MetroHealth has released the findings of a third-party audit of its finances in the wake of the bonus scandal that has rocked Cuyahoga County's safety-net hospital.
The audit, by BDO, a global accounting firm, confirms accusations made by the hospital board that former CEO Dr. Akram Boutros "circumvented rules and processes to pay himself $1.9 million in unauthorized bonuses," the hospital said in a statement.
The hospital points to the audit to bolster its claims that Boutros solely controlled the supplemental bonus plan and “took deliberate steps to conceal his actions” from the hospital board, the statement said.
Boutros has denied wrongdoing since he was fired in November and has sued the hospital board for defamation and retaliation. Boutros has repaid, with interest, the bonuses in question that he received and notified the Ohio Ethics Commission about the issue.
On Friday, Boutros' attorney said the MetroHealth board approved the bonus program and knew the CEO was included in the program.
"They approved the bonus payments for all eligible employees every year," lawyer Jason Bristol said in an email. "The bonuses were awarded only after a robust assessment."
The audit provides the most detailed description yet of the size and scope of the extra bonus program the hospital says Boutros implemented without their knowledge.
Between 2017 and 2021, Boutros awarded more than $9.6 million in Supplemental Performance Based Variable Compensation (SPBVC), according to the audit. In 2017, 74 people received SPBVC. By 2021, that number had grown to 115.
The audit said Boutros did not disclose his SPBVC compensation to the board and others.
"In calendar year 2017, Dr. Boutros initiated and implemented the SPBVC for which he defined the eligible employee population to include himself (without BOT approval)," the audit reads.
Boutros controlled all aspects of the program, according to the audit, including evaluating employee performance and approving payouts, including his own, which the board says he was not empowered to do.
Boutros determined payouts at the end of the year, the audit said.
"The determinants were backward looking (i.e., based on specific activities completed during the year), as compared to the forward looking metrics set by the (hospital board) for the (approved bonus program) plan," the audit reads.
It's those extra bonus dollars the audit says Boutros awarded himself that triggered the hospital to investigate the bonus program.
That investigation determined the board did not approve or authorize the SPBVC payments to Boutros between 2018 and 2022 in excess of $1.9 million. In addition, Boutros took actions to conceal the SPBVC payments to himself, the audit found.
Boutros' attorney said that the board's lack of knowledge isn't proof of a cover-up.
"At the end of the day, the Board falling down on the job and supposedly not knowing about a bonus program for 200 leaders over five years does not equal concealment," Bristol wrote. "The Board’s continued response is an unparalleled admission of Board malfeasance."
The audit found that millions of dollars in unauthorized bonuses were paid out apparently without the knowledge of the board because Boutros circumvented controls and acted contrary to the system's ethics policy.
Further weaknesses in hospital oversight policy and failures in senior leadership also allowed for unauthorized payouts to go undetected for years, the audit said.
The existence of a pool available for the funding of authorized performance-based bonuses made it possible for Boutros to establish and pay out the extra bonuses, the audit found. It also points to a lack of formalized policies and procedures guiding the bonus programs.
Additionally, the audit found that the hospital's chief financial officer failed to "implement segregation of duty controls" related to the CEO's supplemental bonuses and did not obtain supporting documentation or confirm the board had authorized the extra bonuses.
On Wednesday, the hospital system confirmed its CFO Craig Richmond had "chosen to resign." The hospital did not say whether Richmond's departure was related to the bonus scandal.
MetroHealth hired the auditing firm in December "to perform a thorough review of the policies, practices and issues surrounding the unauthorized bonuses paid to former CEO Akram Boutros," according to a hospital statement.
That, said Boutros' attorney, calls into question the independence of the audit.
