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Baltimore Behavioral Health must repay retirement money

Clinic, former CEO owe employees $49,200, judge rules

By Scott Calvert, The Baltimore Sun

2:53 PM EDT, May 4, 2013

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A federal judge has ordered a West Pratt Street clinic and its former chief executive to repay more than 60 current and former employees nearly $50,000 that the private company never deposited into their retirement accounts as required.

U.S. District Judge William D. Quarles Jr. also awarded $27,800 in attorneys' fees to lawyer Richard Neuworth and colleagues who represented the plaintiffs.

The March 22 order marked the latest chapter in the troubled recent history of Baltimore Behavioral Health Inc., once a successful mental health clinic that ranked among the city's largest providers of drug treatment services.

Whether the plaintiffs can collect the money is unclear. BBH filed for bankruptcy protection late last year, and its former chief, William "Kris" Hathaway, was laid off a year ago.

The Baltimore Sun first reported on questions about the retirement contributions in late 2010. Earlier, the newspaper had published an investigation of BBH that revealed unusually high Medicaid billings and six-figure salaries paid to Hathaway and several family members who controlled the nonprofit company.

Employees sued in 2011, alleging that BBH and Hathaway diverted retirement contributions taken from their pay as well as a 25 percent employer match.

BBH never responded to the suit, and Quarles granted a default judgment. In a separate opinion, Quarles wrote that from 2009 to May 2010, contributions were not deposited in retirement accounts. Instead, "the defendants used the funds to pay taxes and other expenses."

While Quarles ruled that the money must be repaid with interest, he denied the plaintiffs' request to impose triple damages. The size of individual awards ranges from $100 to $3,750.

Efforts to reach Hathaway last week were unsuccessful. Current BBH executive Terry Brown referred questions to Mark Friedman, who was appointed the clinic's bankruptcy trustee in late February.

Friedman said he didn't know about the federal lawsuit until Brown contacted him Wednesday after inquiries from The Sun. He said the bankruptcy could at least temporarily block attempts to collect from the clinic.

And while he wants the clinic's past problems "fully brought to light," Friedman said he is trying to help BBH survive so it can continue treating patients, most of them poor.

"I'm not insensitive to the fact that these kinds of claims may be very important to the individuals involved," he said of the lawsuit. But "this was an action against the prior operators of BBH for something that they did, and it's not a reflection on BBH in its efforts to reorganize."

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