The former CFO of United Surgical Partners International, a subsidiary of Dallas-based Tenet Healthcare, sued his ex-employer in federal court June 24, alleging retaliation for raising concerns about potential securities law violations.
The plaintiff, Jason Cagle, joined USPI in 2001 and served in several leadership roles before being promoted to CFO in January 2013. USPI agreed to sell to Tenet in 2015, and by 2018 Tenet owned 95 percent of USPI’s stock. The deal included an equity plan that provided USPI’s management team and about 100 employees with 10 percent of the upside in USPI’s earnings over a seven-year period.
As part of the equity plan, Mr. Cagle was granted more than 750,000 stock options that would be worth $50 million in December 2022, using a conservative valuation, according to the complaint. Other executives and employees were granted stock options worth more than $500 million.
“This valuable equity plan is a huge liability Tenet should have been carrying on its books,” the complaint states. “When plaintiff reported that this significant liability was not being appropriately reported on ‘the books,’ USPI and Tenet retaliated.”
Mr. Cagle alleges he raised concerns about the reporting to USPI’s then-CEO and Tenet’s CFO in November 2018. Subsequently, in a filing with the Securities and Exchange Commision, Tenet allegedly disclosed the book value of the equity plan, but it did not disclose the amounts it would actually have to pay, as Mr. Cagle had advised.
According to the complaint, Mr. Cagle raised the issue of Tenet’s allegedly improper financial reporting during a meeting with executives in April 2019. Mr. Cagle was fired less than two weeks later.
USPI said Mr. Cagle’s employment was terminated for continued failure to perform his “material duties,” but he alleged he was retaliated against for reporting the alleged securities law violations.
Mr. Cagle is suing USPI for breach of contract. He’s seeking back pay and benefits, reinstatement at the same seniority status he would have if he had not been fired and other damages.
Tenet declined to comment on the pending lawsuit.
Source: BECKER HOSPITAL REVIEW