- The Washington Times - Sunday, January 23, 2005

The company that owns Greater Southeast Community Hospital is replacing its top executive and moving to pay off most of its debt after having emerged from bankruptcy protection last year.

But its current and former executives still face a lawsuit over lucrative salaries and use of a corporate jet as the company — Doctors Community Healthcare Corp. of Arizona — was nearing bankruptcy, according to recently unsealed court records.

Doctors Community, which owns Greater Southeast and Hadley Memorial Hospital in the District, said this week that veteran health care executive Thomas M. Reardon has been named the company’s new chief executive officer in a merger with Argilla Healthcare Inc. of St. Louis.

He will replace Doctors Community founder Paul R. Tuft, who will remain with the company as the board chairman, the company said.

Mr. Reardon, who formed Argilla, served as the chief restructuring officer and independent director who oversaw the auction of Doctors Community’s assets during bankruptcy proceedings last year.

Doctors Community beat out several other bidders to keep control of Greater Southeast, Hadley and other hospitals in California and Chicago, and emerged from bankruptcy protection in April.

The company has pledged to continue to improve management and patient care at Greater Southeast, the only hospital east of the Anacostia River and the primary facility for uninsured patients.

“I see this as a positive move for the company and for the hospital,” said Joan G. Phillips, chief executive officer at Greater Southeast. “It just helps strengthen the company, which helps the hospital.”

As part of the management change, Doctors Community named Barbara Groux its chief financial officer. She previously worked with Mr. Reardon at Cambio Health Solutions, a Tennessee-based health care turnaround firm that is running Prince George’s Hospital Center in Cheverly.

Under Doctors Community, Greater Southeast in 2001 won a city contract to handle the District’s more than $80 million-per-year program to provide health coverage to the poor. The city regained control of the program after the company went bankrupt.

“The past is behind us,” said Erich Mounce, chief operating officer for Doctors Community. “This [management change] is going to have a positive impact in terms of operations and viability.”

But legal problems for Doctors Community executives aren’t over.

Last month, U.S. Bankruptcy Court Judge S. Martin Teel Jr. unsealed a 45-page complaint filed by the Doctors Community Healthcare Corp. Liquidating Trust against several current and former executives.

The trust, which files claims on behalf of creditors, said Mr. Tuft and other corporate executives deepened Doctors Community’s fiscal crisis prior to bankruptcy.

An analysis of salaries at similarly sized health care holding companies shows that Mr. Tuft and former Chief Operating Officer Melvin Redman were overpaid by about $6.3 million in the four years before the company went bankrupt, the trust said.

Some of the unpaid corporate loan money helped buy a Mercedes-Benz, a house and a contribution to the University of the District of Columbia, the trust said.

In addition, Mr. Tuft and Mr. Redman formed an entity called Tuft-Redman LLC, funded by $4.7 million in Doctors Community money. Tuft-Redman was created to charter corporate jets and limousines for use by Doctors Community executives.

Mr. Mounce said Doctors Community officials are aware of the lawsuit but have not responded to it. He referred questions to the company’s attorney Andrew Troop, of Boston, who could not be reached by deadline.

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