1. Oregon Attorney General’s Public Meetings Manual

JOHN DAY — The Blue Mountain Hospital District Board of Directors acted swiftly to hire a new chief executive officer but in the process seems to have skirted Oregon law.

In a May 9 special meeting, the board accepted CEO Derek Daley’s resignation and announced that Daley’s last day with the district would be Aug 3. A week later, in another special meeting on May 16, the board voted to have Chair Amy Kreger make an offer to Cam Marlowe, the hospital district’s former chief financial officer, to step in as the district’s new CEO and “report back with the outcome.”

The public did not learn the outcome until early June. On June 4, in response to a request from the Blue Mountain Eagle, Kreger provided information on Marlowe’s hiring and compensation, which includes a salary of $320,000 per year, plus a $50,000 signing bonus and a $35,000 annual retention bonus after two years. In a follow-up interview on June 9, Kreger told the newspaper that Marlowe would take the reins on July 11.

In its rush to hire a new CEO, the board — the publicly elected governing body of the hospital taxing district — appears to have violated the state’s public meetings law.

There is no indication that Marlowe himself did anything wrong.

In general, the law says, a public body such as the hospital district board should take deliberative actions on hiring and make other decisions during regularly scheduled open sessions. However, there are provisions for making such decisions in special meetings if certain requirements are met, including a requirement to give the public adequate notice.

The hastily scheduled meetings in May appear to have fallen short of the law’s public notice requirements.

Public bodies, according to the Oregon Attorney General’s Public Meetings Manual, must provide at least 24 hours’ notice of and public access to a special meeting unless the minutes describe an emergency justifying the lack of such notice.

Kreger said the board properly announced the May 9 and 16 meetings by posting the agendas in the hospital cafeteria and a nearby hallway. Moreover, Kreger said the May 9 session’s agenda had been posted on the hospital district’s web page with at least 24 hours’ notice. As of last week, however, the board’s website did not show agendas for either the May 9 or May 16 meeting.

Jack Orchard, a lawyer from Ball Janik LLP in Portland who specializes in public records and open meetings law, disagreed with the notion that posting notifications in the hospital cafeteria was all that was required.

“Posting in the cafeteria does not appear to be even close to satisfying the meetings law’s requirements,” Orchard said.

Orchard said the board should have notified the newspaper in advance of both meetings.

“Why newspaper notice was not provided seems to be a large oversight,” Orchard said.

He said he was skeptical of the need or legal reason to hold an emergency or special meeting. If the board knew that the CEO matter was pending and Daley was to remain on the job until Aug. 3, the board had no basis under the law to hold a special emergency meeting, Orchard said.

Public and private sessions

Orchard also questioned why so much of the board’s discussion about hiring a new CEO took place in executive session.

State law explicitly allows a public body to meet privately in an executive session — where the public is barred and reporters are instructed not to report on the proceedings — only in certain narrowly defined circumstances. The statute also makes it clear that no final action or decision can be made during an executive session.

Public bodies can meet in an executive session to “consider the employment of a public officer, employee, staff member or individual agent,” the law says. However, if the position to be filled is a CEO or public officer, the public body must first advertise the vacancy and then — in an open session — approve hiring standards, criteria, compensation and policy directives. It must also allow opportunity for public comment.

Compensation, Orchard stressed, cannot be discussed behind closed doors.

It appears the board did not comply with all of those requirements.

According to the official minutes, the board went into executive session for nearly an hour at the beginning of the May 9 meeting, then went into open session for three minutes — just long enough to accept Daley’s resignation by a unanimous vote — before adjourning. On May 16, the board spent 29 of the first 30 minutes in executive session. The meeting adjourned at 6:37 p.m.

It remains unclear when Kreger actually reached out to offer Marlowe the CEO job, but Kreger said she announced Marlowe’s hiring at the May 26 regular board meeting. Still, the meeting minutes do not reference the hiring of a new CEO.

The board was already familiar with Marlowe from his previous stint as the hospital district’s chief financial officer between 2018 and 2020. According to the May 16 minutes, Marlowe was a “prospective and vetted” candidate from an earlier CEO search.

A little over a year ago, the hospital district opted not to renew the contract with its longtime management company, HealthTechS3 Management Services. The management firm had come under harsh criticism from patients for long wait times to see providers, lost referrals and generally poor customer service.

Daley was the hospital district’s CEO at the time, but he was an employee of HealthTechS3, and it wasn’t clear whether the district board would be able to hire him away from the management company. Kreger said the board considered Marlowe for the position in a few closed-door sessions.

Ultimately, the board voted to hire Daley as the hospital district’s CEO and signed him to a two-year contract that paid him $273,000 yearly.

Under terms of the board’s contract with HealthTechS3, the district paid a flat fee of $90,000, roughly 33% of Daley’s salary, to hire him away from the management company. Daley became an employee of the hospital district on April 1, 2021.

First CEO search

Kreger pointed out that Marlowe’s hiring was the first time the board had hired a CEO independent of HealthTechS3.

In the past, she said, the hospital district did not have anything to do with the search and vetting process, because the CEO — as was the case with Daley — was an employee of HealthTechS3.

“Our human resources department and our board had nothing to do with (finding and hiring a CEO),” she said. “The management company) would bring a candidate for us to preview.”

Nonetheless, multiple sources have told the Eagle that a significant number of hospital staff were upset at being left out of the hiring process this time around.

Kreger disputed that claim, saying that the CEO search was not a secret around the hospital and the staff was welcome to engage, ask questions and share their thoughts about the process.

Kreger noted that the CEO transition was prominently displayed on the agenda for the June 22 regular board meeting. At that meeting, the board voted to change Daley’s final day with the district from Aug. 3 to July 22 and change Marlowe’s first day on the job from July 11 to June 27.

However, she said, those in attendance at the meeting were mostly — if not all — supervisors and staff that were required to attend. Additionally, she added that the board makes efforts to engage with the hospital staff.

Kreger defended the board’s performance in hiring the district’s new chief executive. She said a quick hire allowing Marlowe and Daley to overlap was “extremely important” for a “smooth transition for the organization.” Also, she added, the hiring of Marlowe allowed the district to avoid recruiting costs, which can include travel and lodging expenses for job candidates and their families.

Moreover, Kreger said, the hospital district’s legal counsel, Amy Robinson of Miller Nash LLP, advises the board in all hospital business — including Oregon Public Meetings Law — and she maintains the board’s actions broke no provisions of open meetings law.

The Attorney General’s Public Meetings Manual concedes that strict compliance with the requirements of open meetings law may “sacrifice speed and spontaneity for more process and formality.”

Even in an emergency situation, however, the law still requires public bodies to meet certain requirements for public notice and access.

“It appears someone got in a hurry and just wanted to ‘get business done,’” Orchard said. “That’s not our public meetings system. That takes the public largely out of the process.”

Why public access matters

In addition to the Blue Mountain Hospital, the Blue Mountain Hospital District operates Strawberry Wilderness Community Clinic, Blue Mountain Care Center and Blue Mountain Home Health and Hospice Agency. The hospital district has about 250 employees.

As a taxing district of Grant County, the hospital district receives a share of the county’s property tax revenues. According to County Assessor David Thunell, the hospital district was scheduled to receive just over $1.4 million for the 2021-22 tax year.

The U.S. system of government requires all states to conduct government business in the open, unless there is an extraordinary reason not to do so, Orchard noted.

With that, he said, the public gets an opportunity to be notified of a public meeting, observe what happens there, and access — after the fact — a record of what happened.

Because the hospital is a publicly funded entity with publicly elected directors, the three aspects of hiring a CEO — setting compensation, adopting the hiring procedure and voting on the hiring of the individual — are public business matters that must be conducted in an open setting and allow for public comment.

“It’s simple,” Orchard said, “the contract is a public contract and the public needs to be able to observe how that public contract was adopted.”

Because compensation of the hospital district’s CEO involves public resources, he said, the people have a right to understand what public resources are being committed.

“That doesn’t mean the public can stop it, necessarily,” he said.

However, there needs to be an open forum where the public body carries out a process that tells people the public body is hiring a new CEO and is going to pay this person a certain amount of money. Then, he said, the public has a right to share its opinion — favorable or not — about the decision. Either way, Orchard said, the people have a right to comment.

For instance, Orchard said, the public can express its displeasure if the board decides to pay the new CEO more than the one before and can demand to know the reason for the increase.

“The public has the right to ask those questions,” Orchard said.

This article has been updated from its original version to reflect that the board’s May 16 special meeting adjourned at 6:37 p.m. and that the board’s May 26 meeting minutes do not reference Chair, Amy Kreger, announcing that the board hired a new CEO.