Hoboken taxpayers on hook for $100,000 of severance package that HMHA wasn't obligated to pay

August 09, 2011  Jersey Journal

Former chief operating officer Spiros Hatiras will receive a $600,000 severance package from the Hoboken University Medical Center even though the agency that oversees the hospital is not obligated to pay it.

And what Hoboken taxpayers may find more appalling is that they are on the hook for $100,000 of that package. Hatiras, who resigned on July 14, was CEO for just two years.

According to a resolution approved by the Hoboken Municipal Hospital Authority, the city-created agency that oversees the city-owned hospital, new owners HUMC Holdco LLC are responsible for 80 percent, or $500,000, and the city is responsible for the remaining $100,000.

But under the terms on the Hatiras' contract, the severance package would be paid only in the event he was fired, his contract expired, or his contract was not renewed. Both by his own admission and the wording of the resolution, Hatiras resigned from the position.

Asked why the HMHA decided to give Hatiras the generous severance even though it didn't have to, Mayor Dawn Zimmer, also an HMHA commissioner, skirted the question.

"Given the totality of the circumstances, this was the best way to save our hospital and relieve our taxpayers of a $52 million bond guarantee."

Asked [again] if that meant the sale of the hospital was contingent upon Hatiras receiving the lucrative severance, Zimmer said "Given the totality of the circumstances, this was the best way to save our hospital and relieve our taxpayers of a $52 million bond guarantee."

Only a couple weeks after the Hatiras was awarded the severance package, Hudson Healthcare Inc., the company that was created to operate the hospital, declared bankruptcy.

Last week the sale of the hospital to HUMC Holdco, which is owned by the same principles that own the Bayonne Medical Center, was approved by the state Health Planning Board in a 5-0 vote. The sale must be approved by the state Health Commissioner Mary O'Dowd.

Under the terms of the sale, HUMC Holdco agreed to pay off the $52 million bond that Hoboken guaranteed when it took over the hospital from St. Mary in early 2007. The state awarded the HMHA $11 million in aid to cover the interest on the guaranteed bond.

HUMC Holdco has promised $20 million in upgrades to the hospital, but that can hardly be considered part of the sale price since it will own the hospital. Also last week it was learned that Medical Properties Trust of Birmingham, Ala., has agreed to purchase the HUMC property from the new owners for $70 million.

It is expected that the new owners will lease back the land.