Top AMA official sues AMA
CHICAGO (CNN) -- A top American Medical Association official sued the doctors' organization Monday, charging that the group protected a lawyer from being fired because he had earlier protected the board of trustees from the fallout after the organization's short-lived attempt to license its logo to Sunbeam Corp.
Dr. E. Ratcliffe Anderson Jr., executive vice president and chief executive of the 280,000-member group, said Michael Ile, AMA's general counsel, was given a sweetheart payoff and allowed to resign when he should have been fired.
The doctors' group called the suit "frivolous."
Anderson cited the ill-fated 1997 "Trademark Licensing Agreement" entered into by AMA brass before he was hired as the reason Ile was protected. The agreement granted Sunbeam the right to use the AMA's name and symbols on their products.
But soon after the deal was announced, it was widely criticized as something that would undermine the group's reputation and credibility. A few days later, the AMA announced it would "not go forward" with the agreement.
Ile was appointed to conduct the AMA's internal investigation. A day after he delivered his report, the AMA fired three top executives but spared the board members, based on Ile's contention that they had not known about the agreement until it was completed, Anderson said.
But Anderson said in his lawsuit that Ile's investigation failed to mention an internal memo from P. John Seward, M.D., then executive vice president, "that informed the AMA's board of trustees of the plan for a Sunbeam 'partnership' and 'co-branding.'"
Anderson's lawyer, Charles Pautsch, said Anderson had a copy of the memo, but he would not give it to the news media.
Ile's report absolving the board of responsibility in the Sunbeam fiasco helped him survive his own business decision, according to Anderson.
He said the AMA negotiated a deal in 1997 to sell its prime block of downtown Chicago real estate to a group of investors for $23.5 million. But the buyers negotiated extensions, and the property was not sold until 2000. By that time, according to Anderson, land values had soared and it was worth $13.5 million more than was paid.
Anderson accused Ile of having failed to appraise the property to determine its fair market value, seek outside counsel or renegotiate the contract terms.
After the sale, in September 2000, Anderson sought to have Ile fired for cause.
Anderson asked to meet with Dr. Ted Lewers, the chairman of the AMA's board of trustees, and Ile. But Anderson said he was denied access to the meeting, in violation of the trustees' own rules.
The board met and allowed Ile to resign, agreeing to give him a confidential severance package, Anderson said. He said he was not allowed to attend that meeting, and that the board ignored his protestations that Ile should have been fired for cause.
By excluding him from the meeting, the board violated his employment contract, Anderson said. Though he remains in his position at the helm of the organization, he said the actions constitute "constructive discharge."
Anderson is seeking his salary, which exceeds $500,000, to be paid through June 30, 2004, the end of his contract.
"This lawsuit is the best way I know to begin to right wrongs, to alert the house of delegates and the entire AMA membership that the governance structure is not working, and to let the board of trustees leadership know that the AMA is a valuable public trust that belongs to the physicians of America, not the chairman of the board of trustees," Anderson wrote in a news release.
In response, the trustees said Monday in a statement that "the AMA board of trustees, after reviewing the complaint with its legal counsel, is confident that the lawsuit is frivolous." The statement was issued from Chicago, where the AMA was holding its delegates meeting.
"The board intends to vigorously defend against Dr. Anderson's claims," it said.
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