Kansas City University of Medicine and Biosciences Files Suit Against Former President to Recover Funds

Monday, March 22, 2010

Citing a Fiduciary Responsibility to the University’s Students, Faculty, Staff and Stakeholders, KCUMB’s Trustees File Suit Against Former President & CEO Karen Pletz to Recover Assets Owed to the University

(Kansas City, Mo.) Kansas City University of Medicine and Biosciences today filed a lawsuit in Jackson County Circuit Court in an effort to recover assets owed to the University by former president and CEO Karen L. Pletz.

On December 18, 2009, with no dissenting votes, KCUMB’s Board of Trustees terminated Pletz. Promptly after a series of issues were confidentially brought to the Board’s leadership by several sources, a Special Committee of Trustees was formed to investigate the actions and expenditures of Pletz in a fair and impartial manner. The University and the Special Committee retained legal counsel, which had no previous business relationships with Pletz or other management of the University, to advise the Special Committee and conduct an independent investigation, which resulted in the lawsuit that was filed today.

“The Special Committee worked in collaboration with the Polsinelli Shughart law firm and the Deloitte accounting firm for more than four months to conduct an in-depth forensic investigation into allegations against senior management,” explained Terry Dunn, chairman of the Special Committee, which continues to investigate issues brought before the Board last fall.

“We believe the facts we presented to the Board outline a compelling and accurate account of a President and CEO, entrusted with the stewardship of this fine institution that has educated physicians for over 100 years, who abused her position of power and provided false information for her own personal gain,” said Dunn. “It is our belief that this was accomplished with the knowledge and cooperation of other senior executives who are no longer employees of the University.”

In filing the suit, Dunn noted that the Board is “intensely committed” to its responsibility to the institution, alumni and supporters, and students and staff, which have long supported it. “This action represents the Board’s intention to right the wrongs which have been committed,” Dunn explained.

The University has retained the law firm of Berkowitz Oliver Williams Shaw & Eisenbrandt LLP to file the lawsuit and pursue the ensuing litigation.

The investigation of a select sample of expense reimbursements claimed by Pletz revealed that approximately 70% of charges or reimbursements were based upon false or materially inaccurate information. The investigation of remaining reimbursements and expenses by Pletz is ongoing.

In discussing the investigation, the Chairman of the Board of Trustees and University’s Acting President and CEO, H. Danny Weaver, D.O., indicated that “the Trustees are committed to protecting and preserving this outstanding medical school and its students through prudence and a system of strong governance. We are determined to close any loopholes that may have been used by Pletz to engage in behavior unacceptable to and unknown by the Board,” Dr. Weaver continued.

“Although the special investigation has uncovered a number of troubling issues related to the University’s previous administration, I am pleased to report that KCUMB remains on firm financial footing,” said Dr. Weaver. “While the court will address our issues with Pletz, we remain keenly focused on the education of highly qualified students in osteopathic medicine and the life sciences.”

As the independent investigation continues, the University’s Trustees remain actively engaged and intensely focused on strengthening the institution’s governance. The Trustees have established a special Governance Committee to work with the Polsinelli Shughart law firm to draft stronger protocols for the Trustees’ consideration and adoption as soon as possible. The Trustees also adopted a revised whistleblower policy to ensure that faculty, staff and students are encouraged to raise issues without fear of any adverse consequence or personnel actions.

“Since the actions taken by the board in December, the University has remained focused on its primary mission of educating medical students,” said Dr. Weaver. “We have also implemented a much stronger system of governance within the institution, along with a higher and more thorough standard of transparency. Finally, we are committed to bringing accountability to all aspects of the university and it begins in the President's office, moving down. At the University, our mission remains the same, to provide the best possible education for our students. We are committed as a Board to give them the resources needed to reach that goal.”

About Kansas City University of Medicine and Biosciences: Kansas City University of Medicine and Biosciences is a fully accredited, private university, with a College of Biosciences and a College of Osteopathic Medicine. Founded in 1916, its College of Osteopathic Medicine is the oldest medical school in Kansas City, Mo., and the largest in the state.

Media Contact: Laurie Roberts, Parris Communications
lroberts@parriscommunications.com 816-931-8900