Congressional candidate Stan Flemming, a Pierce County councilman, touts numerous public and civic accomplishments to underline his leadership skills. They include his tenure from 2007 to 2009 as president of the Pacific Northwest University of Health Sciences, a medical school in Yakima.
However, Flemming doesn’t mention that his stint ended in a flurry of lawsuits and acrimony.
Court records tell two stories of Flemming’s term as president. Both revolve around money.
Version A: In 2007, Flemming reluctantly takes charge of Pacific Northwest University of Health Sciences, a new nonprofit college built on shaky financial footing and a dubious business model.
Flemming steers the place to long-term viability. He departs in November 2009 after local powers usurp his authority, offend his ethics and violate his contract. He sues the university for his severance pay: $708,000.
Version B: University leaders sue Flemming, saying he doesn’t deserve severance pay. They contend he verbally resigned his position on Nov. 10, 2009, after “a period of escalating misconduct, fiduciary and contractual breaches that would have otherwise led to his termination.”
The stories ended at the same moment in May 2010: a settlement agreement with strict confidentiality provisions, noted at the end of the case file in Yakima County Superior Court.
Attorneys for both sides say they can’t discuss terms of the settlement. Flemming says he never resigned. He says the university agreed to pay him in full, “100 percent.”
The Olympian’s sister news organization, The News Tribune of Tacoma, noticed the lawsuits in the course of standard campaign coverage, which included background checks of local candidates. Flemming, a Republican, is seeking a seat in the newly created 10th Congressional District.
Before the case settled, 11 university administrators and employees filed sworn declarations attesting to Flemming’s actions.
The declarations allege mismanagement and cronyism. They state that Flemming’s tenure left the college in financial turmoil, teetering at the edge of losing its accreditation: the right to graduate students.
In a recent interview, Flemming said 90 percent of the allegations in the declarations were “proven to be wrong” during the course of settlement negotiations and related depositions. Those records can’t be examined due to the confidentiality agreement, he said.
Flemming, 59, has a long and sparkling résumé. He’s a physician, a former state legislator and a retired brigadier general in the Army Reserves (medical command). He was the first mayor of the City of University Place and a longtime city councilman.
Court records include Flemming’s contract with the university. He was hired at an annual salary of $425,000, with benefits that included moving expenses and severance pay.
Flemming worked closely with Timothy Morris, the college’s chief operating officer and chief financial officer and a key figure in the lawsuits. In October 2008, Morris had ordered the school’s controller, Ann O’Brien, to pay Flemming a salary advance of $75,000, split into five checks, according to a declaration filed by O’Brien. O’Brien, a certified public accountant, questioned the payments. She asked Morris for a record of board approval.
“Dr. Morris became enraged and told me never to question his judgment. I delayed awaiting board approval and consulted with the HR director and a member of the board of trustees.”
– O’Brien declaration
Flemming’s contract included a standard annual raise of $10,000. The rest of the money was an advance on his salary. The board had approved a raise for Flemming in executive session, records state, but not as a lump-sum advance.
Asked about the matter by The News Tribune, Flemming said the board’s finance committee approved the payment.
New signs of trouble surfaced in early 2009 as the economy tanked.
The key donor group for the school was the Osteopathic Foundation of Central Washington, a coalition of physicians that backed the university with more than $10 million in active accounts: money used for operations and reserves.
On paper, the foundation’s alliance with the university included a cooperative agreement that spoke of sharing information, including records of the school’s finances. On Jan. 14, 2009, leaders of the investor group sent a sharp letter to the board.
They requested records of current and future budgets and information about future cash flow. They asked whether the board had evaluated Flemming’s performance.
The board defended Flemming and offered a meeting with leaders of the investor group. Board chairwoman Karen Hyatt backed the president.
In spring 2009, Flemming pushed for increased enrollment and tuition. He wanted to jump from 70 slots to 110.
Flemming said as much in a letter to the Commission and Osteopathic College Accreditation, a national entity that draws its authority from the U.S. Department of Education. COCA controlled the school’s viability: provisional accreditation.
Flemming’s note was a surprise. COCA representatives had visited the school in January, only two months earlier, and said the place appeared on track with its existing business plan.
While Flemming pushed for expansion, Morris pushed for money. By April 2009, he’d completed his doctoral dissertation at Gonzaga University. The degree added a notch to Morris’ résumé. According to his contract, it triggered a raise from $180,000 to $250,000.
Morris could have taken the raise over time, but he wanted the money immediately. Again, he told O’Brien to sign two checks – one for $10,000 (his annual raise) and one for $70,000. Again, O’Brien, along with human resources director Stefanie Durand, resisted.
“The University was having to utilize vital reserves and seek alternative financing to meet cash flow requirements,” O’Brien wrote in a sworn statement. “When Dr. Morris heard about my questioning, he called me in and said, ‘Do what you’re told!’”
According to records, O’Brien and Durand refused to authorize the checks unless Flemming signed them first. Flemming did.
In a recent interview, Flemming acknowledged that the board didn’t want to pay Morris up front. Flemming said Morris’ contract required the raise.
The contract was signed in 2006, the year before Flemming arrived at the school. It said Morris was entitled to a raise if he obtained his Ph.D. It didn’t say he would get the money all at once.
Two weeks after receiving the money, Morris told school administrators the university had a cash-flow crisis.
Flemming traveled to Chicago on May 2 and gave his pitch for increased enrollment. COCA leaders were unhappy, court records state – the university had said it was on firm financial ground in January.
Meanwhile the friendship with local investors was fraying. On May 6, Flemming responded to the request by the Osteopathic Foundation of Central Washington to view financial records. Citing legal advice, Flemming said he was “rescinding our provisional agreement” to share financial records.
His letter said he was speaking on behalf of the university and the board of trustees. Declarations in the case say board members didn’t see the letter or approve it beforehand, nor were they aware of the legal advice Flemming mentioned.
The troubles were just beginning. On May 12, 2009, COCA sent a letter to the university labeled “provisional accreditation with warning.” COCA leaders cited 14 areas of deficiency at the school, and stated, “the quality of the total program is threatened.”
The letter came to Robyn Phillips-Madson, the school’s chief academic officer. She immediately shared it with Flemming and assumed he would share it with the board. She was wrong. For months, members would remain in the dark, according to the declarations.
In July, board members upbraided Flemming over Morris, his duties and the payments he’d received. Flemming told board members he’d been “blind-sided” by Morris.
Weeks later, Morris got a new title: chief business officer. Morris would move back to Western Washington and handle his executive duties from Redmond, at an annual salary of $180,000.
To replace Morris, Flemming announced a new hire in September 2009: Don Menard, Flemming’s former chief of staff in the Army Reserves, would become the university’s chief operating officer on a three-year contract at a salary of $180,000.
“We were told at the time that Mr. Menard was a colleague of Dr. Flemming’s from the military, and that he was qualified for the position. The Board was shocked at the size of this salary. Dr. Flemming reported that he did not need the permission of the board to hire a COO, but was reporting it to the board as a courtesy.”
– Declaration of Dr. Lloyd Butler, a college founder
Flemming said Menard is a friend and qualified for the job. He acknowledged he didn’t interview anyone else. He denied allegations in the declarations that said his contract required recruiting candidates from the Northwest. (Menard lived on the East Coast.)
However, Flemming’s job description, contained in court files, includes the following stipulations:
• Emphasize at-will employment of all university employees.
• Seek out and give preference to persons who are qualified from the Pacific Northwest.
On Oct. 1, 2009, the same day Menard was officially hired, the COCA sent a letter of warning to the university, addressed to Phillips-Madson, chief academic officer.
The letter said the university’s provisional accreditation would be withdrawn in 30 days unless various deficiencies were corrected, including problems with financing and governance.
Phillips-Madson immediately shared the letter with Flemming. He didn’t share it with the board. She learned he hadn’t shared the earlier letter either.
“I was astounded when I learned this. Appalled,” Phillips-Madson wrote in a sworn statement. “Dr. Flemming said that the letters were ‘confidential,’ and for that reason he had chosen not to share them with the board. I found this explanation preposterous.”
Board member Hyatt heard about the COCA letter Oct. 3, according to her declaration, but didn’t know what it said. Board members finally saw the full text Oct. 15.
Flemming now calls it an error in judgment.
University leaders had two weeks to save the school’s accreditation. A major internal scramble followed. Phillips-Madson, Butler and other school leaders crafted a presentation they hoped would persuade COCA leaders.
The effort succeeded, according to the declarations. Accreditation was saved, but one loose end remained – the university had to prove it was on firm financial footing.
At the same time, the board proposed to Flemming a “team management structure” that would involve working with a pair of consultants chosen by the board. In theory, the two outsiders could veto a decision by the president. With board members present, Flemming initially agreed, university leaders state in court records. He soon changed his mind.
“My ethics and leadership style doesn’t allow for such a model.”
– Flemming email, 11-9-09
On Nov. 10, Butler and Hyatt met with Flemming and told him they had secured a potential $5 million investment.
“That investment allegedly was contingent upon my removal as president,” Flemming wrote in a declaration. “I indicated that if I was standing in the way of the university’s success, I would consider resigning in accordance with the terms of my contract.”
Butler and Hyatt recalled the meeting differently.
“Dr. Flemming resigned. There is no other way to put it. … He sat down with Dr. Butler and me and said, ‘I’m tendering my resignation.’”
– Hyatt declaration
The next day, Nov. 11, Flemming flew to Portland with Morris to meet with investors from Sun West Inc., an Oregon company that had been involved in a previous real estate deal with the school. It was a settlement conference – an effort to resolve financial loose ends.
Flemming said he spoke to Hyatt after the meeting.
“Don’t come back,” he recalls her saying.
That same night, Flemming also spoke to Gretchen Eickmeyer, the school’s vice president of advancement and development. According to a declaration filed by Eickmeyer, Flemming said he thought he had secured $5 million in funding for the university as an element of the Sun West settlement – but it hinged on his continued service as president.
Board members met Nov. 13, accepted Flemming’s verbal resignation, agreed that cause for termination existed and sent him a letter saying so. The documents appear in the court file.
Cause for termination was a big deal. It meant Flemming wouldn’t receive the severance pay outlined in his contract. That amounted to more than $700,000.
Flemming responded immediately with a Nov. 14 note to Hyatt, saying he hadn’t resigned. On Dec. 29, six weeks after allegedly telling administrators he was resigning, Flemming sued.
“I never offered my resignation and would not have done so without any financial provisions to protect my family while I pursued replacement employment.”
– Flemming declaration, 12-30-09
Morris and Menard joined him in the lawsuit. The three sought compensation, including double damages.
The university countersued, filing 11 declarations from board members, administrators and employees.
The case stalled in January 2010. The parties agreed to submit their dispute to binding arbitration and abide by the findings – but they reached their settlement before the arbitration. Meanwhile, Flemming announced his campaign for a seat on the Pierce County Council.
Flemming’s attorney in the case, Judith Lonnquist, said she could not discuss terms of the settlement with the school. She said she deposed the college employees who filed sworn declarations.
“I deposed all those people who gave declarations,” Lonnquist said. “I can’t tell you any more than that. After I made the depositions, they made an offer of settlement – so draw your own conclusions.”
Brendan Monahan, the attorney who represented the university, offered a brief statement in response.
“With respect to Ms. Lonnquist’s comments, all I can say is that I disagree profoundly with her description …,” Monahan said. “While Dr. Flemming’s decision to comment publicly on his lawsuit against the University is unfortunate, the substance of his remarks is something the University will be taking up with him directly. For its part, the University simply maintains that the matter was amicably resolved to the mutual satisfaction of the parties, and the University will continue to honor all of its commitments in that regard.”sean.robinson@ thenewstribune.com 253-597-8486