Fired Hospital Admin's Story Reveals Flaws in Healthcare Hiring

How can medical groups, hospitals, and other healthcare organizations make sure their job applicants are who they say they are, especially as staff shortages have sparked more urgency to fill vacant posts?

It's not always easy, requiring checking and double-checking -- and not relying just on the references or social security number supplied by the prospective employee.

Bay Area Hospital, a 129-bed facility in Coos Bay, Oregon, learned the hard way when a concerned citizen sent a tip last year that its newly hired chief operating officer had a long history of criminal convictions and incarcerations relating to fraud and theft against facilities -- as it turned out -- in at least four states.

A 2015 press release issued by the Middle District of Louisiana U.S. Attorney's office called Larry D. Butler a "Con Man."

Hidden History

Court documents filed 8 years ago said Butler applied for jobs using a social security number that he faked and a driver's license that he altered in order to conceal his criminal past. That history included 35 arrests primarily related to fraud, 10 criminal convictions going back to 1985, and numerous incarcerations, including a 5-year prison term that began in 2015.

Butler, now 57, falsified his employment history on his resumes and when prospective employers called, Butler pretended to be the previous employer, saying "Oh, he was a great employee," Louisiana U.S. Attorney Ryan Crosswell told the court.

In Baton Rouge a decade ago, Butler acquired company credit cards that he used to rack up charges for "high-dollar" personal items such as appliances and furniture, and obtained cash that he transferred by wire. He rerouted the credit card addresses so the bills went to him instead of the healthcare organizations that paid them.

According to his 2014 federal plea agreement filed in the U.S. Attorney's Office for the Middle District of Louisiana, Butler used these deceptive tactics to get hired as the vice president of information technology at the non-profit, now defunct Louisiana Health Cooperative (LAHC) in 2013, earning $168,000 a year.

He was fired from that position for racking up $66,000 in charges for personal items on the company credit card, the document said.

In 2014, using a falsified social security number and fake information on his resume, he got hired by the non-profit Mary Bird Perkins Cancer Center in Baton Rouge as director of facilities management, with a salary of $80,000 per year.

Butler was sentenced in 2015 to serve a 5-year prison term, followed by 3 years of supervised release.

After he was released from prison in 2019, he came to California, where he was reportedly hired by Mercy San Juan Medical Center, a 300-bed acute care hospital near Sacramento, as senior director of ancillary services.

Officials at Mercy San Juan, part of Dignity Health, declined to answer numerous questions about how it came to hire Butler, how long he worked there, what they knew of his past, or under what circumstances he left. Instead, it issued this statement:

"While we are not at liberty to disclose specific information about a former employee, we can share that Dignity Health has a stringent background check process in place to screen prospective employees, and we regularly conduct internal reviews of our hiring process to ensure the care and safety of our patients and staff."

After he left Mercy San Juan, he traveled northwest to Oregon, submitting false credentials to Bay Area Hospital (BAH), which hired him as its chief operating officer in May 2022 and sent out a press release touting his vast experience.

A story in the local newspaper based on that release said that at Mercy San Juan, Butler reportedly "oversaw hospital operations and ancillary services, including the bariatric program, infusion center, hyperbaric clinic, wound care, dialysis, radiology and clinical project implementation."

Clay England, BAH's chief human resources officer, told MedPage Today in a phone interview, "There's a lot of ways that people can falsify that information. We go off a social security number, and there's ways for people to manipulate that. ... The information he provided to us was false."

England also said that BAH's background checks were mostly performed by a third party vendor with research on Butler going back 7 years, "and all of that met our criteria." He added, "background checks are based upon the information that the applicants submit. That's all I'm going to say."

He would not say if the hospital's checks included Mercy San Juan, whether the hospital actually spoke with Mercy San Juan personnel about Butler's history, or what they said about his performance and background.

After Butler's hiring made the local news, England said the hospital got a call from a "concerned citizen," and after searching online discovered Butler's past. England said that Butler was on the job 4 days before he was suspended, and subsequently terminated.

England said that in Butler's short time with the hospital, he did not have access to anything that would cause concerns regarding fraud or harm to patients.

Asked if Butler had the potential to commit fraud or cause other problems for the hospital if he hadn't been promptly terminated, England said that was a very real possibility, "absolutely."

'Rushed' Background Checks?

The ability of a convicted felon to so easily get hired at so many organizations for prestigious leadership jobs provokes chills among hospital executives, who told MedPage Today that COVID-related staffing shortages may provoke some to cut corners, especially with staffing levels down as much as 30% in some acute care facilities.

Speaking generally and not about this case, Chris Van Gorder, President and CEO of Scripps Health in San Diego, said that health companies should be diligent in their hiring practices, with reference checks, past employer checks, plus third-party checks. "The key is doing a complete check," he said. He added, however, "I suspect with staff shortages these days, some of these checks might be rushed in some organizations."

England said the hiring process involving Butler was not rushed. "I don't believe we rushed this. We took weeks to do this background check," England said. He declined to name the third party vendor the hospital hired.

Bay Area Hospital issued a statement, which said in part: "Even the best system can be manipulated by an unscrupulous individual. That said, BAH's process is consistent with industry standards, and includes, amongst other things, a full state, county and national criminal background check, a minimum of three professional reference checks, and in-depth interviews."

"We do want to confirm and clarify; upon learning of any potential issues, Larry Butler was immediately placed on suspension. Furthermore, we have verified that no patient PHI was accessed nor did he have any access to our employees' sensitive personal information during his 4 days of employment."

England said that his hospital referred the situation to the Oregon U.S. Attorney's Office. "I don't know to what level they pursued that, or decided not to pursue it," he said.

As for how hospitals and other health organizations vet their prospective employees, much of that remains a mystery. MedPage Today tried to contact several third-party reference check vendors about recommended practices, but received no response.

The issue is complicated in California, which in 2018 passed the Fair Chance Act, also called the "Ban the Box" law. In an effort to reduce barriers for people with criminal histories, it prohibits employers from asking applicants about their conviction history prior to making a job offer. Other state laws limit the amount of information that organizations can share with other facilities about an employee.

But The Joint Commission has background check standards within its "Elements of Performance" criteria. It requires all of its accredited healthcare organizations to obtain and document criminal background checks on applicants, according to law, regulation, and the organization's policy, said spokeswoman Maureen Lyons.

If an organization failed to do that, she said in an email, "it will be cited as a Requirement for Improvement requiring a corrective action plan be implemented by the healthcare organization." Such a failure also may impact the organization's accreditation standing.

Asked if reports about background checks were submitted concerning the case of Larry Butler by either Mercy San Juan Medical Center or Bay Area Hospital, Lyons said that reports go back 3 years, and that neither facility reported such a case to TJC.

Comment