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ECMC settles with former CEO Cleland for $1.2 million

Erie County Medical Center has agreed to pay a $1.2 million settlement to its former CEO Richard C. Cleland, seven weeks after the hospital’s board of directors announced that it had unanimously voted to remove Cleland from his post “for cause.”

Attorneys for the hospital and for Cleland have quietly engaged in negotiations over a settlement for the past month and a half since Cleland’s abrupt removal.

ECMC officials released a statement Wednesday afternoon confirming the settlement but saying, “in the best interest of the hospital,” both they and Cleland would have no further comment.

ECMC declined to immediately provide the amount of money paid to Cleland in the settlement, but a source with knowledge of the settlement told The Buffalo News the hospital would pay Cleland $1.2 million over two years.

That’s how much Cleland was owed under the terms of his employment contract, which ran though the end of 2018, if he were let go for any reason other than being removed for cause. If the board fired Cleland for cause, however, he would be owed nothing.

The settlement also includes a non-compete clause that bars Cleland from working for any other hospital in the Western New York market, or for any vendor or company that does business with ECMC, for the next two years, the source told The News. That is more stringent than a standard non-compete clause because ECMC is organized as a public benefit corporation and is therefore subject to the state’s Public Officers Law, according to the source.

Cleland, who was slated to earn $600,000 this year, was represented by attorney Richard T. Sullivan of Harris Beach in the settlement talks.

The controversy dates to early November, when the ECMC board of directors abruptly ousted Cleland and Mary Laski Hoffman, the hospital’s chief operating officer, on the same day. A source confirmed that ECMC paid Hoffman her contractual severance of $350,00 for two years remaining on her contract.

The board said it had voted to fire Cleland for cause, but Cleland insisted he resigned for cause. Hoffman, for her part, resigned after Cleland refused the board’s orders to fire her. That was one of several demands the board made of Cleland if he wanted to stay on as CEO.

The removals happened just five months after Cleland was named permanent CEO of the medical center and 18 months after he took over as interim CEO, replacing Jody L. Lomeo when Lomeo was named the head of Kaleida Health.

Cleland wasn’t embraced by everyone on the ECMC board, and his foes seized on a controversy over his flying to London on a plane chartered by Terry and Kim Pegula for Buffalo Bills suite holders and sponsors to see the Bills play. They criticized the timing of when he alerted hospital officials to the trip and when he agreed to repay the Bills for the cost of the trip.

Thomas J. Quatroche Jr., formerly the hospital’s president, has been serving as acting CEO since early November.