did not ask for a copy of the contract at that time.
"When you learned there was a 2005 contract, didn’t you turn to the other members of the compensation committee and ask about it?" Teague asked.
"At some point in time, after Mr. Miller had finished speaking and left the room, we did look at each other and ask what was going on," Jackson responded.
Turning to the subject of the Rabbi Trust, Teague also asked Jackson if, in his 2008 interview with prosecutors, he did say the board had agreed to establish the account.
"Yes," Jackson said.
Referencing the transcript, Jackson later added that he did tell prosecutors it was his "understanding" that there was a possibility the trust would be funded in part by the hospital, with money "separate and apart" from Miller’s base salary.
Under re-direct from government attorney Esther Walters, Jackson later said the board had agreed to the retirement plan provided that the members got more information about the trust, which he said never materialized.
Jackson, like many other witnesses called by the prosecution, had been asked Tuesday about the board’s decision to hire Minnesota-based Clark Consulting to review both Miller’s 2005 and 2007 contracts. According to documents entered into evidence during the trial, the firm had recommended in increase for Miller before the 2005 negotiations, but noted in the second analysis that if all the benefits included in Miller’s 2007 contract were to be implemented, the hospital could face financial problems and could face scrutiny from both the public and federal tax agencies.
Under cross-examination from Teague Wednesday, Jackson said he was aware that Clark had stated in its second analysis that Miller was receiving $447,905 under the 2005 agreement and would be receiving $625,165 under his 2007 contract.
"And you continued to negotiate a 2007 agreement, did you not?" Teague asked.
"Yes," Jackson responded.
Earlier this week, other witnesses spoke about a June 2008 board meeting convened after the draft audit was released, and how various board members had responded to its contents. At one point, Najawicz defense attorney Robert King also played a tape recording of the meeting, in which board members discussed possibly firing Najawicz after it was discovered that he made two large lump-sum payments based on a memo Carty had sent out about retirement money that Miller was owed.
Other former board members, including Adams and Sam Topp, have testified that the general consensus was to pay Miller the money if there were amounts outstanding, but said that no one asked about the amount, or what it was for.
Asked about the recording Wednesday, Jackson said his first inclination was to fire Carty, but the board ultimately decided to keep him on so he could respond to the allegations raised by the audit.
"We didn’t want to let Mr. Carty out from under this great problem that was facing the board," Jackson said. The next inclination, he added, was to fire Najawicz.
While Teague pointed out that the board, despite its concerns, continued to negotiate a contract with Carty to take over as CEO when Miller eventually resigned, Carty defense attorney Anthony Chambers produced a letter written by Carty about overpayments to Miller, which were not referenced by the prosecution.
King, meanwhile, pointed out that both the draft and final audit reports contained a section that indicated Najawicz never received any copies of Miller’s contracts — a point that he has argued since the beginning, saying that his client was directed by his supervisors, Miller and Carty, to fund benefits he knew nothing about.
Early testimony from Carty legal secretary Allison Spencer revealed that Najawicz had, at one point, requested a copy of Miller’s contract but was forwarded only sections or language pertaining to certain benefits Najawicz had asked about.
Under cross-examination from King Wednesday, Jackson said that he had also requested copies, which were not immediately produced until after the audit was released and the benefits schedule contained in the 2005 contract came to light.
At some point Wednesday, Jackson said that he had been granted immunity by the prosecution in return for his truthful testimony and could not be charged unless he perjured himself on the stand.
It was also mentioned during cross-examination that a final CEO contract was never approved for Carty. Instead, he was granted an interim contract, and Jackson said that at some point negotiations between Carty and the board broke down after Carty said he had "aspirations" to become governor.
Jackson said he was aware that Carty was concerned that Gov. John deJongh Jr. would have him "removed" from his position, and consequently sought a severance package that would cover him if he had to leave the hospital.
Former hospital board chair Beverly Chongasing was also called to the stand Wednesday, and began testifying on Miller’s 2005 and 2007 contract negotiations. Chongasing also said that the board never took a final vote on Miller’s 2005 contract and that she did not know exactly what was included in it until the board began negotiations with Carty.
The trial picks up again Thursday in V.I. Superior Court.