Cardwell is alleged to have funneled $847,884 of Powell Valley Healthcare’s money to a friend, Michael J. Plake, in Indiana. The payments purportedly were intended for Plake’s limited liability company, Plake and Associates, to recruit medical staff to Powell.
In reality, allege federal investigators, Plake did no recruiting and was kicking roughly 75 percent of the money back to Cardwell while keeping 25 percent for himself.
According to a grand jury indictment, the payments to Plake were made through a dozen five-figure checks between April and September 2011. Cardwell resigned from Powell Valley Healthcare on Sept. 23.
Cardwell and Plake each face 15 felony counts of fraud in federal court in connection with the allegations, which have been investigated by the U.S Postal Service and Federal Bureau of Investigation.
The two men have pleaded not guilty to the charges, and a trial is set for June 4 in Cheyenne.
HealthTech’s lawsuit is based on the same allegations that make up the federal charges and seeks unspecified damages.
In Tuesday’s response to the suit, Cardwell attorneys Robert Horn of Jackson and Robert York of Indianapolis list more than a dozen potential defenses — including putting all the blame on Plake.
“All alleged losses of HealthTech were caused by non-parties, Michael J. Plake and Plake and Associates, LLC,” says one of the affirmative defenses.
As another defense, Cardwell says that, in his dealings with Plake and Associates, he acted “in accordance with the customs and standards of the healthcare-provider recruiting industry and the hospital CEO industry and therefore acted reasonably.”
Horn and York, Cardwell’s attorneys, also list standard defenses — such as contending the complaint fails to state a claim upon which relief can be granted and that HealthTech failed to mitigate its damages — and argue the company failed to support Cardwell’s efforts at Powell Valley Healthcare.
It’s typical for responses to civil suits to deny every allegation raised, and Cardwell did so in his filing.
HealthTech said in its Feb. 23 complaint that, according to Cardwell’s job description, the CEO was expected to demonstrate “highly ethical and moral conduct in personal and professional action and communication, consistent with the goal and objectives of” HealthTech.
Cardwell’s response denies that and says the employment document he signed was not an enforceable contract. His response also asserts he was an independent contractor and not a HealthTech employee.
Cardwell also has asked for the case to be dismissed, because Powell Valley Healthcare — whose money was allegedly misused — and Plake haven’t been included in the suit. Those parties must be included for the court to have jurisdiction, York and Horn argue.
The Powell Valley Healthcare board voted to join the suit and name Plake as a co-defendant at its Feb. 27 meeting. On Wednesday, PVHC attorney Scott Kolpitcke said the organization will file a motion to intervene in the suit by the end of the week.