Memorial Hospital of Sweetwater County Countersues Former CEO

Memorial Hospital of Sweetwater County is countersuing former CEO Gerard Klein claiming that he concealed dire financial facts from the hospital board of trustees, according to court documents.

In court filings, the hospital alleges that Klein breached his employment contract, breached his fiduciary duty, and committed fraud, including “conversion of money, assets and property to his own use and benefit.”

According to the countersuit, which was filed late Wednesday, during Klein’s term as CEO:

  • expenses at the hospital increased dramatically over revenues,
  • the hospital lost more than $5 million of investment revenues,
  • the hospital suffered a significant financial downturn,
  • the hospital’s cash on hand dropped from 245 days to 88 days,
  • he entered the hospital into several contracts, including with the former chief operating officer of the hospital, without board approval or authority, and,
  • he purchased more than $190,000 of art as the hospital’s financial condition weakened.

The countersuit alleges that Mr. Klein “failed or refused to look out for the best interest” of the hospital and that he “concealed financial facts” from the hospital board of trustees from late 2015 until the end of 2016. The countersuit also alleges that a financial institution alerted the hospital to the “dire financial distress” that occurred while Klein was CEO.

Klein, whose employment with the hospital ended on Feb. 7, 2017, filed claims against the hospital on March 21, 2017, seeking hundreds of thousands of dollars. The hospital denies his claims.

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