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PA Hospital CEO Breached Fiduciary Duty, Suit Alleges

Margaret Dick Tocknell, for HealthLeaders Media, May 11, 2012

Other allegations include:

  • Shipping as much as 900 pounds of supplies from the Pennsylvania medical center to the Indiana hospital just days before the medical center's bankruptcy petition was filed. The shipment was paid for with the credit card of Robert Lane, a Specialty consultant. The medical center was not reimbursed for the supplies.
  • Milton Knapp received approval from Saint Catherine Medical Center's board to open an alternate bank account that "would provide an alternate means to handle fiscal matters." The signors on the account were alleged to be Knapp and Katie Schroyer, the medical center controller, rather than the medical center itself "to prevent the accounts from being attached or garnished" by creditors.

The lawsuit asks for several claims of relief suggesting that Knapp "acted with a purpose other than advancing" the medical center's best interests. "In fact, Knapp's actions were for the benefit of" the Indiana hospital and "operated to the detriment" of the Pennsylvania medical center, the suit alleges.

Specialty Health "fraudulently expanded" the medical center's indebtedness by continuing the medical center's operations and "continuing to incur debt" despite knowledge that the facility was "financially incapable of continued operations," the suit claims.

Efforts to reach Milton Knapp, who also serves as CEO of Saint Catherine Regional Hospital in Charlestown, IN, were unsuccessful Thursday.

See also:
Immediate Jeopardy for PA Medical Center
PA Hospital's Deficiencies Detailed in CAP
PA Hospital's Financial Woes Trigger Harsh Repercussions


Margaret Dick Tocknell is a reporter/editor with HealthLeaders Media.
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