A legal fight between two tribal health care powerhouses has led to revelations that the Alaska Native Tribal Health Consortium board boosted its chairman's pay to more than $1 million — up from $122,000 two years before.
The fight, played out in a lawsuit filed in January by the Southcentral Foundation, another Native health provider, challenged the 2014 decision by a committee of the ANTHC board to authorize a sharp increase in compensation for ANTHC president and chairman Andy Teuber.
Teuber was already making more than $500,000 working full time for another nonprofit, the tribal health provider in Kodiak. He still holds both jobs.
In August, months after the initial lawsuit was brought, Southcentral Foundation said in a court filing that Teuber had received an "outrageous compensation package." While the payments to Teuber weren't disclosed in any public filing in the lawsuit, his compensation appeared in a separate tax document that ANTHC was required to make public as a nonprofit corporation. The tax document was also filed in August.
The lawsuit also challenged payments to current and former board members — including those who, Southcentral Foundation asserted, authorized Teuber's raise. Southcentral Foundation seeks a change in governance in ANTHC, not a return of money paid to executives or board members.
The sizes of the payments to members of the ANTHC board also weren't in the lawsuit. But the public tax document recorded payments to 39 current and former members of its board of directors in its tax year ending Sept. 30, 2016.
Five directors and a former director each collected more than $249,000, not counting Teuber, who himself is a director. Seventeen current and former directors received $30,000 or less. The reasons for the differences in payments weren't disclosed.
Southcentral Foundation runs health clinics in Anchorage and elsewhere in Alaska and, with ANTHC, shares authority for running the Alaska Native Medical Center — the health care complex on Tudor Road with a 167-bed Native hospital, primary care facilities and labs. The foundation said in the lawsuit that Teuber's raise diverted scarce federal money that should have been spent on health care for Alaska Natives.
In response, the ANTHC board asserted in a prepared statement that Southcentral Foundation's allegations amount to a "smokescreen."
Southcentral Foundation's "real goal" in the lawsuit, the ANTHC board said, wasn't to expose Teuber's pay and how he obtained it, but to "take control of statewide tribal health services" by embarrassing and eroding support of ANTHC and its directors.
ANTHC said in another public statement, posted online, that the cash for its board came from a settlement with the federal government that was specifically intended to cover the administrative expenses of overseeing Alaska Native health programs — including the cost of paying board members for their work.
"For years, individual directors graciously served our people and made significant personal and professional sacrifices to ensure our success," the ANTHC board said. "Due to (the federal Indian Health Service's) failure to uphold its financial obligations, the board set fees at a sizably reduced level to support our organization. And so, it was only fair for us to provide a retroactive adjustment when ANTHC's dispute with IHS had resolved."
Officials at both tribal organizations, including Teuber, declined numerous requests for interviews.
'More than satisfied with the president's performance'
The details of the payments to Teuber, the board and former board members have been blanked out from filings in the lawsuit, with the details sealed under a confidentiality agreement approved by both sides and signed by the U.S. district judge overseeing the case, Timothy Burgess. But some figures are included in ANTHC's latest nonprofit tax filing, dated Aug. 4.
The tax return, on Internal Revenue Service Form 990, shows that Teuber's pay as chairman and president of ANTHC rose to $1.05 million in the tax year that ended Sept. 30, 2016, up from $122,000 two years before.
Teuber had additional compensation from his other full-time job as president and chief executive of the Kodiak Area Native Association. KANA paid Teuber $539,000 in the tax year that ended Sept. 30, 2015, according to KANA's 990 form, the most recent available.
The two organizations said in their 2014 tax filings that Teuber worked more than 100 hours a week between them — 65 hours for ANTHC and another 37.5 at KANA, both during the one-year period that ended Sept. 30, 2015.
Another document, the public statement by ANTHC's board on the lawsuit, said Teuber's working hours were less important than who he was and what he accomplished.
"The president has a salaried position that is compensated based primarily on the level of duties, responsibilities and expected outcomes rather than the specific number of hours worked," the statement said.
The statement didn't detail Teuber's duties and responsibilities, or say what specific outcomes the board expected or how it assessed his performance. Another statement, posted on an ANTHC website that addresses the lawsuit, said Teuber is expected to provide strategic leadership, oversight of financial functions, and be involved with major contracts and partnerships.
"To date, the board of directors is more than satisfied with the president's performance which merits the full amount of compensation paid," the board said in its August statement. "In fact, the consortium's progress under (his) leadership has far exceeded the board's expectations."
The one-time payouts to current and former ANTHC board members, meanwhile, appear to total $2.5 million. That number was calculated by Alaska Dispatch News based on the large increase in payments to current and past board members as reported in the nonprofit tax returns. The big payments were reported in the return dated 2015, and the smaller ones in 2014. The organization itself wouldn't provide a breakdown distinguishing payments for current and past board service.
Of the six current and former board members who received $249,000 or more, four — Evelyn Beeter of Chistochina, Andrew Jimmie of Minto, Emily Hughes of Teller and Lincoln Bean of Kake — declined to comment. A fifth, Robert Henrichs of Cordova, didn't respond to a request for comment and the sixth, H. Sally Smith of Dillingham, died earlier this year.
Rita Stevens, the wife of Kodiak Republican Sen. Gary Stevens, received a payment of $107,000 last year, which came after she finished nearly a decade on the ANTHC board in 2006. She didn't respond to a request for comment.
In court filings in its lawsuit against ANHTC, Southcentral Foundation asserted that the payments were aimed at inducing the board members to sign off on Teuber's raise.
ANTHC counters, in its statement posted online, that the payments were "the right thing to do" after the organization received the settlement from the federal government — $153 million intended to cover years of underpayments for ANTHC's administrative costs of running federally funded programs.
Those administrative costs, ANTHC argued, included the "cost of governance," like compensation for board members.
The settlement was one of hundreds made with tribal groups across the country and elsewhere in Alaska that have brought claims similar to ANTHC's.
Before the settlement, the ANTHC board members were paid fees of between $35,000 and $65,000 a year for an average of five hours a week of work. But those payments were at a "far lower rate" than what board members should have earned, ANTHC said in its online statement.
Beeter, the treasurer of ANTHC's board — who herself received a $268,000 payment last year — dismissed questions about the salary increase and payments as "old news."
"Where'd you find this at? Over at Southcentral Foundation or under the desk or somewhere? Obviously, I can't talk about it because it's going to court," said Beeter, president of the Gakona-based Mt. Sanford Tribal Consortium, a health and social services organization. "You need to go to court and listen, just like the rest of us."
An ANTHC spokeswoman, Michelle Weston, said in an email that Teuber's salary is competitive with other health care executives' and only rose after ANTHC switched to a market-based system of compensation instead of one tied to federal rates for medical professionals.
"We believe Alaska Native professionals should be paid market rate for their services," she said.
Weston declined to provide the independent analyses that ANTHC says were used to determine the size of Teuber's raise and the board members' payments, nor would she name the consultants who provided them.
Conflict and competition
The federal government once ran Alaska Native health care programs through the Indian Health Service. But that started changing with passage of the Indian Self-Determination and Education Assistance Act in 1975, which spurred tribes to take over management of programs under federal contracts and using federal money.
Southcentral Foundation and ANTHC are two of Alaska's largest Native health care providers.
ANTHC is governed by a board with 15 members representing regional health organizations from Southeast Alaska to the North Slope, as well as unaffiliated tribes. One of those regional organizations is Southcentral Foundation, a nonprofit that serves Alaska Natives from Anchorage, the Mat-Su and dozens of affiliated rural villages as far away as the Pribilof Islands.
Southcentral Foundation and ANTHC have faced tensions dating back to the 1990s, when ANTHC was formed. A section of federal legislation authored by then-U.S. Sen. Ted Stevens dictated that the two organizations would jointly manage the new Alaska Native Medical Center on Tudor Road — with Southcentral Foundation providing primary health care and ANTHC focused on the hospital, emergency medicine and administration.
ANTHC's court filings recount years of ensuing conflict and competition for real estate, patients and payments. But the tensions have rarely spilled into public view.
That changed after ANTHC received the $153 million settlement from the federal government. The agreement was announced June 2014, though the fight between Southcentral Foundation and ANTHC didn't become public until more than two years later, in January, when Southcentral Foundation filed its lawsuit challenging Teuber's raise and the new board structure under which it was made.
Five months after the settlement, Southcentral Foundation said, Teuber proposed an executive committee be established as a smaller unit of the board, but with "virtually all of the power of the full board." Southcentral Foundation's attorneys, from Anchorage and Los Angeles, said that the executive committee — which it argued was made up of board members "loyal to Mr. Teuber" — then approved his raise.
ANTHC chief executive and administrator Roald Helgesen also received a raise, which Southcentral Foundation also alleges came after the executive committee approved a new contract.
Helgesen was paid $750,000 last year, up from $440,000 two years before, according to ANTHC's tax filings.
The executive committee's meeting to authorize the raises took place without the knowledge of Southcentral Foundation's representative on the ANTHC board, who learned about the meeting two months later, according to Southcentral Foundation's court filings.
Weston, the ANTHC spokeswoman, didn't respond when asked for the names of board members on the executive committee.
Southcentral Foundation argued in its court filings that Teuber convinced the executive committee to approve his raise by offering retroactive payments to all ANTHC board members, past and present. Some of the details of Southcentral Foundation's allegations are redacted from court filings, but ANTHC's tax documents show that current and former board members received one-time payments during the organization's last fiscal year, which ended Sept. 30, 2016.
Teuber last year earned $843,000 in base pay, plus a $219,000 bonus, $21,000 in retirement payments and $3,000 in nontaxable benefits, according to ANTHC's IRS return for the 2015 tax year, which ran through Sept. 30, 2016.
Teuber's second full-time job at the Kodiak Area Native Association paid him a $539,000 base salary in the tax year ending Sept. 30, 2015, plus $59,000 in "other compensation," according to KANA's most recent tax filing.
ANTHC officials and Teuber wouldn't answer questions about how he balanced the demands of the two jobs. KANA's board chair, Loretta Nelson, declined to comment.
'Sizably reduced' board payments before settlement
Southcentral Foundation argued in its lawsuit that the ANTHC board turned over its powers to the executive committee and broke the federal law authored by Stevens that created ANTHC. That law requires the organization to be governed by a 15-member board and for decisions to be made by consensus "whenever possible."
Teuber's proposal to create the executive committee violated that law because it allowed the committee to take actions without the full board's approval, Southcentral Foundation's filings say — though they add that after the lawsuit was filed, ANTHC's board amended its bylaws to fix that problem.
ANTHC, on its website, argues that board members received "sizably reduced" payments from what they deserved before the $153 million settlement with the federal government, adding that the organization hired a "reputable, independent third party" to determine the appropriate payouts.
The ANTHC website doesn't identify the third party or provide its report, and officials also were unwilling to do so.
The board members' payments also weren't authorized by a proposal from Teuber, according to ANTHC. Instead, ANTHC says, the payments stemmed from an evaluation by a separate "ad hoc committee" that Teuber asked the executive committee to set up, after the full board asked him to evaluate historic board compensation.
The committee's recommendations, ANTHC added, were considered in June 2015, while Southcentral Foundation said in court filings that Teuber's raise was authorized six months earlier.
As for Teuber's own salary, ANTHC says it was raised to reflect the organization's growing size and scope of activities — its revenues were $587 million in its tax year ending Sept. 30, 2016, up from $415 million six years earlier — along with increasing demands of the jobs of board chairman and president.
Nonprofit Providence Health and Services pays its chief executive in Alaska, Bruce Lamoureux, $680,000, while Richard Mandsager, the head of Providence Alaska Medical Center, the 364-bed Anchorage hospital with more than twice the capacity of the Anchorage Native hospital, is paid $950,000, according to Providence's most recent tax filings, from 2014.
Providence, a network of 50 hospitals based in Washington state, doesn't break out its finances for Alaska on a separate tax return, making it difficult to compare the organization's operations with ANTHC's.
Southcentral Foundation, which reported $300 million in revenue in its most recent tax year to ANTHC's nearly $600 million last year, pays its own president, Katherine Gottlieb, $635,000, according to tax filings.
Assessing health care executives' compensation can be complex because of the difficulty in measuring their performance, said Guy David, associate professor of health care management at the University of Pennsylvania's Wharton School.
It's hard to determine how an organization would look "with this person or with somebody else behind the wheel," he said. But one thing to look for, David added, is whether the board of directors is wielding power over a chief executive or is "more of a rubber stamp."
"The question is, given the mission of the organization, is this person basically extracting surplus from this institution?" he said.