When the El Paso Children’s Hospital emerged from bankruptcy under the full control of the University Medical Center of El Paso (UMC), one of the first actions UMC needed to complete to take control of the children’s hospital was to replace the children’s hospital board. On January 2016, UMC appointed Ron Acton, Miguel Fernandez, Patrick Gordon and Ted Houghton to the children’s board. The new UMC-appointed board sealed the takeover by UMC of the El Paso Children’s Hospital and officially emerged the children’s hospital out of bankruptcy.
The following year, Ted Houghton made the announcement for the board appointing former UMC Chief Nursing Officer, Cindy Stout, as the new children’s hospital Chief Executive Officer (CEO). Houghton, in making the announcement, stated that Stout “will lead El Paso Children’s Hospital in delivering the highest quality of care.”
However, by mid-2019, text messages we reviewed under the Texas Public Information Act show that Stout was actively working to remove Ted Houghton from the board of the El Paso Children’s Hospital. The May 3, 2019 text message shows that Stout was looking to leave the El Paso Children’s Hospital and return to UMC as the Chief Nursing Officer for UMC, her previous job before accepting the CEO position at the children’s hospital, after she failed to have Houghton removed from her board.
According to the text message that Stout sent to Cintron, she was having a conflict with Taylor Moreno. Moreno is currently the El Paso Children’s Hospital and University Medical Center Foundation’s program director for community programs. Prior to working at the foundation, Moreno worked as the Program Director for El Paso Children’s Hospital from 2017 through September 2019.
As we previously reported, in a May 3, 2019 email exchange, Cintron and Stout discussed finding ways to have Moreno fired from the children’s hospital. In addition to looking for ways to terminate Moreno, Cintron and Stout accused Houghton of passing confidential documents to others.
The El Paso Children’s Hospital Board oversees the operations of the children’s hospital and hires and terminates the CEO of the hospital. It is the board that sets policy and procedures that the non-profit, including the CEO, follows. It is the responsibility of Stout to follow the board’s directives.
Texas Law On Board Governance
Because non-profits do not have shareholders, board members of non-profits may be removed from the board only by the other board members. Generally, the causes for the removal of board members include not attending meetings or actions taken by a board member that is detrimental to the non-profit.
In the case of Houghton, Stout alleged that Houghton was “telling” a third-party “what was occurring in executive session.” Generally, executive session discussions are privileged and can be grounds for removal from a board by the other board members.
However, in the case of the El Paso Children’s Hospital there is another issue to be considered. The children’s hospital, although a non-profit, is wholly controlled by UMC, a public entity. As such, the county commissioners who control UMC have indirect oversight of the children’s board activities through UMC. Thus, regulations and laws governing the activities of the children’s board and its CEO also fall into governmental oversight.
Texas law governs the removal of board members from entities like non-profits. The Texas Nonprofit Corporation Act (TNCA) states that a board member can be removed by the other board members for cause. Cause can be for missing meetings or rise to the level of criminal activity by the board member. Cause, in most cases, is defined by the non-profit’s bylaws.
Although Texas law generally addresses the removal of board members for cause based on the organization’s bylaws there remains the issue of the removal of a board member through conspiracy, which can be a criminal act. Conspiracy is defined as an agreement between two or more individuals who agree to commit a criminal act. Cindy Stout, as the CEO, does not have the authority to remove a board member from her board. The removal of a board member, in the case of the children’s hospital, can only be accomplished by its board or indirectly by UMC through its board appointments.
In the text message exchange, Stout admits to Cintron that she “did everything in my power to get” Ted Houghton “off the board but failed.” She wrote this to Jacob Cintron, the CEO of UMC, a public entity. Although Cintron does not confirm his participation in the attempt to remove Houghton from the board, he, nonetheless, does not seem surprised by Stout’s admission that she was doing “everything” in her “power” to remove a board member from her board.
Under Texas law, conspiring to remove a board member in bad faith can lead to criminal charges depending on the circumstances. Because Cintron is an official of a governmental body, his participation, if any, can lead to criminal prosecution as well.
The underlining question is whether Stout’s admission that she wanted to remove a board member was in “bad faith.” We asked Ted Houghton his thoughts on the matter as he was the target for removal from the board.
Ted Houghton Responds And Then Goes Silent
When we asked Houghton for his comments, he responded immediately by asking us for a copy of the text messages. After we provided a copy of the text messages to him, Houghton did not respond to our request for comments on the matter.
Houghton is no longer on the board. Because the El Paso Children’s Hospital refuses to release its board minutes under the Texas Public Information Act it is unknown when Houghton stepped down from the board.
Now that Houghton is aware of the attempt to remove him from the board of the hospital the question becomes whether he will pursue the matter. We will report developments as they become available.
El Paso News has been reviewing thousands of pages of documents released by the University Medical Center of El Paso (UMC). We will be following up with more information on UMC and the children’s hospital as more information becomes available.
Serious IRS fraud happening here.
Although it is possible for a 501(c)(3) organization to be established by a government agency (UMC) they MUST operate in a way that is separate and distinct from the government entity itself.
All these text messages suggest that Jacob is calling all the shots and that’s illegal.
Too bad she didn’t leave and allow somebody competent to take her place. If Ted really did think she was a bad CEO then he was right. She didn’t deserve to be given the CEO chair and she doesn’t deserve to sit in it now.
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