The "True" Color of Race Relations in America - The Struggle for Economic Equality Continues
WHS v. Henry Ford Health System: The Civil Rights Movement migrates to a covert Health Care Epidemic in Urban America
Chattanooga, TN (PRWEB) July 19, 2004 -- Recent developments in a Michigan federal lawsuit are pulling back the curtain on the hot button issues of minority contracting, meaningful jobs in the inner city, and race relations in the health care industry. In July 2003, World Healthcare Systems, Inc. (WHS), an African American owned medical supply firm filed a $50 million contract and racial discrimination lawsuit against Henry Ford Health System (Henry Ford) in Michigan federal court. World Healthcare Systems, Inc. v. Henry Ford Health System, Civil Action No. 03-72659 (USDC Eastern Dist. Mich. originally filed July 11, 2003).
According to the federal lawsuit, which was amended in August 2004 to include additional information, Henry Ford promised to purchase 20% of its requirements for medical/surgical supplies (e.g., exam gloves, soft goods, disposable pillows, protective apparel, pouches and positioning products) from WHS in exchange for a savings of at least 10% (i.e., $1 million plus in annual savings to the hospital system) over prices previously offered by other Henry Ford vendors. This supply agreement is a part of a 5-year master distribution agreement between Henry Ford and Owens & Minor, Inc. of Richmond, Virginia. WHS filed suit after Henry Ford reneged on the deal. Henry Ford has denied the existence of any deal with WHS in the Michigan federal case.
On May 7, 2004 (almost a year after the case began), Henry Ford filed a motion to dismiss the contract claims on the on the grounds that the hospital system did not have any agreement with WHS. However, on June 30, 2004, WHS filed a 30-paged Response Brief claiming that WHS had a substantial supply deal with Henry Ford that the hospital system later breached. In addition to the June 30 Response Brief, the attorneys for WHS, Rawle Andrews Jr., Esq. and Curtis L. Bowe, III, Esq. of Tennessee's Andrews & Bowe, PLLP also filed numerous Exhibits including 2002 Management Reports to Henry Ford's Board of Trustees, as well as letters, memoranda, and emails from Michael Whalen, Henry Fords Vice-President of Purchasing and his staff indicating that Henry Ford had and was working on a deal to obtain medical and surgical supplies from WHS from at least October 2001 to early 2003. The WHS Exhibits also include numerous newspaper articles from 2002 and 2003 reporting on the deal, as well as pictures and direct quotes from Gail Warden, Henry Fords CEO at the time the deal between WHS (www.worldhealthcare.com), Henry Ford (www.henryfordhealth.org), and Owens & Minor (www.owens-minor.com) was made.
In one of the more interesting Exhibits to the WHS Response Brief, an April 8, 2002 memorandum to the Distribution Team, Henry Ford Vice President Michael Whalen writes: "Henry Ford Health System is moving forward with plans to achieve our overall goals of reducing cost, increasing diversity initiatives and standardizing products. With these goals in mind, we are in the process of converting a number of basic commodity products to one of our minority-owned suppliers, WHS of Michigan. This will result in a 10% saving on these and other items. We are excited about our partnership with Owens and Minor and WHS of Michigan. We feel confident that we can increase our overall volume of business with WHS of Michigan to at least $10,000,000. We have the commitment from O&M and WHS of Michigan to work through whatever conversions are necessary." In a related June 4, 2002 e-mail, H. Michael Falconer, a Henry Ford contracting coordinator reconfirms Henry Ford's business relationship with WHS as follows: "As you may recall in April Mike Whelan sent a e-mail announcing our new partnership with World Healthcare. I shared an Excel file listing the OR items that World Healthcare will be transitioning to become our preferred/exclusive vendor."
According to the WHS Response Brief and the documents filed with the Michigan federal court, Henry Ford's landmark supply agreement with WHS also was presented to and approved by Henry Ford's own Board of Trustees. Despite the fact that Henry Ford is denying the deal in federal court, the WHS Response Brief specifically refers to Supplier Diversity Reports that were presented to Henry Ford's Board of Trustees on June 19, 2002 and December 12, 2002, respectively. In fact, the June 19th report to Henry Ford's Board of Trustees, which is attached as part of the Exhibit Package, estimates that Henry Ford was on pace to do $6 million worth of business with WHS during calendar year 2002.
"Our mission and vision for WHS and the future of minority contracting in the health care sector has been devastated by Henry Ford's willingness to take credit for the supply deal, and its subsequent failure to honor its landmark agreement with us," said Sylvester L. "Skip" Reeder, III, Chairman and CEO of WHS. "Gail Warden (Henry Fords CEO at the time) personally asked me to support Henry Ford's Minority Business Initiative because WHS was the largest minority owned healthcare vendor in the United States. WHS also was selected as Henry Fords partner for medical and surgical supplies because WHS had a master contract with Premier, a $12 billion group purchasing organization (GPO) that is partially owned by Henry Ford (www.premierinc.com). WHS accepted and prepared for this significant business opportunity because we thought Henry Ford was really committed to spending its dollars equitably in the community it serves. Unfortunately, we had to file a federal lawsuit against them to enforce the promise," Reeder added. The Michigan Federal Court has set a hearing on Henry Ford's partial motion to dismiss in Detroit for November 17, 2004 @ 2 p.m.(ET.
The WHS Response Brief also includes a compelling Timeline (pgs. 7-14 of WHS Brief), showing the dates, times, and places when WHS, Henry Ford, and its agent Owens & Minor apparently met to negotiate and work on the supply deal.
The Timeline
- 10/03/01: HFHS-O&M Letter of Intent (which was faxed to WHS by Henry Ford on 10/10/01) ("We at Owens & Minor understand the significance of Henry Ford Health System partnering with World Healthcare and Owens & Minor");
- 10/22/01: O&M-WHS Confirmation Letter ("Our plan as the Integrated Distributor Partner of Henry Ford Health System includes a commitment to assisting Henry Ford Health System in fulfilling its minority initiatives to purchase at least ten million dollars of products from WHS of Michigan on an annual basis.");
- 04/08/02: Whelan confirming memorandum entitled World Health Systems of Michigan Conversion", which addresses, with excitement, Henry Fords on-going participation in a special requirements contract for medical and surgical supplies to increase its overall volume of business with WHS of Michigan to at least $10 million),
- 04/15/02: Henry Ford publishes its supply agreement with WHS on the World Wide Web (www.hfhspurchasing.org) in its Purchasing Points Newsletter under the heading "A Word from Mike Whelan" Note: HFHS terminated the website after the WHS lawsuit was filed.
- 06/04/02: Email from H. Michael Falconer (HFHS Contract Coordinator) Henry Fords OR PAM Team entitled, "World Healthcare," which reads, in pertinent part: "You will recall in April Mike Whelan sent an e-mail announcing our new partnership with World Healthcare. I shared an Excel file listing the OR items that World Healthcare will be transitioning to become our preferred/exclusive vendor," together with copy of Whelan's 04/08/02 Memo to Henry Fords PAM Team, entitled "World Health Systems of Michigan Conversion."
- 06/12/02: E-mail from Mary Stevens (HFHS Contract Coordinator) and Dana Reeder (WHS Reg. Mgr.): "I had heard from Carol that all was going well on the conversion. Thanks for the update I knew that the change would go great."
- 06/19/02: "Supplier Diversity Report" of Henry Ford's Board of Trustees: projects $6 million in purchases from WHS during CY 2002; and lists the HFHS-WHS agreement as Defendant's Number "1" Accomplishment during the first quarter 2002 (Board Report text is virtually identical to Whelans published statements during spring 2002);
- 10/10/02: Crain's Detroit Article entitled "WHS of Michigan wins $10 million deal from Henry Ford Health System," which recites the 20% spend for 10% discount agreement of the parties and quotes then CEO Gail Warden.
- 10/21/02: Modern Healthcare Article entitled, "Spreading the Wealth," which describes the parties' 20% spend for 10% discount agreement, and features a picture of Gail Warden (Henry Ford) and Robert Johnson (WHS) above the caption, "Henry Ford's Gail Warden, left, and Robert Johnson, president of WHS of Michigan, discuss their $10 million-plus deal."
- 11/29/02: Michigan Front Page (sister paper of the Michigan Chronicle) article entitled "WHS provides $10 million to Ford Hospital," which describes the parties' agreement, future goals for expanded purchasing opportunities, and includes a picture and quotes of then Henry Ford CEO Gail Warden ("Our relationship with WHS of Michigan is a great enhancement to our supplier diversity program.")
- 12/09/02: Letter from Trustee Member Rev. Dr. Joseph R. Jordan, Pastor of the Corinthian Missionary Baptist Church of Hamtramck, MI to Marilyn Hubbard (HFHS VP of Community Affairs), indicating: "There is still much that needs to be accomplished to enhance diversity, particularly in supplier diversity. There seems to be no one individual within the organization that possesses the necessary power to render immediate resolution to the existing problems."
- 12/12/02: "Supplier Diversity Report" of Henry Ford's Board of Trustees (just three days after Rev. Jordan's letter to Vice President Hubbard regarding "existing problems" at HFHS): Paragraph 3 of the Report's "Accomplishment Section" devotes two full paragraphs to describing the parties' agreement, and commends WHS for its community outreach.
- 12/15/02: E-mail from Jeanette Carney (Henry Ford) to Bob Johnson (WHS) and other HFHS and O&M officials congratulating WHS on a job well done, informing WHS of the 11/29/02 Michigan Front Page article and advising WHS of Board of Trustees extensive discussion about Defendants progress in implementing its landmark agreement with WHS.
- 01/01/03: WHS enters "Product Services Marketing Agreement" with Kimberly Clark Corp. at Henry Ford's direction: Services Agreement reconfirms Plaintiffs agreement with Henry Ford, and that WHS has agreed to use Owens & Minor to distribute products to Henry Ford.
- 01/12/03: Detroit News article entitled "Medical supplier aids others" that chronicles WHS' creation of a non-profit Fund administered by the Community Foundation for Southeastern Michigan to grow minority manufacturing in the healthcare arena, which will be funded by proceeds from the parties'agreement.
- 01/13/03: Letter from present CEO Nancy Schlichting to George Barnes of Heritage Optical (and the MMBDC) summarizing Henry Ford's broad" minority contracting efforts, including its landmark agreement with WHS for medical and surgical supplies ("MMBDC Companies that specialize in Healthcare, . . . that are doing business with HFHS: World Health Care Systems (medical/surgical supplies). The best opportunities for growth can occur in medical supplies (e.g., World Health").
- 01/14/03: PowerPoint Presentation for meeting between Bob Johnson (WHS) and Nancy Schlichting (Henry Ford) et al. regarding shortfall under the agreement and proposed plan for Henry Ford's improvement of its performance under the deal.
According to Attorney Rawle Andrews Jr., lead counsel for WHS, this lawsuit has consequences for society that are far greater than who's right and whos wrong in this case. "We have said all along that a deal is a deal, and we mean it. However, we simply must get past the point where our 21st Century mindset still places a higher value on Black athletics and entertainment over the academic achievement and professional advancement of African Americans and other minorities in this country. I certainly do not begrudge our entertainers their successes, but if we were talking about a contract dispute involving LeBron James' (NBA Rookie of the Year and Ohio High School graduate) and his $100 million sneaker deal, no one would bat an eyelash about the size or length of the agreement, or what motivated a decision not to pay," said Andrews, Chairman of Tennessees Andrews & Bowe, PLLP.
Attorney Andrews also remarked: "Bill Cosby can say whatever he wants about the plight of Urban America, but as long as people on both sides of 8 Mile Road or whatever rail road tracks that separate the city from the suburbs keep falling out of their chairs every time a Skip Reeder (CEO of WHS) or a Bob Johnson (Pres.,WHS-Michigan) starts talking about enforcing a $10 million/year deal they made with a non-profit, federally funded hospital system making $2 billion in yearly revenues, we are never going to solve the riddle of race relations in America or reach some understanding of the root causes for why Black folks are still sitting at the back of the bus when it comes to issues of equal access to patient care, and meaningful employment and minority contracting opportunities in the healthcare industry," Andrews added.
In addition to the contract claims, the WHS lawsuit also alleges that Henry Ford's motive for reneging on the supply deal was based on race. According to CEO Reeder, Detroit should have been an ideal proving ground for the growth of minority and women owned healthcare manufacturers and suppliers in the United States. "Although Detroit has the largest base of African American owned manufacturing companies in the world, we still have a long way to go in the fight for economic equality in this country. Healthcare spending is nearly $2 trillion in America but minority and women owned businesses take in less than 1/10 of 1% of the total health care dollars spent every year." Reeder commented. "Henry Ford had a golden opportunity to be an industry leader in eliminating artificial barriers and increasing supplier diversity in the health care sector, but they defaulted on their promises to us and now are denying we ever had a deal in court. Our word, our Brief and the attached Exhibits prove Henry Ford's defense is a sham," said Reeder. Although Henry Ford has denied the charges of racial discrimination as well, these claims apparently are not a part of its motion to dismiss on file with the Michigan federal court.
On August 6, 2004, U.S. Magistrate Judge Paul J. Komives heard arguments on Henry Ford's motion to shield documents from public view under a proposed blanket protective order. Following a lengthy hearing, the Court rejected Henry Ford's motion and entered a limited form of protective order as requested by counsel for WHS. Factual discovery will close in the case on September 16, 2004. The federal lawsuit is pending before U.S. District Judge Nancy G. Edmunds.
Contact Information:
Rawle Andrews Jr., Esq.
ANDREWS & BOWE, PLLP
Office: 202-349-3975
Fax: 410-510-1034
Email: ablaw2005@yahoo.com
URL: www.lobbylawfirm.com
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