A litany of government documents—including employment contracts, bank letters and internal memos—was the focus of testimony presented Tuesday, as both government and defense attorneys continued to probe into the alleged conspiracy that former execs Rodney Miller Sr., Amos Carty Jr. and Peter Najawicz are charged with perpetrating at Schneider Regional Medical Center (SRMC).
In the trial’s opening day Friday, prosecuting attorney Denise George-Counts argued that the trio had been working together to award, approve and pay one another lavish wages — including additional stipends and perks — above their documented salaries, and without approval from Schneider’s governing board.
She alleged that Miller racked up close to $3.8 million by the end of his five years at the hospital, while Carty and Najawicz — accused of approving and making the payments — were also pulling in thousands more than the $80,000 salaries listed in their government payroll documents.
Some of the government’s supporting documentation surfaced Tuesday, as the trial continued with the cross-examination of legislative post auditor Jose George, who spoke Monday about reports generated by his office during the Senate’s annual budget process.
The Post Audit Division is tasked with compiling an analysis for each government department and agency, based on submitted information, which includes, among other things, a detailed listing of employees and their salaries, along with the agency’s previous and proposed expenses.
George said Tuesday that his division "relies heavily" on accurate information submitted by the agency — in this case, the hospital — along with the Office of Management and Budget, which is responsible for allotting budget funds after they’ve been appropriated by the Legislature. Referencing personnel listings included in the post audit reports for fiscal years 2002 through 2008, George has testified that up until fiscal year 2007, Miller was making $150,000, while Carty and Najawicz were making $80,000.
George said it’s the duty of post audit to verify the numbers, and working off of wrong information — whether provided by the hospital or OMB — could result in the agency being underfunded for the fiscal year. Meanwhile, the hospital’s enabling legislation requires that detailed reports, along with a certified audit, be provided to the government and Legislature annually, since Schneider Regional receives money from the General Fund to pay its staff.
George said it "appears" the documents accurately reflect the information submitted to the Legislature during those years, and that he was "not aware" of any other documents submitted to the division that would reflect any additional pay or other form of compensation.
Under cross-examination from the defense, however, George added that any additional compensation received by hospital staff would not be factored into the totals included in the post audit reports, which were subpoenaed by the prosecution and list salaries based on the employees’ Notices of Personnel Action (NOPAs), which show, among other things, what position an individual holds and how much they are paid.
Miller defense attorney Alan Teague — who has argued that many other hospital employees were, and still are, being paid above their NOPA salaries — also peppered George with questions about additional stipends given to specific employees, including SRMC’s current Chief Operating Officer Angela Rennalls-Atkinson, who Teague said is documented to have made $80,000 in fiscal year 2006, but who he implied was actually making $120,000.
Defense attorneys have argued over the past couple days that the practice of paying officials and providers above NOPA centers on recruitment and retention — in other words, paying them enough so they continue to work at the hospital.
Teague has also argued that Miller was open about the practice, and referenced Tuesday a 2005 statement from Miller before the Senate’s Finance Committee saying that the hospital has "hired its own staff on contracts outside the NOPA process" in order to reduce recurring expenses, such as salaries paid to traveling nurses. The statement goes on to discuss the hospital’s financial position, with Miller asking the Senate to fund a minimum $26 million of the $30.1 million needed to cover salaries during that year.
While Carty defense attorney Anthony Chambers pointed out Miller’s statement was given during a public hearing, where residents could come out and listen, the prosecution had George point out that nowhere in the statement did Miller say that he, Carty and Najawicz were included in the group making about their NOPA pay grade.
George-Counts also directed George to read a paragraph from the statement that says the hospital, due to low funding levels, was being "forced" to offer contract positions that don’t include full benefits, such as retirement.
Getting into the meat of the allegations — money transfers from the hospital’s bank accounts to Miller’s, Carty’s and Najawicz’s personal bank accounts — George-Counts sought testimony from Allison Spencer, a hospital paralegal who worked with the officials in drafting many of the hospital’s correspondence and internal documents.
In particular, George-Counts had Spencer go through Miller and Carty’s employment contracts, to include the benefits — and changes to the benefits — listed within. A 2005 contract for Miller, for example, showed a base salary of $265,000, with a 5-percent cost-of-living allowance, an annual $40,000 housing allowance and a 20-percent retention incentive.
An offer letter with the same figures was also presented as evidence Tuesday and signed by former hospital board chairwoman June Adams, who is also charged with aiding and abetting the three officials, along with three counts of perjury.
A 2007 contract for Miller lists a base salary of $310,000, with a 25 percent (or $77,500) signing bonus, an annual cost-of-living allowance of 5 percent and a $40,000 housing allowance. A list of proposed benefits was included in two schedules attached to the employment agreement, which Spencer said was later analyzed by an independent firm called Clark Consulting.
George-Counts had Spencer read the contents of a report prepared by Clark in May 2007 — which Spencer said she had "never read" through before. While the letter said the benefits "currently in place" for Miller in 2007 were below those of other execs in his peer group, other benefits included in the attached schedules, if implemented, would put him in the high 90th percentile.
Implementing Miller’s proposed benefits could be a "large financial liability" for the hospital, a cause for "public censure" and force the Internal Revenue Service to address the "unreasonableness of Mr. Miller’s total compensation," the report said.
Other documents testified to by Spencer Tuesday include employment and additional compensation/stipend agreements for Carty, along with letters between Miller and Carty — many of which Spencer said that she had prepared — discussing various payments.
A letter from Miller in 2003, for example, grants Carty an additional "stipend" of $1,538 a paycheck for doubling as the hospital’s chief executive officer while also serving as the general counsel. Another letter directs an official at Banco Popular to debit a certain account for the same amount and transfer it to another account that Spencer later identified as Carty’s, and listed under the name "Amax Management Services Inc."
An amendment to the stipend agreement later bumped the biweekly payment up to $1,838. In another letter dated Nov. 7, 2005, Miller discusses raising Carty’s base salary to $189,600, and offering him a 15-percent incentive, which would become effective Aug. 1, 2005.
Other transactions referenced Tuesday include transfers to Miller’s Pentagon Federal Credit Union account, which was seized after Miller was arrested in 2008.
The defense is expected to cross-examine Spencer when the trial continues 9 a.m. Wednesday.