A special state audit of the MetroHealth System concluded that fired CEO Dr. Akram Boutros’ actions were “not criminal” when he paid himself $1.9 million in secondary bonuses. 

The bonuses were at the heart of the hospital board’s decision to fire Boutros in late 2022, just before the end of his contract. After the board discovered and challenged the bonuses, Boutros repaid the money. He later sued the board for defamation related to his dismissal, though he voluntarily dismissed his lawsuit in December 2023, citing “a serious health issue that requires intensive treatment.”

“I am gratified that the Auditor of State’s comprehensive investigation has confirmed the truth about my compensation and proves that I have done nothing wrong,” Boutros said in a statement.

Attorneys for Boutros said Tuesday the audit reinforces their belief that the board was wrong to fire Boutros over the bonuses. 

“Two years ago, the MetroHealth board released a so-called ‘report ‘— produced by a private firm with no statutory authority, based on an incomplete three-week review — that accused Dr. Boutros of concealment in violation of criminal laws,” Boutros’ attorneys, Kevin Spellacy and James Wooley, said in a statement. “The board publicly accused Dr. Boutros of fraud. That was just dead wrong. And this was tragic. The MetroHealth board took a compensation dispute, mishandled it, and spun it into a public scandal that destroyed Dr. Boutros’ reputation, livelihood, and even his health.”

The audit, released Tuesday morning, did not find supporting evidence that the board had given explicit permission for Boutros’ additional bonuses. It said that Boutros did not discuss management of the bonuses program directly with the board but that he did share information with a consultant the board hired. The report also said the board didn’t keep a close enough eye on Boutros’ pay. 

“The Auditor of State was not able to determine whether Dr. Boutros had proper authorization to receive the [bonuses], as there was reasonable doubt based on the information gathered,” the audit said. “Additionally, our work concluded the board did not effectively oversee the CEO’s compensation as his total compensation was processed through the payroll system.”

MetroHealth said in a statement that it still believes Boutros intentionally did not disclose the bonuses to the board and cited several sections of the audit that discuss the management bonus program under which he was compensated.

“While the Auditor’s report does not find sufficient evidence to support a criminal referral, the report is clear on several key facts, including (1) ‘ …Dr. Boutros did not share the development and management of the (supplemental performance based variable compensation) program directly with the Board…,’ (2) the Auditor was ‘unable to identify any supporting documentation for overt authorization by the Board for Dr. Boutros’ participation in the SPBVC’, and (3) when confronted with the payment of the unauthorized bonuses, ‘Dr. Boutros repaid the SPBVC bonuses, including interest, at a total of $2.1 million,’” the board said. “These facts make it clear that the Board acted properly in terminating Dr. Boutros for cause and recouping millions of dollars in unauthorized bonus payments.”

Less than two years after Boutros’ firing, the MetroHealth fired his successor as CEO, Airica Steed. At the time, the board chair said board members and Steed “fundamentally disagree” on priorities and performance standards for the CEO. Steed has hired a legal team and said she was “stunned” by the firing.

Auditor: Boutros ‘not unreasonable’ in reading contract to allow second bonuses

Auditor Keith Faber’s office began the investigation in December 2022 – the month after Boutros was fired – at the request of Cuyahoga County Prosecutor Michael O’Malley, the audit said. 

Investigators focused on the system of supplemental bonuses paid out to MetroHealth staff, including Boutros, on top of their base pay and primary bonuses. Board members told auditors that they did not know Boutros received these bonuses and evaluated himself for them, the audit said.

Auditors conducted interviews and reviewed board materials, emails, Boutros’ contract and other documents to sort out who knew what. 

While the board approved resolutions that contained attachments mentioning “supplemental incentives,” some board members said they didn’t think that applied to the CEO. MetroHealth’s payroll system lumped the secondary bonuses in with the regular bonuses and did not break them out separately, the audit said. 

Two different consulting companies examined compensation at the hospital, but their studies did not look specifically at the supplemental bonuses, the audit said. However, in two emails in August 2019, Boutros explained the supplemental bonus program to MetroHealth’s chief legal officer and representatives from the consulting firms, according to the audit. 

The fired CEO argued that his contract enabled him to receive secondary bonuses like any other executive, which MetroHealth’s board disputes. The audit doesn’t pick a side in that dispute, but concluded that Boutros wasn’t criminally liable for interpreting his contract the way he did. 

“The manner in which the contract was drafted creates the ambiguity which makes

Boutros’ interpretation, and thus his actions, not unreasonable and, therefore, not criminal,” the audit said.