Rockwood Clinic’s former chief financial officer has filed a whistleblower complaint accusing the large medical practice of attempting to force him into filing misleading financial reports.
When Gregg Becker refused, Rockwood fired him, according to a companion lawsuit seeking more than $5 million in damages.
Rockwood executives rejected Becker’s allegations and released a written statement: “We conduct our operations with an absolute commitment to ethical business practices. We follow generally accepted accounting principles and our financial results are audited each year by an independent accounting firm.”
The clinic plans to fight the allegations in court.
Becker had left his position as a senior financial officer last year for the Department of Veterans Affairs in Atlanta to take the Rockwood job. He was tasked with fusing the clinic’s financial operations with those of Deaconess and Valley hospitals as part of an integrated health care system under the common ownership of Community Health Systems Inc., a for-profit health care company based in Tennessee.
Among Becker’s responsibilities as Rockwood’s top financial official was to prepare a 2012 budget projection.
When his report forecasting revenues and costs determined that Rockwood was poised to lose $12 million this year, financial executives overseeing his office asked him to rework his projections to reflect an anticipated loss of $4 million instead, the lawsuit charges.
Becker could not produce such a scenario, according to his Spokane attorney, Mary Schultz.
He unsuccessfully argued to his bosses that he couldn’t meet the $4 million loss estimate without violating federal Sarbanes-Oxley financial reporting laws. His job situation then deteriorated and Rockwood’s local chief executive, urologist Dr. Craig Whiting, put Becker on probation.
Becker said he was forced to resign, according to the lawsuit.
Rockwood’s 77 physician owners sold their practice for more than $54 million to community health two years ago. Together with its 2008 purchase of Deaconess and Valley hospitals and subsequent equipment and building upgrades, Community Health has invested more than a quarter-billion dollars in Spokane’s health care sector.
Becker’s whistleblower action asks federal officials to investigate whether the financial reporting practices he claims he witnessed are systemic within the Fortune 500 Company based in Franklin, Tenn.
Community Health runs a network of 133 hospitals in 29 states and achieves profitability by acquiring hospitals that are often struggling and applying stronger financial management practices and expertise that come with corporate ownership, according to company records and the lawsuit.
The lawsuit filed last week in Spokane County Superior Court states that Community Health had earlier told investors that Rockwood’s 2012 loss would be $4 million. By not affirming that earlier estimate, Community Health would have to disclose to investors that its revenue projections on the acquisition were not meeting expectations, the lawsuit alleges.
“What we intend to find out is whether this sort of pressure is being put on chief financial officers throughout CHS,” Schultz said.
“The thing that’s perplexing here is that Gregg presented his findings to Rockwood and CHS and simply asked for an answer,” Schultz said.
Projected budgets are provided to stockholders and bankers to attract new investment.
“The problem is what then happens when those budget projections are not met,” Schultz said. “Apparently you leverage the CFO into financial fraud.”
Rockwood’s statement on the whistleblower complaint and lawsuit noted that it would fight the allegations in court.
“It is our position that there is no merit to the allegations contained in this lawsuit. We intend to address the allegations, and defend against them, in the appropriate legal forum,” the statement said.