OUSTED HOSPITAL ADMINISTRATOR FILES LAWSUIT.

Byline: Karen Maeshiro Staff Writer

LANCASTER - Ousted hospital administrator Mathew Abraham has filed a lawsuit claiming that a medical group owner attempted to bribe and extort him in a bid to get more favorable contract terms.

High Desert Medical Group and its owner, Dr. Richard Merkin, had a plan to do ``whatever is necessary'' to gain control of the Antelope Valley Hospital board of directors so that Abraham could be fired and a better contract could be negotiated for the group, the lawsuit said.

The allegations were contained in a wrongful termination and defamation lawsuit filed by Abraham, who was ousted from his job as chief executive officer by the board in February 2003, three months after a High Desert Medical group doctor was elected to the board.

``He is seeking monetary damages and to clear his reputation and set the record straight. That's the real purpose of the lawsuit,'' said Abraham's attorney, Greg Hafif.

Officials at High Desert Medical Group said they had not seen the lawsuit and declined to comment. Antelope Valley Hospital spokesman Ed Callahan declined to comment.

Hospital board member June Snow said she can prove everything she has ever said about Abraham, who is seeking a seat on the hospital board in the Nov. 2 election.

``The arbitrator never said that we did not have cause to terminate him. Contractually there wasn't cause, but there were plenty of valid reasons why he was terminated,'' Snow said.

Snow said Abraham's contract had three reasons for which he could be fired: a felony conviction, performing an act of moral turpitude, or altering hospital documents.

``I cannot imagine why he wants to work with me on the board when all he wants to do is sue the hospital. I don't understand what his motivation is,'' Snow said.

Hospital board member Deborah Rice said Abraham's lawsuit will be the fifth since 1989 that he has filed against an employer or an individual.

An arbitrator ruled in February that the hospital had no cause to fire Abraham but said a controversial ``golden parachute'' consulting contract was invalid.

Abraham is one of nine candidates running for three hospital board seats in the Nov. 2 election. Two of the three incumbents, Dr. Abdallah Farrukh and Steve Fox, are running for re-election.

The lawsuit names as defendants the Antelope Valley Healthcare District; Merkin; High Desert Medical Group; and Heritage Health Care Provider Network, of which High Desert Medical Group is a part.

Other defendants include hospital directors Farrukh, Dr. Don Parazo, who works for High Desert Medical Group, Rice, Snow and hospital chief executive officer Les Wong.

The lawsuit says that in February 1999, when Abraham was hired as the permanent CEO, Merkin on behalf of High Desert Medical proposed an agreement with the hospital in which Merkin would receive a fee of $1 million a month for 40 years.

Abraham advised the board against the proposal and the board ultimately rejected it, but while the proposal was pending, Merkin sent Abraham $30,000 - six checks totaling $5,000 each - between April and June of 1999, the lawsuit said.

The first check came from Houston Guarantee Investment Inc., and the second check dated April 30, 1999 had the words ``consulting services'' written on the memo line, the lawsuit said.

When Abraham spoke to someone at Houston Guarantee, the person told him that the checks were for ``consulting services'' and had been mailed to Abraham at the direction of Merkin, the lawsuit said.

Despite Abraham's demand that the checks stop being sent, four more were sent to him, the lawsuit said.

In October 2001, High Desert Medical's contract with the hospital was terminated when Abraham and Merkin were unable to agree upon the terms of a contract extension, and the group went without a contract for approximately four months, the lawsuit said.

``Knowing that the district is ultimately controlled by its elected board of directors, (Heritage Health Care and High Desert Medical) through Merkin expressed their intentions that they would do `whatever is necessary' to gain control over the district's board of directors,'' the lawsuit said.

``The purpose of this plan was to have plaintiff terminated and then negotiate themselves more favorable contractual terms with the district that would financially benefit the defendants to the financial detriment of the district,'' the lawsuit said.

The defendants ran Parazo as a candidate, the lawsuit said. Parazo won along with Snow in the 2002 election, the lawsuit said.

The night before a Feb. 13, 2003, executive session at which Abraham's employment was to be discussed, Merkin called Abraham, the lawsuit said.

``In that telephone conversation, Merkin stated that if plaintiff would immediately fax to Merkin a contract amendment granting HDMG a new 20-year contract term with a guarantee of no rate increases for the first 10 years, Merkin would make sure that plaintiff's contract as district CEO was not terminated. Plaintiff refused ...,'' the lawsuit said.

The next day, the board voted 4-1, with Fox dissenting, to oust Abraham.

Karen Maeshiro, [phone]

karen.maeshiro(at)dailynews.com