'There's something afoot here:' Kalkaska hospital board implodes in accusations, lawsuit

Apr. 28—KALKASKA — In the fall of 2023, four local hospital board members met inside a room at the county's government building to talk about, as one member put it, "where the hospital seems to be going."

The men locked the commission chambers door and, believing they were speaking privately, spent the next hour critiquing Kalkaska Memorial Health Center CEO Kevin Rogols, questioning the commitment of certain board colleagues and using colorful language to reminisce about old times.

The taxpayer-owned hospital, an affiliate of Munson Healthcare since the 1970s, was at a crossroads.

In July 2022, Munson officials had sent the hospital a non-renewal notice, and Kalkaska Memorial's 20-member board and its CEO began exploring other options for providing leading-edge healthcare to area residents.

Mike Cox, Eric Hendricks, Paul Erickson and Stuart McKinnon, in commission chambers that day, worried aloud that important decisions about the hospital's future might soon be finalized without a full vetting and away from public scrutiny.

"It makes no sense to me," Cox said, during the foursome's Oct. 9, 2023, conversation. "There's something afoot here I think that is not real obvious."

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

There were no signs at the entrance to the county building or anywhere outside or inside the commission chambers meeting room, alerting visitors to the recording policy, Cox said.

The county's security camera policy, updated the year before, states 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.

Records show that former Kalkaska County Sheriff Jerry Cannon, who serves on Kalkaska Memorial's board, filed a FOIA on Nov 14, 2023.

That recording, and the subsequent fallout after Rogols offered copies to board members, is the subject of a federal lawsuit filed Monday by Cox and McKinnon, accusing multiple municipal defendants of wrongdoing.

At a regular board meeting Tuesday, several board members and Rogols were personally served a copy of the lawsuit by attorney Brace Kern, who represents Cox and McKinnon.

That same day, Cox and McKinnon filed eavesdropping complaint letters with U.S. Attorney Mark Totten, state Attorney General Dana Nessel and Kalkaska County Prosecutor Ryan Ziegler.

Rogols, Board Chair Karl Klimek and Cannon did not return calls or emails seeking comment, although Rogols previously told the Record-Eagle that hospital administration and the board are seeking to do what's in the best interest of the community.

The emailed questions were forwarded to Laura Zingg, Kalkaska Memorial's vice president of media and public relations, who said Friday the hospital did not comment on active litigation.

"Our mission is to improve the health and quality of life of those we serve," Zingg said in an email. "We will continue to devote all our efforts to fulfill that commitment with integrity."

More questions than answers

The complaint letters to Totten, Nessel and Ziegler accused municipal defendants of retaliation and raised two larger questions:

Had anyone else, such as criminal defendants and their attorneys, met in the commission chambers meeting room and been recorded?

And why had Act 47 been amended by the Legislature in 2022, removing the requirement that, if sold, an Act 47 hospital had to be transferred at fair market value?

"Please open an investigation into this matter," the complaint letters requested.

The county prosecutor on Friday said attorneys have other options for places to meet with their clients that are closer to courtrooms and more private. "I find that unlikely," Ziegler said of such meetings taking place in commission chambers.

And Rogols, Klimek and a number of board members have been adamant in recent months that the hospital is not for sale — and they have sought ways to respond to rumors spreading in the community.

"The hospital is not for sale," Klimek said during a board meeting in February. "We're trying to make it absolutely clear to our community and squelch any rumors that might be out there. We are not for sale."

To underscore this point, at their February meeting, members unanimously passed a motion stating the board wasn't investigating any potential sale of the health center to a third party.

At Tuesday's meeting, board members again discussed how to respond to all the "for sale" questions from patients and community members. And future public forums to discuss a possible transition are planned.

Officials, however, have not directly addressed whether a larger hospital could assume the assets of Kalkaska Memorial without a sale, Cox and McKinnon said.

Transitioning out of Act 47

In 1945, the state Legislature passed Act 47, which allowed one or more municipalities to fund a community hospital with a voter-passed property tax millage.

Act 47 was popular in its day. At one point, there were more than 30 such hospitals in Michigan. But changes in federal reimbursement rules, privatization and consolidation have left just one Act 47 hospital standing: Kalkaska Memorial Health Center.

Changing to a private nonprofit would require a vote of the board to put the issue on the ballot, and then passage by Kalkaska County voters.

Both Cox and McKinnon said this week that they don't think board members or voters have enough information to make an informed decision.

"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 said.

"We talked about doing it in people's garages but I said, 'Hey, we use the commissioners' room multiple times for different events, so why don't we just meet in the county building?'" McKinnon said. "The commissioners' room is confidential."

The matrix McKinnon referred to is a questionnaire Rogols asked board members to complete, rating three governance structures — stay taxpayer-owned (called an Act 47 hospital) and maximize vendor relationships; stay taxpayer-owned and bring certain services in-house to minimize vendor relationships; or transition to a 501©3 non-profit.

"We'd been given that matrix from the hospital administration," Cox said. "We thought we'd get together and sit down and talk about what the heck is this really asking?"

The lawsuit complaint states Cannon gave a copy of the recording to Rogols, who, following a board meeting Jan. 23, told board members he had dozens of flash drives containing the recording for each board member to take home if they wished.

At the board's February meeting, the board passed a resolution censuring Hendricks, Erickson and McKinnon — Cox had previously resigned — and stating the board "condemns" Cox's actions.

The resolution acknowledged the men were not a committee or subcommittee of the 20-member board, but stated the men had breached their duties to the hospital and the board and their "secret" meeting was an intentional effort to violate the Open Meetings Act.

As an Act 47 taxpayer-owned hospital, Kalkaska Memorial Health Center is a nonprofit, yet is also subject to both FOIA and the OMA, in ways other nonprofit hospitals that are not taxpayer-owned hospitals, like Munson Medical Center, are not.

The board voted to send a copy of the resolution to the townships where the men were appointed, although board chair Klimek later mailed copies to all 12 of the county's townships, according to the lawsuit.

"In order to avoid any misunderstandings about what action it took, the KCMHC Board felt it important to share a copy of the Resolution it adopted with all of the municipalities that make up the KMHC Authority," Klimek said in a March 1 letter.

Dueling OMA violation accusations

The board, in their resolution, accused Cox, Erickson, Hendricks and McKinnon of violating the Open Meetings Act and of breaching their duties to the hospital and its board.

But Cox and McKinnon said exhibits included in their lawsuit, containing documents McKinnon received in response to a FOIA request, show just the opposite.

"I was a little amused that they would accuse me and the other three of violating the Open Meetings Act, which we didn't do, when they were so blatantly violating it themselves," Cox said.

Between November 2023 and March 2024, emails included as plaintiff's exhibits in the lawsuit show scheduling of multiple meetings of some hospital board members with the board's various committees.

These meetings constituted a quorum of the board, the lawsuit states, and as such should have been noticed, open to the public and someone should have taken and posted meeting minutes to comply with OMA.

"I was furious once I read it and seen it put all together," McKinnon said, of emails detailing these meetings. "The activity that we did was not any violation. In my opinion, the purpose of this (the resolution) was to get some board members to leave."

Cox and McKinnon are asking the court to void any decisions made during board meetings and in closed sessions that they say violated the OMA — and for Kalkaska Memorial to provide documents they say the hospital withheld in response to McKinnon's FOIA request and to pay attorney fees and damages as the court sees fit.

"I certainly want my name cleared for having been smeared in public for doing something which I did not do," Cox said. "But, even more important, it may bring to light to the people at large that there's something odd going on out there."