(This story has been updated to add new information.)
MorseLife Health Systems in West Palm Beach is doing away with a pay arrangement that resulted in $35.9 million in compensation being paid to a company owned by the health care provider’s top executives during a four-year period, according to a June 4 email from Chairman David Mack.
In the email, sent to board members and donors, Mack said the non-profit senior living facility no longer will pay a firm owned by President and Chief Executive Officer Keith Myers and Chief Financial Officer Randy Wolan to handle MorseLife’s management.
Instead, the charity will pay these top executives directly, and the pay will be disclosed “in normal course filings,” Mack wrote.
The decision, Mack added, has been in the works and has been “progressing over the past several months.”
The announcement was made two days after the Palm Beach Post revealed that MorseLife had been paying millions of dollars to the executives through a for-profit company they owned called Amplifii Management LLC.
The Post article included comments by a donor who planned to stop giving to the non-profit, as well as a statement of concern by the Jewish Federation of Palm Beach County, which has funded a MorseLife entity.
Their dissatisfaction with the compensation arrangement stemmed from what they said was a lack of transparency about MorseLife’s finances.
MorseLife a fixture in community for decades
For decades, senior citizens and their families have turned to the high-end MorseLife for care. Founded in 1983 as the Jewish Home for the Aged, MorseLife provides health care, housing and supportive services for seniors living in its independent and assisted-living, rehabilitation and memory-care facilities, its website said.
The 52-acre campus is just south of the CACTI Park of The Palm Beaches.
In his June 4 email, Mack said the executives’ compensation no longer will be “directly linked to the organization’s revenue growth — which increased by an extraordinary 165% over the past five years.”
This link between MorseLife’s revenue and its executive compensation immediately raised eyebrows in the community. This was especially the case with sophisticated philanthropists and those who deal in the non-profit world.
Compensation based on revenue growth is a model used in for-profit companies, and it is not typically seen in charities, they said.
Amplifii was paid $10.3 million in management fees by MorseLife for the 2023 fiscal year, federal tax records show. MorseLife, a nonprofit institution, also paid Amplifii $9.5 million for the 2022 fiscal year, $8.4 million for the 2021 fiscal year and $7.7 million for the 2020 fiscal year, records show.
Myers owns more than 35% of Amplifii, and Wolan also is an owner, according to federal and state records. The arrangement between MorseLife and Amplifii was created in 2019.
It is not clear from tax filings exactly how much Myers and Wolan earned from the fees paid to Amplifii, or whether anyone else also received payment from Amplifii. MorseLife did not respond to questions about these amounts.
Revenue at MorseLife includes money from federal and state agencies, insurance carriers, foundation grants and private donations.
One donor who previously gave generously to MorseLife said on June 5 that he was outraged to learn the charity “used this elaborate structure to reward Myers and Wolan based on the amount of the money raised.”
The donor added that MorseLife already employs people whose sole job is to raise money for the charity. “Myers and Wolan’s job is to run the institution to fulfill its mandate,” the donor said.
Anonymous letter triggers MorseLife response
The controversy over MorseLife’s compensation arrangement began in January when an anonymous letter was sent to the leadership board at the respected health care facility.
The letter raised alarms about “excessive” executive pay, tax law compliance and potential for a whistleblower complaint.
The letter, sent to 52 MorseLife board members, expressed concern that the executive compensation arrangement could violate federal tax laws and Medicare regulations.
Federal tax forms, called 990s, require that charities clearly disclose expenses so donors and the communities they serve know exactly how money is being spent, legal experts told The Post.
But the anonymous letter said the issues at MorseLife were so grave that the charity MorseLife could lose its tax-exempt status. “We see it as a moral and legal imperative to protect our dedicated, hardworking colleagues, our donors, our patients, and MorseLife itself,” the letter stated.
The letter said its authors wanted to remain anonymous for fear of recrimination by MorseLife.
MorseLife’s Myers immediately responded to the anonymous letter. In an email sent Jan. 28, Myers told board members that the non-profit was looking into the “serious allegations.”
Subsequently, in April, board members were told by MorseLife representatives that the outsourced compensation was appropriate and a common practice among other non-profits.
Compensation experts interviewed by The Post said the arrangement is not common for non-profits.
Soon after the April meetings, about half a dozen board members announced plans to resign. Most of these board members did not respond to emails and texts from The Post inquiring why.
MorseLife requires its board members to sign non-disclosure agreements.
In a statement emailed to The Post in May 15, MorseLife said it had hired an outside lawyer to review the allegations in the anonymous letter. So far, the review has found the letter is “fraught with factual errors, incorrect assumptions and false claims,” the statement said.
The statement made no mention of Mack’s June 4 statement that plans to directly employ Myers and Wolan had been in the works “for the past several months.”
Mack’s June 4 email also did not explain why MorseLife decided to move away from directly compensating Myers and Wolan, as it used to do prior to 2020.
But the email did note that the findings of the independent review have confirmed that the claims in the anonymous letter were “entirely unsubstantiated, resting on distorted interpretations of policies, selective use of information, and a fundamental misunderstanding of how MorseLife operates.”
MorseLife touts ‘five-star lifestyle,’ but rents to rise?
The nonprofit touts its “five-star senior lifestyle,” which can cost residents several thousand dollars per month, depending on the level of care required.
Through the years, the facility has earned many accolades, including five-star ratings through the Centers for Medicare and Medicaid Services and the Florida Agency for Health Care Administration.
MorseLife’s services, including hospice services and home health care, are divided into nine nonprofit entities, with nine separate boards of directors.
But even as Mack touted MorseLife’s 165% revenue growth during the past five years, and Amplifii collected nearly $36 million in fees, expenses elsewhere remain an issue.
Residents living in at least one MorseLife building were recently told that monthly rents will rise 15% soon.
Anxious residents and their family members say they now face a quandary over whether to try to pay or find living space elsewhere.
With all the revenue pouring into MorseLife, “why do they need to raise the rent?” one source close to MorseLife said.
For the 2022 fiscal year, the entities combined totaled more than $175 million in gross receipts and about $300 million in assets, according to professionals who have tried to evaluate the charity’s finances.
MorseLife does not provide a total budget for all its combined entities, even though community members have asked for it so they can get a complete financial picture of the charity, according to sources.
MorseLife, open to patients of all faiths, practices Jewish traditions and is deeply tied to the Jewish community. This includes the Jewish Federation of Palm Beach County, which serves as the community’s “city hall.”
On May 9, the Federation said it was aware of the allegations involving MorseLife. In a statement, Michael Hoffman, president and chief executive of the federation, said at the time that “transparency and donor trust are essential to the integrity of all non-profit organization.”
He added the federation was hopeful that the letter’s concerns are being taken seriously and addressed in a timely manner “through a thorough, independent investigation.”
Following Mack’s email on June 4, Hoffman stressed the importance of MorseLife’s mission and the need for clarity in MorseLife’s finances.
“A community’s strength lies in caring for its most vulnerable, especially seniors and Holocaust survivors. Rooted in our values and responsibility, we are committed to providing essential services so older adults can age with dignity, security, and connection,” Hoffman said. “By upholding the highest standards of transparency and compassionate care, we ensure our seniors’ well-being remains our unwavering priority.”
Alexandra Clough is a business writer at The Palm Beach Post. You can reach her at aclough@pbpost.com. X: @acloughpbp. Help support our journalism. Subscribe today.
This article originally appeared on Palm Beach Post: MorseLife Health Systems in West Palm Beach will end payment to top executives’ company
Reporting by Alexandra Clough, Palm Beach Post / Palm Beach Post
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