Hospital CEO collects special $1.7M payoff

The chief executive of Valley Medical Center collected a $1.73 million retirement payment this year, even though he's still working at the tax-supported facility and was paid more than $900,000 last year in compensation.

The retirement payoff to CEO Richard Roodman, 61, is spotlighted in a recent draft state audit, which noted that the payment fell outside normal industry practices and should not be included in future employment contracts at the hospital.

"He hasn't retired, but he's got the money," said Sen. Pam Roach, R-Auburn, a vocal critic of the CEO and the hospital district that pays his salary and benefits. "I don't think there's any public officer who's received retirement before retiring."

Roodman, CEO of the Renton hospital since 1983, did not make himself available for comment.

But Don Jacobson, president of the five-member commission that oversees the tax district that funds the hospital, said the retirement-payment plan was created to keep Roodman from retiring.

The special retirement fund was established in 2003. It included provisions that would pay Roodman the funds if he retired after his 60th birthday, or was fired or had his authority and salary/benefits reduced, the draft audit states.

That agreement was amended in late 2007, after a contentious election in which two incumbent commissioners were unseated by candidates promising to reform the district. The amended contract — approved before the reform candidates took office — allowed Roodman to request the funds after January 2009, when he would be 60 years old and fully vested, according to the draft audit.

Roodman requested and received the money in February, the audit states.

The money is separate from the pension he will receive when he retires, officials said.

The Renton hospital and 20 associated clinics are funded by property taxes from King County Hospital District No. 1. The tax district includes Renton, Covington and Tukwila, and parts of Bellevue, Newcastle, SeaTac, Black Diamond, Maple Valley and some unincorporated areas of King County.

Commissioner Anthony Hemstad, who was not on the board that amended Roodman's retirement contract, said he knew nothing of the payout until an auditor working for the state asked him about it more than a week ago.

"How could that payment be made without us being informed about it?" Hemstad said. "It's indefensible to do it in such a private way."

Jacobson, the board president, said the decision was made years ago and that all the commission's decisions were approved publicly. He said he would make the same decision today.

"We don't think we're out of line at all," Jacobson said. "We needed to stay competitive, and he's doing a good job."

The draft audit said Roodman's total pay package exceeds that of at least 75 percent of his peers across the country.

Valley Medical's spokeswoman, Kim Blakeley, who returned phone calls on Roodman's behalf, said, "Rich has been here for 26 years. It's a highly competitive market, and our board feels that ... in order to keep someone of Rich's caliber, he needs to be compensated as such."

The audit said Roodman's base salary of $587,800 was within norms for an executive with his tenure. He also receives annual retention pay of about $235,000, and was given incentive pay of about $163,000 from 2006 to 2008.

"It's big money — more money than I ever made," Jacobson said. "But I always say, 'If you want to play ball, and you want to play in the majors, you pay the majors' salary.' "

Jacobson also acknowledged that the hospital's insurance paid a penalty assessed to Roodman in May 2007 for using taxpayer dollars to promote hospital ballot measures in 2005 and 2006.

Roodman and another administrator at the facility acknowledged spending nearly $500,000 in public funds on behalf of a successful tax levy and an unsuccessful annexation proposal that would have increased the size of the tax district.

State law does not allow tax dollars to be spent on campaigns.

The state Public Disclosure Commission fined Roodman $195,000 for the violation, but reduced the amount to $120,000 if Roodman paid the fine with nonpublic funds.

Roodman also agreed to use nonpublic funds to reimburse the district $155,000 for money paid to vendors in an effort to pass the ballot measures.

Jacobson said the money to satisfy the settlement was paid by the hospital's insurer. He said it was appropriate because Roodman was working in the hospital's best interest, and because he didn't know he was violating the law by spending public funds.

Staff at the Public Disclosure Commission said the use of the hospital's insurance is considered nonpublic money because it did not come from taxpayers.

That disclosure incensed Roach, who in 2008 requested the performance audit on Valley Medical.

"He didn't pay the $120,000," she said. "The taxpayers paid it because they paid it with the insurance."

The district will have an opportunity to respond to the findings. The final audit is expected in several weeks.

Susan Kelleher: 206-464-2508 or skelleher@seattletimes.com