NUMC sues fired CEO Megan Ryan, alleging $1M in improper payouts and destroying documents

Nassau University Medical Center has sued its former CEO Megan Ryan, accusing her of authorizing more than $1 million in wrongful payouts, destroying documents and reimbursing herself for a made-up trip to Chicago.

Wednesday's lawsuit alleges malfeasance and financial waste at the East Meadow hospital, which treats a large share of Nassau's low-income and uninsured patients. The filing follows a monthslong power struggle between local officials and Gov. Kathy Hochul, who took control of the hospital board this spring after NUMC reported a $1.4 billion deficit last year.

"Our goal with this [lawsuit] is to be fully transparent about what occurred," NUMC chairman Stuart Rabinowitz wrote in a statement. "The taxpayers, patients, and employees who depend on this hospital deserve a clear accounting of how resources were used."

The suit seeks $10 million in punitive damages.

"If the political hacks who have been put in charge of [Nassau Health Care Corporation] to cover up the State’s massive fraud want a fight — they’ll get one," Tom Basile, a spokesman for Ryan, wrote in a statement to Newsday. "We have the evidence, the witnesses and the facts to ensure Ms. Ryan will be vindicated on all fronts."

The lawsuit claims Ryan orchestrated a mass resignation of herself and 13 executives who she paid out tens of thousands of dollars each. Ryan also oversaw a comprehensive destruction of hospital documents on her way out, according to the suit.

"The coordinated resignations of 14 top administrators and the active destruction of critical hospital management data were deliberate attempts to destabilize this hospital and disrupt care for the patients who rely on us most," Richard Becker, NUMC interim president and CEO, wrote in a statement.

NUMC's board also voted Wednesday to drop several lawsuits filed last year under Ryan, two against New York State and its health department, and another against the watchdog group that oversees the hospital’s finances.

Phantom flights, lobster dinner

Newsday reported last month that a top executive under Ryan paid more than $1,400 for lobster and Wagyu steak at a Park Avenue restaurant in May, at the hospital’s expense — though its policy caps reimbursable dinners at $50 per person.

Ryan herself spent more than $10,000 on flights and hotels for a lobbying trip to Washington, D.C.,  and a conference in Chicago in April, Newsday reported. But Wednesday’s lawsuit stated Ryan canceled the trip to Chicago. Nonetheless, on May 8, she submitted a reimbursement request for flights to and from Chicago. Ryan received $7,800 for the "phantom trip to Chicago," according to the suit.

NUMC’s accounting department "pushed back on the request," but Ryan overrode concerns and approved the reimbursement, the suit claims.

In the 47-page lawsuit, hospital executives also accused Ryan of consolidating power to use taxpayer money earmarked "for the underserved communities in Nassau County, to personally enrich herself and other top administrators."

She authorized more than $1 million in improper termination payouts to herself and 13 other executives who resigned with her, according to the suit. Ryan approved more than $237,000 in excess payouts for herself, nearly $126,000 for chief financial officer Perry Sham, nearly $124,000 for chief medical officer Grace Ting, nearly $107,000 for chief information officer Sasy Salomon and more than $104,000 for pharmacy director Michael Knee, according to the suit.

Ryan also approved bonuses of $15,000 each for Knee and director of special projects Marisa Plotkin, who was scheduled to accompany Ryan on the trip to Chicago, the suit says.

Sham, the hospital's former CFO, directed a hospital payroll supervisor to circumvent hospital policy to authorize the payouts, the suit says. When the supervisor expressed concern, the suit alleges she was told, "Meg authorized them."

Sham, Ting, Salomon and Knee could not be reached for comment Wednesday.

Document destruction

Ryan destroyed "significant amounts of data" and hard copy documents on her way out of the hospital in a "coordinated effort to remove traces of digital activity," the suit alleges. She and her executive team shredded, wiped and destroyed documents after their last days on the job —  copying some files to external USB devices.

"Ryan was assigned three computers, and each of the computers has varying degrees of deletion," the suit read.

One computer showed Ryan deleted all internet activity, according to the suit. The other two computers had "all traces of Ryan’s profile removed," such that it took a forensic investigator to confirm they were Ryan’s computers in the first place.

In the weeks leading up to her last day, 40 containers worth of documents were shredded on the hospital’s 19th floor, home to NUMC’s legal and financial offices and CEO suite, the suit says. Security staff were instructed not to staff or patrol the 19th floor during that time.

Years of 'significant mismanagement'

The hospital in East Meadow has seen major upheaval in the last year. It juggled an ever-changing cast of leaders, boasting two new board chairs and a new CEO in a 36-day period, public fights with state officials and an unverifiable break-in allegation — all while the parent company that runs NUMC reported a deficit of $1.4 billion.

Hochul has accused NUMC of "significant mismanagement" for years. State health officials pleaded with the hospital in December to "immediately halt" a vote to appoint Ryan as the permanent CEO, which went ignored.

Meanwhile, NUMC sued New York State for $1 billion, with executives blaming health officials of withholding funding the hospital was legally entitled to for treating a large share of low-income patients. 

The hospital board, which has been fully revamped since the suit against the state was filed, announced it had dropped the litigation on Wednesday.

"The breathtaking level of waste, abuse, and mismanagement under NUMC’s previous leadership is an insult to taxpayers and a betrayal of the hospital’s mission," Gordon Tepper, a spokesman for Hochul, wrote in a statement to Newsday.

"The recent revelations further validate Governor Hochul’s decisive action to restructure the board and restore accountability to this critical safety-net institution."

 In April, Nassau County Executive Bruce Blakeman removed former NUMC chairman Matthew Bruderman one day after he publicly alleged someone had broken into his Centre Island mansion to steal a binder with his name on it, claiming it was tied to an FBI probe of the hospital. Centre Island police have declined to comment on the case and fulfill public records requests, saying the case was referred to Nassau County detectives.

In May, days before state officials took control of the hospital’s board, Ryan announced her resignation. Lawmakers then approved a restructuring of the board, which now includes seven appointments from the governor and state's majority party, Democrats, and four from the county executive and the county's majority party, Republicans. Days after that, Blakeman and Republicans refused to make their four appointments, vowing to take back control of the board and accusing Hochul of a "cover-up" and "power grab."

On June 18, NUMC’s new board fired Ryan, whose last day was originally scheduled for July 20.

The hospital has since hired three companies to support its transition: new legal counsel, a financial and operational consultant and a head hunting firm to find a permanent CEO and general counsel, a post Ryan also held.

Richard Kessel, president of the Nassau Interim Finance Authority, which oversees the hospital’s finances, told Newsday: "This is a hospital that’s over a billion dollars in debt, and it needed to be rescued."