Kalkaska Memorial to pay out-of-pocket for lawsuit response

May 26—KALKASKA — An insurance carrier for Kalkaska Memorial Health Center has reportedly declined to cover attorney fees related to a federal lawsuit filed last month against KMHC and several hospital officials.

"Information we've received states that Michigan Municipal Risk Management Authority sent a letter declining coverage," said Brace Kern, who represents plaintiffs Mike Cox and Stuart McKinnon.

Cox is a former member of KMHC's board of trustees, McKinnon is a current board member and the two men filed suit April 22 in U.S. District Court for the Western District of Michigan.

Cox and McKinnon accuse hospital officials of eavesdropping on their private conversations, violating the Open Meetings Act and retaliating against dissenters who questioned what they said was a lack of public transparency about a planned change in governance.

KMHC CEO Kevin Rogols, who is among six named defendants in the lawsuit, previously referred questions to Laura Zingg, vice-president for media and public relations.

Zingg, when asked about insurance coverage for attorney fees, said, "KMHC continues to work each and every day fully dedicated to our to our patients, residents, and community," adding the hospital does not comment on active litigation.

MMRMA is a public entity self-insurance pool founded in 1980 that provides liability, property, and data breach coverage to governmental entities throughout Michigan.

KMHC is an Act 47 hospital, owned by taxpayers who fund its operations through a county millage.

Since the 1970s, KMHC has also been an affiliate of Munson Healthcare, which provided various services from billing to branding and access for patients to certain diagnostic and treatment opportunities the hospital might not otherwise been able to provide.

Then in July 2022, Munson officials sent KMHC a non-renewal notice, and Kalkaska Memorial's 20-member board and its CEO began exploring other options for providing healthcare to area residents.

It was in the midst of that process, Cox and McKinnon state in court filings, when things went awry, starting with a get-together Cox, McKinnon and two other trustees — Eric Hendricks and Paul Erickson — had in a commission meeting room at the county's government building last October.

Cox and Mckinnon said they wanted to discuss how best to complete a questionnaire-type document called the Act 47 Decision Matrix Survey, that Rogols had provided to all 20 trustees.

"The only thing we were trying to do was discuss the matrix issue and make sure that we understood exactly what was being asked," McKinnon previously told the Record-Eagle.

The matrix asked board members to rate three governance structures — stay taxpayer-owned (Act 47) and maximize vendor relationships; stay taxpayer-owned and bring certain services in-house to minimize vendor relationships; or transition to a 501©(3) nonprofit.

Rumors the hospital was going to be put up for sale had proliferated throughout the community, which board Chairman Karl Klimek, also a defendant in the lawsuit, repeatedly said were false.

The four trustees thought they were speaking privately, and expressed concerns that important decisions about the hospital's future might soon be finalized without a full vetting and away from public scrutiny.

In the background, however, the county's audio and video equipment was set to automatically record, a security measure about which the men were unaware.

The county's security camera policy, updated the year before, states that an internal network also gives the sheriff's department a live video feed of activity in the room and that video recordings are available to anyone filing a Freedom of Information Act request.

Another trustee, Jerry Cannon, a former Kalkaska County sheriff, filed a FOIA for the recording, records show.

Cannon is also a named defendant in the lawsuit, along with trustees Tracy Nichol, Bruce Zenner and R. Troy Stobert.

The lawsuit states Cannon gave a copy of this recording to Rogols, who offered copies on flash drives to trustees, who then passed a resolution censuring Hendricks, Erickson and McKinnon — Cox had resigned — for breaching their duties.

The resolution also accused the men of violating the OMA — though in the lawsuit Cox and McKinnon made similar accusations against their accusers.

The KMHC's board's bylaws state that all board and committee meetings shall be public, held according to OMA provisions, meaning a notice is publicly posted, an agenda is available and minutes are taken.

The plaintiffs, in court filings, accuse KMHC of holding private, unnoticed meetings of the strategic planning committee and of board leadership, outside the public eye, often to discuss the actions of Cox, McKinnon, Hendricks and Erickson.

Court filings show attorneys in the lawsuit have agreed to allow the court to extend time for defense attorneys to respond to the complaint.

A scheduling conference is set for 4 p.m. June 25 in Grand Rapids before U.S. District Court Judge Robert J. Jonker.