AMA fires CEO after he institutes lawsuit

Home Health Columnist / Guide · Jul 3, 2001

http://www.chicagotribune.com/business/printedition/article/0,2669,SAV-0106300130,FF.html

AMA fires CEO after he files suit

Board cites terms of employment agreement

By Bruce Japsen

Tribune staff reporter

June 30, 2001

The American Medical Association fired its chief executive Friday, less than two weeks after he slapped the group and its chairman with a breach of contract and defamation lawsuit.

In a statement, the AMA said E. Ratcliffe Anderson Jr.'s contract was terminated "pursuant to the terms of his employment agreement." Officials would not elaborate.

His departure from the Chicago-based doctors group marks another stumble for the 154-year-old organization, which has turned around financially but is struggling to retain physician members and rebuild its credibility with the public.

Now, however, the AMA's troubles do not look as though they will subside anytime soon. Anderson vowed Friday to forge ahead with his litigation.

Anderson sued the AMA and its chairman, Dr. Timothy Flaherty, on June 18 as members met in Chicago for their annual meeting. Anderson alleges that the group did not allow him to fire the organization's top lawyer over a real estate sale because the attorney had protected certain trustees from being identified with an embarrassing 1997 endorsement deal with Sunbeam Corp.

Anderson also alleges that Flaherty made disparaging comments about the CEO's compensation package of more than $500,000 a year.

"This breach of contract prompted the lawsuit and I will continue to pursue the avenues available to me through our legal system," Anderson said in a statement Friday. "With the board's precipitous termination of my employment, nothing has changed from my point of view. This latest action from the board just confirms to me that they were unwilling to comply with the terms of my contract."

The AMA's board of trustees and Flaherty have rejected Anderson's allegations as groundless. Anderson's lawsuit, filed in Cook County Circuit Court, seeks damages of more than $5 million and a jury trial.

With Anderson out, the AMA's board said Dr. Robert Gilmore, the association's deputy executive vice president, will be the senior ranking staff executive. The AMA board will soon conduct a national search for a replacement for Anderson.

Last week, the AMA's policymaking House of Delegates appointed a committee of physicians to look into Anderson's allegations. At that time, Anderson pledged to stay on as CEO at least until their investigation was completed.

While Anderson believed the delegates' investigation showed he had a measure of support, AMA members last week were not ready to pass judgment on the board. AMA delegates overwhelmingly re-elected Flaherty and other trustees to new terms in AMA leadership.

Although several high-ranking AMA executives were either fired or resigned in the aftermath of the Sunbeam matter, the organization's board of trustees claimed they did not know about the pact.

The AMA drew intense criticism from some of its members and the public for its decision in 1997 to sell the use of its brand name to Sunbeam. The AMA eventually backed away from the deal; however, the association paid Sunbeam $10 million to settle a breach of contract lawsuit and the organization's credibility was tarnished.

Anderson has said he was brought in to restore the AMA's reputation.

The AMA's finances have improved under Anderson's watch after the group cut some money-losing programs and reduced its staff by 14 percent.

Still, Anderson's leadership has been controversial.

Two years ago, Anderson fired the editor of the AMA's medical journal after it published, during President Clinton's impeachment proceedings, a study that found that most college students did not regard oral sex as having "had sex."