Ex-Rothman CEO says he was fired and ‘perp-walked’ out the door for whistleblowing

The former chief executive officer of Rothman Orthopaedic Institute, Christopher T. Olivia, is suing the Philadelphia-based physicians’ practice, saying he was wrongfully ousted after he blew the whistle on financial mismanagement.

The civil lawsuit alleges that shortly after Olivia became CEO in April 2021, he uncovered “many financial improprieties” at Rothman, which describes itself as the nation’s largest orthopedics group.

Olivia also contends Rothman’s leadership deceived its young doctors, who invested millions in the practice, in order to further enrich senior shareholders.

Olivia says he received a terse email firing him and building security “perp-walked” him out of the Center City headquarters in March — just hours after he requested “a truthful financial report” from the practice’s accounting department to give to Rothman’s board of directors. He then warned board members about what he viewed as an urgent financial crisis and “the need to cease the fraudulent practices,” according to the suit.

“Rothman’s reputation for orthopedic excellence is second to none,” the suit states. “But underlying this sprawling orthopedic empire is a decayed and — in many instances — corrupt financial management infrastructure.”

Olivia says Rothman violated New Jersey’s Conscientious Employee Protection Act and Pennsylvania’s wage payment and collection law. He is seeking unspecified financial damages for breach of contract and other legal complaints.

Rothman spokesperson Alexandria Hammond and Philip G. Kircher, a lawyer for Rothman, declined comment on Thursday. Olivia’s lawyer, George Bochetto, also declined to comment on the lawsuit, which was filed Oct. 9 in Philadelphia’s Court of Common Pleas. It was first reported by legal news site Law360.

The lawsuit follows another high-profile court case this year revealing concerns about how Rothman runs its practice. The Inquirer reported in May on dueling lawsuits filed by John Abraham, a former Rothman surgeon, and Jessica Phillips, a former medical resident in orthopedic surgery. Abraham and Phillips accused each other of sexual misconduct and each faulted Rothman’s handling of their concerns, a May 2023 Inquirer investigation found.

Olivia says he was hired by Rothman to take the practice “to the next level” after years of financial mismanagement. It quickly became apparent to Olivia that leadership had failed to invest in the Philadelphia practice for years, including in MRI machines that regularly broke down, the lawsuit says.

Rothman’s expansion in New York, announced in 2017, struggled to turn the profits it had anticipated. Olivia says the New York practice had lost about $5 million a year, but he helped it “near breakeven” in 2022, according to the suit.

Olivia’s lawsuit names multiple Rothman entities as defendants, including its parent company, Reconstructive Orthopaedic Associates, which runs more than 50 orthopedic practices with roughly 1,800 employees, in Pennsylvania, New York, New Jersey, and Florida. The suit also names prominent Rothman board members.

Because Rothman is privately owned, little is known about its ownership and finances. Olivia’s complaint says the company has about $400 million in annual revenue from its core operations and is owned by 90 physicians.

Olivia, an ophthalmologist who lives in South Jersey, was Rothman’s CEO from April 2021 to March 2023. In the suit, he credited himself with overseeing an increase in the average payout to physician shareholders from $817,000 in 2021 to $977,000 in 2022.

But Olivia’s lawsuit against Rothman paints a picture of a company with weak financial controls that was heading toward a financial crisis at the end of last year. Olivia says he warned the board that shareholders should expect a significant reduction in fiscal 2023 payments.

He says the board refused to address looming financial troubles, such as unfunded obligations to retired doctors, heavily indebted real estate holdings, and a “serious decline” in Rothman’s recruitment of new physician shareholders.

Rather than tackling the problems, the board blamed “rising overhead,” despite the fact that Rothman’s overhead was “well below” the industry average, according to the complaint. In 2022, the board went against Olivia’s advice and shifted the burden of overhead costs to lower-earning, mostly younger doctors, according to the suit.

Olivia alleges that the board’s actions cost him more than $10 million. That figure is likely based in part on Olivia’s claims to an ownership interest in a holding company that Rothman created for the company’s national expansion, including businesses in New Jersey, New York, and Florida.

The lawsuit says that at the time Olivia was fired, a Florida hospital was offering $150 million to $200 million to help pay for Rothman’s expansion.

Olivia, whose annual salary was scheduled to rise to $3.8 million after three years, says in the suit that he was entitled to a multimillion-dollar payout if Rothman were sold.