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Hospice CEO resigns amid controversy; workers portray Davis as bully, lavish spender

First of a two-part series. Read more in Monday’s edition of The Dominion Post.

MORGANTOWN — Her tenure as president and CEO of Capital Caring hospice services saw robust revenues, but Malene Davis resigned Friday amid allegations she bullied employees, spent lavishly on business trips and oversaw potentially troublesome Medicare dealings.

Davis stepped down just days before publication of this story, which resulted from a months-long investigation of allegations regarding her conduct. Her resignation followed an investigation by the Capital Caring board, a probe launched after a critical dossier was submitted by people closely associated with the company.

All the employees who spoke to The Dominion Post requested anonymity, fearing retaliation from Davis, a WVU graduate who sits on the university’s alumni association board of directors. These sources also provided the dossier.

They allege Davis engaged in “luxurious and wasteful spending” of company money — about 90 percent of which is taxpayer funds via Medicare and Medicaid — and operated the company in an atmosphere of intimidation.

They alleged the CEO’s small leadership team, including a contracted consultant who also parted ways with the company Friday, benefited from the wasteful spending and willfully permitted the “hostile work environment.”

It was unclear if Davis also resigned from WV Caring, a Preston County-based subsidiary of Capital Caring that is becoming an independent organization again.
Capital Caring informed The Dominion Post of Davis’ resignation and the separation of the two companies Friday.

Davis’ name was removed from the Capital Caring website but not WV Caring, which did not respond to a request for comment. Davis’s personal attorney also declined comment.

Capital Caring is based in Falls Church, Va. Davis maintains homes in Arlington, Va., and the Preston County community of Arthurdale.
Davis was the founding president, of WV Caring, formerly known as Hospice Care Corp., which serves 12 West Virginia counties, including Monongalia and Marion. WV Caring and Capital Caring entered a joint operating agreement in 2016 that ended Friday.

Davis has a bachelor’s degree and master’s degrees in nursing and business administration from WVU.
She made more than $500,000 per year at Capital Caring, but witnesses alleged she used company money on trips to posh resorts and had the company reimburse her for personal expenses, down to cups of coffee.

The Dominion Post began its investigation March 15 and first contacted Capital Caring in mid-June, via phone and four sets of emailed questions, along with supplemental questions as information came in.

With Davis’ resignation, none of those questions were answered. On Friday, the company supplied a statement and a copy of the internal company announcement, and Davis’s attorney supplied a statement from her.

Capital Caring board chair and interim President and CEO Tom Koutsoumpas said in the memo:
“As many of you know, the Capital Caring Board of Trustees recently authorized a comprehensive operational review of the organization, conducted by an outside organization.
“The Capital Caring board has a fiduciary responsibility to initiate tighter controls, operational improvements and enhanced oversight moving forward.
“As interim CEO, my immediate focus will be to work with you, our patients, their families, and our donors in addition to our board members to ensure we plot a path forward of transparency, trust and compassion.”

All allegations made to The Dominion Post were based on documentation or statements by at least three witnesses.

Upon learning of Davis’s resignation, one source responded, “The right thing has occurred here. The leadership of Capital Caring had gotten away from the core mission and it seemed they became focused only on their own self-indulgence.”

Capital’s background
Capital Caring is a nonprofit serving Washington, D.C. and portions of Virginia and Maryland. In 2016 – the most recent data available from its annual reports and IRS 990 forms – it served 6,980 hospice patients, 1,862 palliative care patients and 5,351 adults receiving bereavement support. It employed about 800 people (733 according to its annual report, 857 according to its 990) along with more than 1,000 volunteers.

In 2016, its total revenue was $92.3 million, with $85.8 million coming from program services (paid via Medicare, Medicaid and some private insurance) and $5.5 million coming from contributions and grants.

Capital Caring’s net 2016 revenue was $1.1 million, its lowest since 2006. This fluctuates from year to year and we’ll look more closely at that later.

In 2016, the company provided charity care for 200 patients, valued at $3.4 million.

Davis’ 2016 total compensation was $547,508, which includes $371,164 base salary and a $128,809 bonus. These figures vary annually and we’ll also look more closely at them later.

The remaining members of the inner leadership circle are David Schwind, executive vice president and chief financial officer, Dr. Cameron Muir, executive vice president and chief medical officer, and Dr. Perry Fine, a Utah-based anesthesiologist and pain management physician who was not on the payroll but served under contract as “strategic advisor.”

As of Friday, Fine was no longer a consultant. He is the namesake of the Perry G. Fine, MD, Endowed Fund in Pain and Palliative Medicine at the WVU School of Medicine. Davis was instrumental in creating the Perry G. Fine M.D. Pain Lecture Series at WVU; the 10th annual lecture was in October 2017.

Sources don’t begrudge the high salaries earned by Davis and her circle – the company was losing money for two years prior to her coming aboard. But witnesses raised concerns about leadership’s lavish spending on themselves and what they describe as Davis’s vindictive management style.

Dubious spending
Witnesses presented emails and receipts of some examples of the spending they questioned — questioning whether this type of spending is appropriate for a nonprofit supported overwhelmingly by taxpayers.

In October 2014, the four leaders and two others attended what they call the Napa Annual Leadership Retreat at the Napa Silverado Resort in Napa, Calif.

For the flight there, Fine emailed to a company employee Davis’ order to upgrade her flight to business/first class, for an additional $743. Davis’ total round-trip airfare for that year’s retreat was $1,168.19.

Davis emailed the team — she called them collectively the Medicine Cabinet in her email — during July informing them that during the retreat six of them will attend the annual Pagan Ball, a masquerade party, at the nearby Castello di Amorosa winery. Admission prices were $125 for members, $155 for guests, according to the winery. So party admission for the six ranged from $750 to $930.

For the party, Davis wrote to the employee: “Costumes? Need to reserve – you do it! Many thanks!”

In the July email, Davis listed the activities planned:
— A four-person balloon ride
— A Napa bike tour
— Daily five-mile walks
— A winery dinner that she asked Fine to arrange.

In a July-August set of email exchanges, Fine wrote to a different winery, the Signorello Estate: “The senior leadership team … has established a tradition of coming to Napa for a retreat each year. Last year, a long-time family friend … prepared the most marvelous dinner for four of us, and this wonderful memory has endured – so much that we would love a repeat performance this coming fall, if at all possible.”

Fine requested a private estate dinner by the pool. The dinner was arranged, requiring a $500 nonrefundable deposit paid on Davis’ company card. The total cost for the private dinner for four — which included a reception with hors d’oeuvres and wine and four courses each with their own wine pairing — was $1,260.

Each year, Capital Caring hosts a fundraising gala at a D.C.-area hotel. A credit card receipt from November 2015 shows $400 spent at the Noufal Hair Studio in Vienna, Va. A handwritten note by one of the witnesses on the copy of the receipt says this was for hairstyling for Davis and her mother before that year’s gala.

Capital Caring has leased three Mercedes Benz vehicles, witnesses said, for Davis and her two VPs. They question why such luxury vehicles are appropriate for leaders of a nonprofit.

Witnesses also mentioned that Capital Caring leadership enjoyed trips to the Brickhouse Inn Bed & Breakfast in Gettysburg, where the premium two-night stay and tour package costs $449. The next package down, “The History Lover’s Package,” is $219 per couple plus lodging, which ranges from $149 to $219 per night.

This summer, Capital Caring purchased the use of a luxury suite at FedExField in Landover, Md., where the Washington Redskins play football. The cost of the contract is $150,000 per year for three years for use of the suite for certain events.

The company hired a special events and partner relations coordinator to handle use of the suite. The ad for the position said the person would be “the project lead for a new partnership venture between Capital Caring and the Washington Redskins, established to support donor acquisitions, enhance donor stewardship and build relationships with community leaders and influencers.”
Among the person’s job duties would be to plan events at the suite and identify prospects and guests to “ensure events provide appropriate cultivation and stewardship opportunities for donors.”
Witnesses said company reimbursements for Davis’s personal expenses amounted to “tens of thousands of dollars” each year.

The dossier states, “What’s stunningly heartbreaking and callous is all the CNAs, LPNs, call center staff, volunteer coordinators and others who are told Capital is so poor they can’t pay employees a decent holiday bonus.”

Company finances
As referenced earlier, in 2016, Capital Caring took in $92.3 million and ended $1.1 million in the black.

It lost $3.7 million in 2003 and $204,000 in 2004. Davis assumed her post at Capital Caring in 2006, taking over the job from an interim CEO. Under her leadership, the company made a quick turnaround.

The interim began partway into 2005 and the company saw a net income of $2 million that year. It netted $2.97 million in 2006. Net income jumped to $5.8 million in her first full year, 2007, and it peaked at $8.5 million in 2012.

Leaders receive bonuses based on company performance, and Davis saw her first bonus in 2008, worth $48,880. Her next came in 2010 at $219,650. That was her biggest bonus. Her lowest ($100,817) came in 2014.

(The dossier notes, in comparison, that company nurses and nursing assistants receive $250 holiday bonuses in some years.)

Her total income fluctuated but curved upward:
— $353,377 in 2007;

— $300,831 in 2009;

— $354,458 in 2010;

— $562,634 in 2011;

— $590,529 in 2014;

— $547,508 in 2016.

From 2006 through 2013, Davis also collected payroll from Hospice Care Corp. (It changed names Jan. 1, 2017.) The 990 forms states she was paid for her accessibility as a consultant.

Her Hospice Care income peaked in her last full year there, 2005, at $180,308. It then steadily declined: $134,376 in 2007; $120,200 in 2009; $73,097 in 2010; $69,231 in 2013.

Her Hospice Care titles changed several times during those years: executive director through 2009; founding president from 2009 through 2015; president and CEO in 2016.

Her combined hospice incomes peaked in 2010 at $637,634. It was $608,000 in 2013.

Hospice Care’s financial fortunes turned south shortly after Davis left. It peaked in 2007, taking in $18.9 million and spending $13.3 million, for a net positive of $2.7 million.

Net revenues plunged to $109,523 in 2008. Then began a series of steady losses. From 2006 through 2016, Hospice Care saw only two years in the black: 2010 and 2012. Hospice Care saw an aggregate loss of $4.8 million from 2009 through 2016.

Hospice Care also shed employees during that span, shrinking from 274 in 2008 to 161 in 2016.

Two Hospice Care/WV Caring employees are members of Davis’ immediate family: Her sister, Malisa Smith, is vice president of operations, and her brother, Steve Smith, is vice president of organizational performance.

Davis also has financial connections with companies Capital Caring does business with.

The 2016 annual report reveals Capital Caring had been working for two years with New Orleans-based mumms Software developing an electronic medical record and billing system.

Davis, Fine and Muir have all served as guest speakers at mumms conferences in New Orleans.

Reports show that mumms has been a pioneer in hospice software, but witnesses claim the new system doesn’t work well. Glitches don’t allow timely billing and employees feared bringing it to Davis’ attention because of her close ties with mumms.

In 2015, Davis gave mumms’ CEO Capital Caring’s 2015 Passion for Innovation Award.

Davis also has financial ties with North Carolina-based Multi-View Inc., better known as MVI, which provides consulting and training in hospice management.

Davis and Fine have served as paid speakers at MVI programs. In turn, witnesses said, Davis requires Capital Caring employees to take training sessions at MVI.

Davis and Fine were instructors at an MVI clinical leader program course. It notes that Davis operates Capital Caring in the black.