MONTGOMERY, Ala. — The Alabama Board of Medical Examiners was pressed Thursday during a legislative hearing on several separation and non-disclosure agreements it entered into with former employees totaling $288,000, agreements that one state lawmaker claimed were illegal.
While board leaders claim they had received approval from the office of Attorney General Steve Marshall, a spokesperson refuted that claim in a statement to Alabama Daily News Friday.
The board, which acts as the state regulatory agency responsible for licensing and regulating health care providers, was appearing before the Joint Sunset Committee at the State House, as did several other of the state’s regulatory boards.
“Those NDA agreements are illegal,” said Rep. Chris Pringle, R-Mobile, speaking to the board’s legal counsel, Wilson Hunter. “They should never have been signed, and I want to know who got them.”
The Sunset Committee regularly reauthorizes the authority of various professional licensing boards and had in hand a 2019-2023 audit report on the Medical Examiners. It included detailed accounts of the board’s finances and operations, as well as the five separation agreements, including NDAs, in question. The report didn’t name the employees.
Prepared by the Alabama Department of Examiners of Public Accounts, the report questioned the legality of the board entering into settlement agreements, citing state law that empowers only the state attorney general to settle litigation matters.
William Perkins, executive director of the board, said that his agency had received approval from the Attorney General’s Office to enter into the agreements at the time.
“After lawsuits from former employees, and hundreds of thousands of dollars spent defending these suits, the board instructed our legal department to mitigate similar litigation in the future,” Perkins said Thursday.
“Our attorneys then spoke with our managing attorney at the AG’s office — who unfortunately has since retired — and he informed us that it was permissible for us to enter into such agreements if they were in the best interest of the agency.”
Perkins added that the board has not drafted an NDA in roughly two years and has opted to cease the practice going forward.
Unconvinced, Pringle pressed Perkins on his claim that the board had received approval from Attorney General Steve Marshall’s office.
“I know Steve Marshall,” Pringle said. “You cannot tell me that one of Marshall’s (staff) told you that you could break the law and be okay.”
At one point, he asked if the board could get the settlement money back.
Hunter, the board’s legal counsel since 2016, insisted that the board did, in fact, receive verbal approval from Marshall’s office.
“At the time they were signed, we definitely did think that it was okay, there was communication with the Attorney General’s office – not with the attorney general himself – that said that that is a very common business practice,” Hunter said.
In a statement to ADN on Friday, however, a spokesperson for Marshall’s office refuted Perkins’ and Hunter’s claim that the board had received approval to enter into the aforementioned NDAs, verbal or otherwise.
“The Attorney General’s Office has no record of giving the board the approval to settle a matter confidentially, nor of endorsing the board’s authority to settle any legal matter without the approval of the Attorney General,” the spokesperson told ADN.
“Further, we have no record of being asked to approve any of the specific settlements referenced in the audit.”
Hunter told ADN Friday that he and the board stood by their position that they had, in fact, received approval from staff at Marshall’s office to enter into the agreements.
“As we said to members of the committee, the agreements were made in order to avoid the much higher costs of litigation caused by frivolous lawsuits filed by disgruntled former employees. Separation agreements are a common business practice,” Hunter said in an emailed statement.
“Compared to the likelihood of years of litigation, we believed it was in the best interests of our licensees and the taxpayers to avoid these higher costs. In everything we do, we operate in the most cost-effective manner possible. We acknowledged to the committee that our perceived authority was the result of an informal communication and affirmed our change in policy in 2022. We are regretful for any misconception on our part.”
Covering 2019 to 2023, the report found that the board’s annual revenue has grown steadily over the years, by roughly 17% from 2019 to 2023, from $9.3 million to $10.9 million. Its annual expenditures, while having increased at a slower rate than revenue over the same time period, exceeded the board’s revenue for all four years.