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Cover Story March 20th, 2008

  Untitled Document
A Covert Operation
by lyle e davis

It’s a strange thing that happens when you write an in-depth story. One story often develops into another - sometimes an even bigger story.

On December 20, 2007, The Paper broke a story with the headline . . .“Mr. Mike’s Traveling Miracle Medicine Show.” The story suggested that Mike Covert, the president and CEO of the Palomar Pomerado Health District, was quite active in promoting Proposition BB which would deliver $496 million dollars to the district to aid in building a new hospital. It suggested further that Mr. Covert was so active that he and his minions may have, in fact, made substantial misrepresentations in order to persuade the electorate to pass the bond issue. We also documented how the cost overruns had run up to $1.2 billion dollars (from an original projected cost of $753 million). This figure was later trimmed back to $990 million. Further, the downtown business community was concerned that a major promise that was made about importing the administrative staff to the existing downtown Palomar Hospital campus might not be kept. If that promise was broken then downtown Escondido might well become a ghost town.

palomar conceptThe story generated a lot of discussion; not the least of which was generated by a number of community members and doctors who called us and (1) congratulated us on the accuracy of our story, (2) confirmed that our figures and our information was absolutely on target, (3) there was even more to the story if we would only dig a little deeper, and (4) the doctors and medical staff did not want to be identified as their careers could be ruined by Michael Covert if he discovered they were talking to the press. Intrigued, we asked a few more questions.

It was recommended to us by several doctors that we examine what happened at Memorial Hospital in Sarasota, Florida, as well as at other hospitals where Michael Covert had served as president and CEO.

It did not take long to find some disturbing facts about the tenure of Mr. Covert while at various hospitals. It seems controversy followed him, wherever he went. The most recent controversy was at Memorial Hospital in Sarasota.

A number of issues developed, the most shocking of which was a successful lawsuit by Dr. Gregory Flynn against Memorial Hospital of Sarasota, Florida, that, after an eight day trial, took the jury less than 45 minutes to reach a verdict and only another 20 minutes to determine the amount of damages.

Dr. Flynn and his attorneys alleged, and proved, that Michael Henri Covert, president and CEO of Sarasota’s Memorial Hospital, and the Sarasota County Public Hospital Board, doing business as Sarasota Memorial Hospital, unlawfully and without just cause, revoked or terminated the medical privileges of a doctor at the hospital who specialized in pain management, and that they did so because the doctor had earlier (in 1994) filed and pursued a federal lawsuit. Secondly, the jury also found that the Hospital Board had additionally executed the revocation and termination of medical privileges for other than the filing of the federal lawsuit. Under Section II of the jury verdict they also found that the Sarasota County Public Hospital had terminated or revoked the doctor’s privileges as as a result of the doctor having exercised his freedom of speech rights.

Called to the witness stand, Michael Covert was clearly and thoroughly impeached by Plaintiff’s attorney, Tony Leon.

Impeachment is a lawyer’s fancy word that simply means the witness and his veracity is questioned. The witness is accused of not being honest in his actions and statements. Based on his testimony while being impeached, the jury then made their judgment, ruling against Michael R. Covert and the Sarasota Memorial Hospital, finding the Defendant had violated 28 U.S.C., Section 1983 (depriving the plaintiff of his constiturional rights of free speech) and the Plaintiff was entitled to damages.

The damages? $8.65 million. That’s M. As in million.

A subsequent settlement was reached at $6.5 million. Shortly after this jury verdict and award of damages, Michael Henri Covert was no longer the president and CEO of Sarasota Memorial Hospital, Sarasota, Florida.

They jury awarded $2.1 million for past monetary loss and $6.0 million for future lost earnings. In addition, they awarded the doctor $550,000 for emotional pain and suffering, inconvenience, mental anguish, impairment of reputation and personal humiliation. Total: $8,650,000.

Source: Verdict Form, May 26, 1999, United States District Court, Middle District, Tampa, Florida - Case 97-2911-CIV-T-26E, Gregory T. Flynn, M.D. Plaintiff vs. Sarasota County Public Hospital Board, Defendant.

Subsequently, the hospital agreed to a prompt settlement of $6.5 million. The doctor, returned to serve his patients in another city as well as opening his own pain management clinic.

The plaintiff, Dr. Gregory Flynn, had an outstanding background. Born in New Jersey, he was an Eagle Scout, an honors student, graduating Summa Cum Laude from University of South Florida in 1976. He served as Chief Medical Officer of the USS Peleliu stationed in Long Beach in 1980, had received a high security clearance, and up until the time he ran into Michael Covert he had always had positive peer reviews. A peer review is an evaluation process by a review panel comprised of medical practioners who have experience in the same areas of medicine and health delivery systems as the doctor being evaluated.
On October 4, 1994, Dr. Flynn’s medical privileges were suspended, terminated, revoked. Without, he argued, good and sufficient cause, and in retaliation for Dr. Flynn having pointed out patient care issues at the hospital. On May 26, 1999, Dr. Flynn was finally vindicated. Five years and almost three months and $1.7 million in legal fees, before the court cleared his name and reputation rather resoundingly.

While we have court records in our possession and could give a blow by blow account of the allegations, later proven to be lies, by Mr. Covert, and his staff, and his board of directors, it is perhaps sufficient to say that Memorial Hospital of Sarasota, Florida, lost their case in court. Big time.

What else was there about Michael Covert’s background, we wondered? We dug a little deeper and found several other, to say the least, interesting facets to Mr. Covert’s career.

Item: Michael Covert started out his management career as Executive Director of the Ohio State University of Hospitals, Columbus, Ohio. The hospital and Mr. Covert attracted a great deal of controversy in the mid 1980’s when it was learned that complaints from the Ohio State Hospital staff and nurses about a resident physician named Michael J. Swango, a suspect in a series of murders, were not properly handled.

The Columbus Dispatch, Columbus, Ohio’s, daily newspaper, reported in a June 1985 article that as a result of the controversial fallout caused by this failure to notify police authorities, a new hospital policy was implemented. This, following an internal report concerning the allegations against Swango as well as a highly critical internal report against Dr. Swango. Under the new policy, staff had the authority to call in police when criminal wrongdoing was suspected.

The then hospital executive director, “Michael H. Covert said today. ‘This will allow both the risk manager and hospital security manager to call in university police in cases of criminal negligence in a timely manner.

‘I’m trying to improve lines of commnciation period. We want the right hand to know what the left hand is doing.’

That sounds like a good policy; but was it too late? Had there been irreparable damage already done? If such action had been taken earlier, would police have been able to intervene earlier? Had police intervened at that time, would countless victims still be alive today?

Michael J. SwangoIf the name Michael J. Swango rings a bell, no wonder. He is one of the most notorious serial killers in ages. Swango had received a surgical internship at Ohio State University in 1983. Nurses began noticing that apparently healthy patients on floors where Swango worked began dying mysteriously with an alarming frequency. One nurse caught him injecting some "medicine" into a patient who later became strangely ill. The nurses reported their concerns to the administrators, headed by Michael Covert, but were met with accusations of paranoia. Only a perfunctory investigation was conducted.

In response to the board's inquiries, Surgery Director Dr. Larry Carey expressed misgivings about Swango, citing run-ins with hospital personnel and, specifically, the episode with several patients who became ill after treatment by Swango, one of whom died (and for whom Swango would later plead guilty to having killed).

At no time did Mike Covert, as executive director of the Ohio State University Hospital system, call in either University Police or Columbus, Ohio Police to investigate the matter, even though patients of Dr. Swango had died, even though documented observations and evidence had been submitted to the proper internal authorities. It was only later, when it was too late, that Covert took the action to change the policy that provided for notification of police authorities when suspected criminal activity was noted. In spite of these cautions the Ohio State Medical Board in 1984 granted Swango a license to practice medicine in Ohio.

Although Swango was cleared by this internal investigation, he resigned in 1984 and was not asked back to OSU.

After leaving OSU in July 1984, Swango returned to Illinois and began working as an emergency medical technician. In October of that year, Swango was arrested by the Quincy, Illinois, Police Department, who found arsenic and other poisons in his possession.

“It was only then,” says Dick Harp, Lead Investigator for the Ohio State University police department on the Michael Swango case, “when the Quincy, Illinois, police department called us and told us they had this guy who had been a doctor at Ohio State and he had poisoned some people, that we got involved.” Harp said he contacted the Ohio State Hospital University staff and there appeared to be a collective effort to resist the investigation. They were not terribly cooperative, he said. However, when on August 23, 1985, Swango was convicted of aggravated battery for poisoning co-workers at the Adams County Ambulance Service there was a flurry of activity. Finally. Swango was sentenced to five years imprisonment. Mr. Covert now created a new policy.

After being released from jail, Dr. Swango forged a number of documents, adopted aliases, and continued to serve in the medical communities, worldwide. Finally, on July 11, 2000, Swango pleaded guilty to killing three of his patients, one of whom, a woman, was a patient at Ohio State University Hospital when Swango was an intern there; convicted as well on fraud charges. He was sentenced to life imprisonment without the possibility of parole.

Dr. Michael Swango, convicted murderer - with three life terms, without possibility of parole

It is estimated that, over the course of his career, Swango killed anywhere between 30 and 60 people, even though he was only convicted of three of them.

Was Michael Covert’s failure to act promply on the complaints against Dr. Swango a proximate cause of the deaths of the other 30 to 60 people that were murdered?


But one wonders what might have happened, or not happened, if he had cooperated with hospital nurses, staff, and notified police authorities who would have been able to investigate Swango during his tenure at Ohio State Hospital, particularly concerning the Ohio State Hospital patient. Would Swango have been arrested, convicted and jailed? Maybe. Maybe not. It was, in the end, a judgment call. In hindsight, it was not a very good judgment call.

There would be other questionable judgment calls and other controversies to follow Mr. Covert. He left the Ohio State Hospital system and moved on to become Chief Operating Officer at St. Francis Regional Medical Center, Wichita, Kansas.

From here, he went to the Sarasota Memorial Hospital. When he left there in 2000 his salary was $327,000.

At the time he left, according to articles in the Sarasota Herald-Tribune: “In late 1997, Sarasota Memorial slid into a financial quagmire that administrators blamed on tightened Medicare spending and increased managed care.

That fiscal year, the hospital and its affiliated corporations lost more than $9 million. Physicians Services Inc., an affiliate launched by Covert that buys and operates physicians' practices, was responsible for much of that loss.

Last year, those losses were drastically reduced, but at a price. The hospital eliminated about 250 jobs and several programs to save money, angering staff members and the community.

Sarasota Memorial and its affiliates finished the 1998-99 fiscal year with a profit of about $636,000, according to the hospital.”

It’s a pretty good bet that the $6.5 million Sarasota Memorial Hospital had to pay out to Dr. Gregory Flynn did not help their bottom line much. Whether that negative financial impact had anything to do with expediting Mr. Covert’s departure is still debated within the Sarasota medical community.

Item: George McEvoy, a columnist for The Palm Beach Post, reported that the former Florida Secretary of State, Katherine Harris (yes, that Katherine Harris. The one that George W. Bush relied upon to “sort out the political problems with the vote in Florida) appeared to have run afoul of various laws in Florida. Her background includes a fund-raising scandal in which five of her supporters were indicted and pleaded guilty, with one going to federal prison. All were part of an insurance company known as Riscorp, Inc. Susan MacManus, a political science professor at the University of South Florida in Tampa, was quoted in The Sarasota Herald-Tribune as commenting that, "I'd almost call (the Riscorp case) earth-shattering because it burned a lot of people."

Katherine HarrisIt apparently did not burn Katherine Harris, however, who won her race for the state Senate. And in 1996, she sponsored legislation that would have helped Riscorp at the expense of its competitors. One bill blocked the other companies from getting a larger share of the workers' compensation market, while another would have hurt a competitor of the firm, if it had passed. And, folks, here’s where it gets interesting.

When asked about the Riscorp scandal, Ms. Harris strenuously denied doing the Riscorp company any favors, and cited a 1995 bill she sponsored to exempt Sarasota Memorial Hospital from antitrust laws. Riscorp had objected strongly to the bill, arguing that it would give the hospital an unfair advantage over HMOs, such as the one run by Riscorp.

But according to the Herald-Tribune, Ms. Harris was dating the CEO of Sarasota Memorial, Michael Covert, at the time. She also said that had nothing to do with her sponsorship of the legislation.

Naturally, Mr. Covert would not have importuned Ms. Harris to do anything to benefit his hospital. Or so Ms. Harris suggested.

Following the lawsuit loss, Mr. Covert announced on January 1, he would be leaving Sarasota Memorial Hospital, where he had served since February of 1992, effective March 1st. For three months, from March 2000 when Covert left, Sarasota Hospital was without a president and CEO until Duncan Finlay, M.D. was named President and Chief Executive Officer in June of 2000.

Meanwhile, on Monday, February 28, 2000, Washington Hospital Center in Washington, D. C. named a new president and CEO, effective March 1st. His name was Michael H. Covert.

Mr. Covert remained at Washington Hospital Center a little over two years, leaving there on June 3rd of 2002. The separation was a “mutual decision,” a hospital official said.

It appears he was unemployed from June of 2002 until January of 2003, when he was hired on at Palomar Pomerado Hospital District as its president and CEO.

Talking with medical staff, newspaper reporters from Columbus, Ohio, and Sarasota, Florida, and with medical staff here in North San Diego County, a picture of an energetic, eager, impatient, egotistical, demanding, and often angry chief executive emerges. It was interesting that a parallel term was used by medical staff in Sarasota and in Escondido to describe Mr. Covert’s management style. “He’s a Little Hitler,” was the common expression used by both medical communities.

According to several medical staffers at Sarasota Memorial Hospital, Covert was not well liked, was described as manipulative and that he would do anything to get his way. Former board member Catherine Bowles, who had been at odds with the board and Covert testified at Dr. Flynn’s trial that "people who complained about patient care were not warmly received by a majority of the board." Nor, it is said, by Mr. Covert.

A number of others who know him, both within the medical community as well as within the Escondido community at large, agree that he is a highly egotistical man. He has to have things done his way. He is very good at playing politics and is also very good at playing hardball with contracted medical service suppliers.

Yet another doctor gave a somewhat contrasting view: “He’s affable on one hand . . . a very good salesman; in front of a group he’s almost evangelical in his passion . . he almost bowls you over. Makes me kinda question someone who has so much zeal like . . “I’m right.

Like all CEO’s, he’s very egotistical. He wants to have total control over everything, including the doctors.”

It is said he wields departmental administrative assignments as a tool and dangles the financial remuneration of them, ranging from as little as $10,000 to as much as $150,000 a year, as an incentive to fall in step with his wishes.

A number of doctors who practice at the Escondido campus of Palomar Medical Center confided to us, off the record, that they feared Covert.

One doctor complained, “Covert is trying to take over as dictator of the hospital. There is supposed to be a separation between the hospital, the medical staff and the administrator. If you have the administrator making all the decisions then all decisions are made on money issues rather than what is best for the patient or the patient population. This poses a threat to the medical population and harms the quality of medical care. Covert is simply Hitler reborn.”

Another doctor agreed, saying, “At most hospital districts, administrators don't normally show up at Medical Executive Meetings unless invited . . . but here, administrators are present at closed meetings. They should not be privy to private medical meetings/discussions and they tend to dominate the meetings.”

There are additional concerns about how independent the members of the Medical Executive Committee are. One doctor pointed out, for example, “The Director of the Surgery Center, the Head of Trauma, The Quality Care Administrators - they can sit on the Executive Committee, the head of Internal Medicine, department heads of RAPE - (Radiology, Anesthesioloty, Pathology & Emergency Medicine), the head of Orthopedics, . . . they all sit on the Medical Executive Committe . . . but they all have exclusive contracts with the hospital. If the head guy of any department disagrees with administration, his or her contract could be in jeopardy. He or she could be gone, replaced by someone who is a little more flexible in their thinking. A little more willing to get in step with the administration.”

Along that same line, another doctor complains, “Covert has gone to the medical staff bylaws committee and has drawn up proposed amendments to the by-laws which would give him unchecked power; he could throw anybody off medical staff that he sees fit. Any doctor who upsets the administration, Covert can throw them out. When that happens there is no advocate for patients, no advocates for quality care. The proposed new by-laws are coming up for ratification. I don’t think they’ll pass. I certainly hope they don’t pass. But the mere fact that Covert is proposing them gives you some insight into his demand for power.”

There are also a number of questions concerning physician contracts and whether physician members who sit on the medical executive committee have contracts, and in what amounts, and do those contracts influence their thinking and voting on what is best for the hospital district and patient care? We presented our findings to Bruce Krider, Chairman of the Palomar Pomerado Health Board of Directors.

Bruce Krider
Bruce Krider, Chairman, PPH Board of Directors

He was on the selection committee that made the recommendation to hire Covert. There had been 16 candidates and it came down to two finalists, Covert and one other. Krider pointed to Covert’s resume and said, “that’s our star.”

He confirmed that Covert was brought to the board’s attention by a national executive search firm, Witt/Kieffer from Oak Brook, Illinois.

He said the search firm had not given the board the information we had uncovered in our investigation. He was vaguely aware of the Sarasota Memorial Hospital difficulty but was unaware of the magnitude of the case and/or the size of the judgment awarded, nor of the fact that Covert had been impeached by both deposition and testimony from the stand.

He said that Covert had told him he had resigned from Washington Hospital Center because of a disagreement with them over the transfer of funds from one hospital to the other that Covert felt was improper.

He did not know of the Dr. Michael Swango case or its implications with respect to the Ohio State University Hospital system and the controversy generated by Covert’s not calling police authorities and disregarding documented reports of his nursing and medical staff. In that regard, Kriden said, “I've managed hospitals for 12 years - issues arose where disgruntled physicians did bad things by omission or commission. The boards and administrators do our best to stay on top of them. You and your readers need to know that Covert is one of the most highly regarded executives in the industry. He has received a number of very prestigious awards. Some of them puts him in the company of surgeon generals, such as C. Everett Koop. He has held high executive and board membership in national organizations.

You're going to find from time to time incidents that happen. The board and administrators try to stay on top of these incidents . . . but sometimes it gets by us.

We asked Krider, being aware of the issues we have outlined and documented, if Covert would be eligible for hire today?

We'd certainly look at these issues. We'd look at his record and his accomplishments. I wouldn't dismiss him from consideration.

Krider thought the fee of the executive search firm was probably about 50% of the first year’s salary of the individual hired. Covert was hired at an initial salary of about $350,000 which meant the search firm would have claimed a fee of $175,000.

As to the prior history of Michael Covert and the controversy that seems to follow him, we have to ask ourselves, if we, a weekly newspaper in North San Diego County with limited resources, could uncover this information, why couldn’t the Palomar Pomerado Health District Board of Directors? They are obliged, while performing their due diligence duty in researching the background of a CEO to do the same. Or, if they rely upon a national executive research firm, to expect them to do the necessary due diligence. Particularly if you’re entering the rarified atmosphere of paying $528,000 per year in salary, plus about $160,000 in bonus money.

If there were ever to be any damages to the employer because of that apparent negligence, shouldn’t that executive search firm be at least partially liable?

Krider: Well, it's their job to present qualified candidates. It makes sense that they not present problematic candidates. It's in their best interest and all others . . . and it's their responsibility to present vetted candidates.

We asked Krider if, in his opinion, the board did its due diligence in vetting Mike Covert before hiring him?

Krider: I think we did. You can't always find everything about someone. I think we took reasonable and thorough steps in learning about him.

There are many other comments from physicians, other leads to follow in pursuit of the rest of this story. However, we, as a weekly newspaper, have neither the time nor resources to explore the labyrinthine depths of hospital administration committees, subcommittes, advisory councils, etc. Side fanancial agreements, whether or not their are “kickback” arrangements within the hospital structure. That additional research and reporting would be better left to someone who has the resources, such as a Grand Jury.

For now, we have finished our research. We started by expressing our concerns about the Palomar Pomerado Health District and its plans for building a new hospital on the west edge of town with the proceeds from Proposition BB, the proposition that, when passed, provided $469 million dollars.
We questioned whether there had been misrepresentations made to the public in order to persuade them to pass Proposition BB. Our story also questioned the proper management of the allocated funds and pointed out that the construciton cost to complete the original project had reached $1.2 billion, then shaved back to $9.9 million; we also pointed out promises and commitments that had been made and appear to not be kept; we reported on what we fear is a devastating loss to the downtown business community if those promises are not kept. And now we have reported on Michael Henri Covert and his executive/managerial background and history.

From this point on, we leave it to others to explore and report.


United States District Court, Middle District, Tampa, Florida - Case 97-2911-CIV-T-26E, Gregory T. Flynn, M.D. Plaintiff vs. Sarasota County Public Hospital Board, Defendant.
Sarasota Herald Tribune, Sarasota, Florida
Columbus Dispatch, Columbus, Ohio.
Interviews and document review with medical staff and physicians at PPH, Sarasota Memorial Hospital, and Washington Central Hospital.
Ohio State Police Public Affairs Office
Richard Harp, Chief Investigator, Ohio State University Police Department
Witt/Kieffer, Oakbrook, Ill.
As of press time, PPH Board members Dr. Marcelo Rivera and Dr. Alan W. Larson nor Witt/Kieffer, the executive search firm, had not returned our phone calls.

We offered an opportunity to respond to this article to Mr. Covert through his Public Relations Department. A spokesman for Mr. Covert, Andy Hoang, said Mr. Covert was traveling and would not be available for comment.







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