Governance Nightmare in Arizona

A stunning story of corporate misconduct out of Arizona this week: A special investigator hired two months ago by Hacienda Healthcare has quit, saying the board thwarted his investigation into how a comatose patient there was raped and impregnated — and his departure seems to have driven 10 other managers there to resign, too.

You might recall the original story from December. The patient, a 29-year-old woman who had been in a vegetative state for more than a decade, was discovered pregnant and delivering a baby boy on Dec. 29. A male nurse at the facility was subsequently arrested and charged with sexual assault.

That alone is horrifying. Now comes word that the special investigator Hacienda hired on Jan. 13, a former county prosecutor named Rick Romley, tendered his resignation on Feb. 28. Romley told the Arizona Republic that he resigned because the board created “intolerable working conditions” and “complicated our ability to be successful.”

“I felt I couldn’t do my job in an effective manner,” Romley said. “Management was working really hard … I can’t speak well enough about their interest and willingness to do the right thing.”

One day later, all hell broke loose among the executive ranks. Romley’s resignation prompted the newly hired CEO, Patrick White — who joined Hacienda only six weeks ago, to replace the prior CEO, who’d been fired for letting a patient get raped in his watch — to submit his resignation as well. So did COO Kayte del Real and Hacienda’s director of patient services.

But rather than accept those resignations, Hacienda’s board chairman Tom Pomeroy fired all three and called police to escort them from Hacienda’s offices immediately.

That action prompted another Hacienda board member, Dr. Kevin Berger, to resign in protest. Then five other senior Hacienda senior executives also tendered their resignations, effective March 13. That group includes Hacienda’s director of corporate compliance, Marianne Love-Day, who has been head of compliance since 2015 and with Hacienda in various other roles since 2008.

That was all on Feb. 28. The following day, Pomeroy — who had served on Hacienda’s board for 38 year — stepped down, saying, “It’s clear that the organization needs new leadership.” An investigation by the Arizona Republic published earlier this month had already documented many instances of nepotism, sweetheart deals and other questionable governance moves under Pomeroy.

It gets worse. The prior CEO of Hacienda, Bill Timmons, who had been chief executive for nearly 30 years, had been accused of sexual harassment numerous times by employees since 2006. Pomeroy’s board investigated, and apparently referred Timmons to counseling and training. Still, Timmons remained on the job until the rape happened.

Governance Failures All Around

So, to recap: apparently we had a long-time board chairman unchecked by others; combined with a long-time chief executive with tainted leadership abilities at best. Their negligence led to a comatose patient getting raped and giving birth. We don’t even know the health of the baby, since medical staff weren’t aware the mother was pregnant and therefore provided no prenatal care, while dosing her with her usual regime of drugs.

Then, when new executive leadership did commission an outside investigation, Pomeroy moved to undercut that effort. (Neither Romley, the investigator; nor White, the new CEO, have publicly said what Pomeroy did.) Pomeroy’s meddling led to the entire senior management team at Hacienda submitting their resignations, which then led Pomeroy to step down from the board on Friday.

It seems like Romley and the Hacienda executives are the heroes here, for walking away from a deeply dysfunctional organization and raising the alarm to the public. That said, we have many unanswered questions about the original crime and negligence among Hacienda staff, because a woman doesn’t get pregnant and give birth in one day. What background checks were performed on staff? What background check was performed on the former nurse accused of raping the patient? How did staffers not notice the patient was pregnant?

My suspicion is that with Pomeroy out, those executive resignations will be rescinded. We should also hope that Arizona Gov. Doug Ducey seizes the business on an emergency basis and installs a new board. Best practices in corporate governance exist for a reason, including regular turnover among board members, outside directors serving as chair, and constant attention to risk management procedures and speakup culture.

All those things failed here. Now a helpless, innocent woman and her newborn son are paying the price for those failures.

We don’t come up with good governance practices and babble about ethical values to hear ourselves think, people. We talk about these issues because they help to prevent bad things from happening.

So even though much of corporate compliance is frustrating, and does seem unnecessary, and sometimes will fail anyway; this is why we do what we do. Because when you boil everything down to one innocent victim, suddenly the moral imperatives of what to do are perfectly clear.

Compliance and ethics programs are the apparatus we put in place to avoid those moments. So as clunky and unfun as those programs might be — I’d still take working on those any day of the week, if we can prevent even one outcome like this from happening. That’s why we do what we do.