Campbell County Health recently hired its new chief operating officer, Gerard “Jerry” Klein, a man who is highly experienced in health care but also moving on from a tumultuous ending to his most recent leadership position on the other side of the state.
His time as the CEO of Memorial Hospital of Sweetwater County in Rock Springs ended with a flurry of resignations and removals, including accusations of financial mismanagement and an alleged downward trend in the hospital’s finances that caused the county to take drastic measures.
However, a subsequent legal battle and conflicting claims further complicate the picture of what exactly happened during Klein’s time in Rock Springs roughly three years ago.
“They really wanted to ignore my claim and said that I resigned, but I had not resigned and I never did,” Klein said in a recent interview with the News Record. “I left because they didn’t want me there because I was very close to my board, and I felt the whole thing was wrong.”
The COO vacancy that Klein recently filled once belonged to Campbell County Health CEO Colleen Heeter, who stepped into her role atop the CCH leadership ladder in July.
As chief operating officer, Klein, 71, will be paid a salary of $275,000, said CCH spokeswoman Karen Clarke.
In early 2017, a legal battle followed Klein’s departure from Memorial Hospital. He initially claimed wrongful termination and that the hospital board that accepted his resignation was not lawfully constituted, according to court documents.
The hospital then countered Klein’s initial lawsuit with a laundry list of its own accusations.
According to the countersuit, the hospital claimed that it “suffered a significant financial downturn” in the years Klein was CEO, including that the organization went from having about 245 days cash on hand to about 88 days cash on hand at the time the hospital said he resigned. It also alleged that $5 million in investment revenues were lost while he was CEO and that he concealed financial information from the hospital board of trustees.
The countersuit also accused Klein of failing to perform his fiduciary duty as CEO and committing fraud by way of the “conversion of money assets and property to his own use and benefit, while putting MHSWC in such a position that bankruptcy and sale of MHSWC was potentially the only viable option.”
Klein filed counter claims denying the veracity of his former employer’s allegations and the case was eventually settled out of court with a settlement that Klein said was to his satisfaction.
“There was mediation resulting in the case being settled out of court,” Klein read from a prepared statement. “All my claims, and the hospital’s counter claims were dismissed.”
Memorial Hospital Sweetwater County declined to comment for this story.
Because of the settlement’s terms, Klein said he could not further discuss the lawsuit or the full extent of the circumstances that preceded it, something he said is still a source of frustration for him.
“The truth of the matter (is) I haven’t been vindicated in any way, shape or form,” Klein said. “(Not in) any way that I can explain to you or the public or anybody else.”
Heeter said that in vetting Klein and his time in Rock Springs, CCH spoke to current and former hospital board members as a part of its due diligence in the hiring process. Ultimately, she said she was satisfied with what they discovered and believes that Klein and his decades of health care experience will be an asset to CCH’s leadership team.
“Jerry is very much aware of what comes with him and he was very open with us, so we knew even before I called him. We were aware of it,” Heeter said. “We had some other candidates but not near the health care experience, (what) I’d call a little bit of tenacity and ability.”
Background in health care
Klein said he has worked in health care since graduating from college in 1972. He began as a lab technician fresh out of the University of Nebraska and through a series of career and state-to-state moves, eventually made his way into a hospital leadership position in Ohio.
After about 10 years as the CEO of Bucyrus Community Hospital, a rural Ohio facility, Klein was fired in January 2010, according to Becker’s Hospital Review, a heath care industry publication.
Soon after in March 2010, the hospital filed for Chapter 11 bankruptcy, reporting about $30 million in outstanding debt. Later that year, Bucyrus Community Hospital was sold for $10.2 million and became part of a small network named Avita Health System, which included nearby Galion Hospital, according to Inside Healthcare Magazine.
Not long after leaving Bucyrus, Klein accepted a position as CEO at Memorial Hospital in Rock Springs.
While in Rock Springs, Klein took an aggressive approach toward the hospital’s growth, multiple former hospital board trustees said.
“Jerry was a visionary,” said Charlie Van Over, an architect and president of the Memorial Hospital Foundation board of directors.
Klein hired and brought in doctors and specialists who not only had never been in Rock Springs, but who some said could never be recruited there, said former-Memorial Hospital Board Trustee Artis Kalivas.
When he became CEO of Memorial Hospital, Klein said many residents were making the almost three-hour drive to Salt Lake City, Utah, for treatment, often because the services they sought were not available in Rock Springs. He sought to change that.
As part of that expansion plan and to support the growth, a medical office building was designed and built. Also, many doctors and specialists were added to the hospital’s roster, a move that cost the organization upfront but was meant to pay off in the long run once their client bases were built up, Kalivas said.
“So did it (cash on hand) start to dip a bit? Sure it does,” Kalivas said. “When you first hire a doctor, doctors aren’t cheap to open their practice up. It takes a while for them to turn that around.
“They didn’t give him enough time to get the thing turned around, and it would have turned around.”
Ultimately, the county commissioners disagreed. While the hospital was expanding and bringing in new doctors and specialists, its financial reserves were growing smaller, ringing an alarm with the Sweetwater County Commission.
Feb. 7, 2017
Feb. 7, 2017, was somewhat of a day of reckoning in Sweetwater County.
Accumulated conflict and a long-sought reconciliation between the commissioners, hospital board and employees at Memorial Hospital all came to a head in the council chambers that day.
In a video recording of the meeting that day, the modest-sized room appeared to be filled wall-to-wall with people interested in the outcome of the meeting. The commissioners faced the hospital board. The atmosphere and intensity was more akin to a U.S. Senate hearing than a local county meeting. The topic of conversation: what the commissioners saw as the hospital’s faltering money issues and how to improve its financial standing.
Days cash on hand is a metric often used in hospital budgeting to quantify, most simply, how much money it has. It is not representative of liquidity, but rather a rough indicator of the hospital’s financial standing. One day cash on hand is equivalent to the cost of operating for one day.
At the time of the meeting, the hospital had 88 days cash on hand. If the hospital were to dip below 75 days cash on hand, it would default its bonds with Wells Fargo and the bank would be able to make oversight changes to reorient the hospital’s financial situation, the commissioners said during the meeting.
That was a line they were unwilling to cross. There was a margin of 13 days cash on hand to come up with a solution and avoid defaulting on the hospital’s bonds and having the bank take over the county-owned hospital, the commissioners said in the meeting.
The hospital board was asked by the commissioners to come up with a plan to show how the organization would turn around what had been a growing deficit. What the board presented to the commissioners was a non-starter, the commissioners said.
“I don’t see this as a plan, this is an outline,” said then-Commission Chairman Reid West during the meeting. “We asked for a financial plan, how you’re going to avoid defaulting on the bond, and I guess I expected more of a business plan that you would take to a bank, if you will, to show your position and how you’re credit-worthy.”
The plan presented in the meeting was a single-page document with line items of where to cut costs to increase cash on hand.
Taylor Jones, who is now president of the hospital board, was one of the newer board trustees at the time and said during the meeting that he had not been sent the document to review until late the night before the board was to approve it.
It appeared that all of the trustees did not agree to the plan, which Jones said at the time was Klein’s design.
“I will not support Jerry’s plan, this is not the board’s plan, this is Jerry’s plan,” Jones said during the meeting. “And I will not support Jerry’s plan without some detail on how did we get to this point. This is, it is an outline.”
A central issue during the meeting was the potential for hospital employee layoffs being used as a last-ditch effort to preserve cash on hand and spur the financial uptick requested by the commissioners.
A rumored mass-layoff was brought up by the commission several times during the meeting, with West saying that he and the other commissioners had heard from others in the community about a “town hall meeting” the day before, where hospital workers were told that about 30 hospital staff could be laid off. The cuts were expected as soon as the day following the commission meeting, The Rocket Miner reported at the time.
The hospital board members offered vague, inconsistent responses about their knowledge of the potential layoffs.
Joe Manatos, who was on the hospital board at the time, said that then-Commissioner John Kolb said the cuts in the outlined plan would not have been enough, bringing about a need for layoffs, according to the Rocket Miner.
“We were looking at it (the 75 days cash on hand threshold), let’s put it that way,” Manatos told the News Record. “Yeah, I was concerned and we had a plan in place that the commissioners didn’t even hear. They just basically terminated us and Jerry before that even hit their desk. They just were not going to listen to anything we had to say.”
Kolb, who was then the liaison between the commission and hospital board, said the commissioners could not be blamed for the shortcomings of hospital board members who would not take responsibility for the financial situation during its CEO’s tenure. That propelled the commissioners, the board and hospital leadership into a circle of blame and collective lack of accountability.
“In that last year, a new county commissioner was appointed (as hospital liaison) with no background in health care,” Klein told the News Record. “To be honest, it quickly got into, what do I want to say, a conflicting relationship with the hospital board.”
During the public comment portion of the meeting, several residents — some in the health care field — expressed discontent at the communication breakdown and overall uncooperative dynamic between the hospital board and the commissioners.
The meeting ended with two hospital board members, Manatos and Harry Horn, resigning on the spot. During an executive session that followed the meeting, trustee Grant Christensen also offered his resignation, according to minutes of the Feb. 7, 2017, meeting.
Two other trustees, Gene Carmody and Artis Kalivas, were removed from the board by the commissioners for “failure to maintain their fiduciary duties to manage the hospital, days cash on hand declined from 236 to 88 days, a trend toward a bond default and the attempted implementation of a financial plan without Board of Trustees approval,” according to the minutes.
“They got rid of the entire board,” Kalivas told the News Record. “They had all of us removed from the board.”
Jones and Richard Mathey, the two remaining hospital board trustees, were not removed because they were deemed to have not been on the board long enough to be responsible for the financial decline, according to the meeting minutes. Then, the commissioners accepted a motion to reconstitute the hospital board from seven members to five. They appointed Barbara Sowada to join Jones and Mathey on the board to form a quorum.
Despite his physical absence from the meeting, Klein’s name and tenure presided over much of the conversation that day.
During an emergency hospital board meeting that followed the eventful commission meeting, the newly constituted board said it accepted Klein’s resignation, a resignation Klein later said he never gave.
Jim Phillips, attorney for the current Memorial Hospital of Sweetwater County Board of Trustees, said the trustees declined to comment for this story.
‘Three years of hell’
A roughly yearlong legal battle between Klein and Memorial Hospital of Sweetwater County commenced soon after the meeting.
No longer working at the hospital, Klein filed a complaint against his former employer, claiming that the third member added to the reconstituted hospital board, Sowada, was not properly sworn in at the time that it claimed to have accepted his resignation.
“Mr. Klein never resigned. There are no grounds to ‘void’ his contract,” the complaint read.
Klein sought severance benefits totaling close to $600,000, according to the initial complaint.
In May 2017, the hospital filed a countersuit denying Klein’s claims and countered with accusations of its own. Among those were that cash on hand dropped from about 245 days to about 88 days during his time there, that the hospital lost almost $5 million in investment revenues and that he bought about $190,000 worth of artwork over the course of multiple years with hospital money at a time the hospital could not afford it.
The countersuit also alleged that Klein withheld financial information from the hospital board, which did not come to light until outside institutions came forward with the information in late 2016 and early 2017.
A response was then filed on behalf of Klein to answer the hospital’s counterclaims.
“Taken as a whole, the counterclaim is an accumulation of vague and baseless smears,” the court document said.
“Not a single dollar of loss to the Hospital is specifically attributed to any act of Mr. Klein,” according to Klein’s counterclaim. “In fact, during Mr. Klein’s employment, hospital revenues doubled, jobs provided to the community increased dramatically, the quality of medical care and the reputation of the hospital grew in the same way.”
Specifically about the artwork, the filing says that, “it is true that the hospital purchased art for the benefit of patients and visitors and to support local and regional artists and a community art program.”
The case was ultimately settled out of court and dismissed with prejudice in March 2018.
“If they had legitimate claims, if they had things that they could hold me legitimately accountable for, do you think that they wouldn’t have done it? They didn’t,” Klein said. “They dropped the claims and they settled it to my satisfaction.”
Separate from the lawsuit and during the February 2017 commission meeting where the hospital board was overhauled, monthly payments of $1,800 for greeting cards were brought to the board’s attention by Kolb.
Manatos acknowledged in the meeting that the payments went to Klein’s daughter in exchange for the cards and denied Klein having any involvement, saying it was a decision by then CFO Irene Richardson and not endorsed by Klein.
The Rocket Miner reported at the time that Richardson said that Klein mentioned buying the cards from his daughter and that she did not initiate buying the cards.
“Every month, Jerry would give me an invoice for the cards,” Richardson told the Rocket Miner.
Because of the settlement, Klein declined to comment about many of the specifics leading up to him leaving Rock Springs.
“The board was in charge of the strategy and direction of the hospital,” he said.
He emphasized that he and the rest of the hospital’s leadership team followed the board’s direction and strategy. While doing so, all of the decisions were public via board meetings and news media and also consistent with “what the community wanted and community satisfaction surveys.”
“The fact that the county commissioners believe they knew as much or more than the board running the hospital is a debate between them and not between me,” Klein said.
Heeter, CCH’s new CEO, knew that hiring Klein would be scrutinized. Still, she expressed confidence in her decision and believes he is the right candidate for the job.
“We knew that would be an issue and so does Jerry,” Heeter said. “We did a significant amount of due diligence. We talked to several people down there. Our attorney, Tom Lubnau, knew the scenario. Andy (Fitzgerald, former CCH CEO) knew the scenario.”
Heeter and CCH have expressed interest in exploring potential affiliations for its hospital system to partner with, something Klein has significant experience with in his professional career.
In Rock Springs, he spearheaded an affiliation with the University of Utah. When many locals were going to Salt Lake City for treatment, Klein said he saw an opportunity to form a partnership and bring some of those resources to Rock Springs.
“We need to recruit some physicians, we need to add some services, why don’t we become a part of the University of Utah?” he said about that decision.
Memorial Hospital was the first to affiliate with the University of Utah, which now has multiple affiliations with other entities in the region using the same agreement, Klein said.
“He has been involved in an affiliation, he’s dealt with physician contracts,” Heeter said. “He’s got really, I would say, some fresh ideas, eyes from a different view.”
As the chief operating officer, Klein will oversee multiple branches of the CCH hospital district.
“I’ve worked my whole life to learn what I’ve learned about health care and I just feel like I’m not ready yet to put an end to the use of that and I feel like I can still bring a lot of advantages in things to an organization,” Klein said.
For Heeter, Klein’s experience in health care leadership and business negotiations carries a lot of value above younger candidates who haven’t proven to be able to hold their own in a top management position. She also noted that the shelf life for hospital CEOs is often times brief and that being fired is not necessarily a commentary on that person’s character.
“I do like to give people a chance to explain themselves,” Heeter said. “I certainly would not want to be that person that somebody is accusing and saying that they’re guilty without a fair and equitable trail or opportunity to explain themselves.”
Despite how his time in Rock Springs ended, Klein said he stands by his vision for Memorial Hospital at the time and the community it serves.
“We believe Jerry is a fine candidate and the way things came out, he’s a positive man who has the morals and ethics and values that we want here,” Heeter said.
An oil and gas company’s proposal to trade land with the state has angered landowners in southern Campbell County.
In July, EOG Resources asked the Campbell County Commissioners to support a proposed land swap between the oil and gas company and the state of Wyoming.
There are eight sections of state land in southern Campbell County and northern Converse County measuring 5,120 acres. EOG proposed trading eight sections of land in Laramie County, southeast of Cheyenne, to the state in exchange for the land in Campbell and Converse counties.
EOG also proposes to pay the state $300,000 a year until 10 wells are drilled on the land. It also projects that the tax and royalties to the state from the drilled wells “should likely exceed income currently generated” by the state lands or the proposed annual payment.
EOG estimated the surface value of the sections of state land was $600 an acre while its own property in Laramie County is valued at $2,000 an acre.
In EOG’s view, it’s “a reasonable proposed exchange that will strongly benefit the state and county governments,” according to the proposal. EOG said its land is worth $10.6 million, while the state land is $3.1 million.
But during the Campbell County Commission’s meeting last week, landowners, attorneys and state legislators all asked the commission to oppose the trade.
Ranchers have agreements with the state to incorporate those state sections into their ranching operations. Many of the state lands are surrounded by private land on all sides.
Lee Isenburger, whose ranch incorporates two of the sections of land that EOG wants to acquire in the proposed trade, said that if the trade goes through, his operation will be affected by at least 20%.
“We can graze the ground while they’re doing development, but with the developments they’re going to make, there’s not going to be much ground (to graze on),” he said.
Attorney Tad Daly, representing Isenburger, said it would set a “very dangerous precedent” in Wyoming.
“The precedent we’re concerned about being set is, Wyoming then becomes in the business of selling or exchanging lands to the highest bidder,” Daly said.
Kristi Bohlander, a landowner in Converse County, said she spoke with all the landowners who would be affected, “and all of them are against the project.” She added that her family had gotten along with EOG “for a really long time.”
“We negotiated 57 wells on our place with them,” she said. “We got along with them really well until about a year ago. Then I think something in their management changed.”
Eric Dille, vice president of government relations for EOG, said the change in economics due to the COVID-19 pandemic is “the biggest issue that’s driving any changes you’re seeing now.”
“We’re willing to talk to everyone. We’re not trying to roll over anyone,” Dille said, adding that Isenburger was sent a questionnaire, which he did not complete.
He pointed out that in 2019 alone, EOG paid $173 million to the state in ad valorem tax and royalty revenue.
Floyd Reno & Sons has operations on two of the sections of land in the proposed trade. Mike Fuller, an attorney representing Floyd Reno & Sons, said it’s not even close to being an even trade.
“The land they’re proposing to trade does not have the same value, or the same potential these lands have had through the years. It’s not a fair trade,” Fuller said.
He compared the proposed trade to building in someone’s backyard in Campbell County and in return giving them an equal-sized piece of land in another county.
“You can’t allow these companies to come in and take your backyard and trade you for a backyard that doesn’t produce, that’s not connected, that doesn’t add any value to your operation,” he said.
Daly said that by allowing EOG to take ownership of these state sections, it paves the way for other companies to start putting “large commercial industrial facilities” in the middle of a ranch.
“They want to put industrial sites in the middle of these ranches and not have to pay for it,” Fuller said.
Daly added that EOG hasn’t been very open about communicating.
“We’ve requested numerous meetings of EOG, requested audits of our surface use agreement, requested copies of other documents,” he said. “We have not been privy to the application that was filed. They are not communicating with the landowners.”
Rep. Eric Barlow, R-Gillette, said the way the process is structured puts landowners at a disadvantage. Under current state statute, EOG “can keep it confidential until it goes to the state,” he said.
Barlow said he and other lawmakers will work in the 2021 legislative session to address the issue.
“Good fences don’t make good neighbors. Good people make good neighbors, people that are honest in how they treat you and are forthright,” he said.
“It’s very important the landowner has a seat at the table to mitigate what that impact is on their agricultural operations,” Daly said.
A lot of energy companies come and go, said state Sen. Ogden Driskill, pointing out numerous companies that were here for the coal-bed methane boom, many of which are now “long gone.” Agriculture, on the other hand, has been part of Wyoming since before it became a state.
“We really don’t need to lose some of our long-time neighbors and the backbone of our state. I think that’s what we’re messing with,” Driskill said.
He asked the commissioners to oppose the trade.
“You have immense power,” Driskill told commissioners. “The state looks to you for leadership on these (state) sections.”
Converse County Commissioners have unanimously agreed to oppose the land trade, Daly said.
Commissioner Del Shelstad suggested holding a public hearing in Wright to hear from more of the landowners.
“If you don’t want it, I don’t want it,” he said to Isenburger. “I think private property rights are getting pushed back by government and corporations, and that’s tragic.”
“We’ve been walked on before,” said Commissioner Bob Maul. “I think it’s time we stand up and take a stance.”
Summer seemed to end abruptly as temperatures dropped on Labor Day from a high of 97 on Saturday to lows that dipped into the high-20s in parts of the county and residents awoke to snow on the ground on Tuesday.
Alex Calderon, meteorologist for the National Weather Service in Rapid City, South Dakota, said that some sites southwest of Gillette got down to 28 overnight. He said one observer station reported 3 inches of snow on the western edge of Gillette.
Cold weather will continue into Wednesday. Calderon said Campbell County can expect a hard freeze, and southern parts of the county will get down to the low-20s.
After Wednesday, though, he said the temperatures will continue to rise through the beginning of next week. The weekend should be in the 70s and Monday will get into the low-80s, Calderon said.
“We got lucky,” said Wendy Clements, city arborist for Gillette. “I don’t think they got as lucky as us in other parts of the state.”
The luck came as a combination of temperatures that didn’t drop too far below freezing, snowfall that wasn’t as heavy and, most importantly, wind that helped prevent more accumulation on tree limbs.
“Anytime I see snow coming before the leaves fall off in the fall ... I pray for a little bit of wind,” Clements said.
She hadn’t seen any significant breakage of limbs in her city trees, although some could use a good shakedown. Breakage isn’t the only potential damage to trees, and Clements doesn’t think Gillette escaped completely unscathed.
“I do expect to see a little bit of leaf damage,” she said. “The leaves will turn black, and we won’t get those pretty fall colors.”
She noted that such temperatures can cause problems for trees as they’re trying to store up nutrients for their period of winter dormancy, so it will take some time to see the full extent of this most recent cold spell.