Former UK HealthCare CFO accuses UK of contract breach, discrimination

University of Kentucky Hospital.
University of Kentucky Hospital.

The former chief financial officer of UK HealthCare has accused University of Kentucky officials of firing him in 2012 after he complained that he wasn’t being paid as much as other people in similar roles, according to a lawsuit filed Wednesday in Franklin Circuit Court.

Sergio Melgar was hired at UK in 2004 by CEO Michael Karpf, who was trying to turn UK HealthCare into a massive regional medical center. Karpf is due to retire this summer. Melgar was hired at a salary of $330,000 with an incentive plan that allowed him to earn as much as 20 percent of his base salary. By 2012, he made $479,000.

In 2010, the lawsuit says, UK gave Melgar a special incentive to encourage him to stay at UK. But in a 2012 memo to UK human resources, Melgar complained that he should have been making closer to $533,000, which was the average at like-sized institutions.

The lawsuit says that after he began to complain, his duties were reassigned. In February 2012, he made a formal complaint of discrimination and retaliation that was not addressed by UK. By August of that year, he was terminated, and UK “failed to pay him substantial sums owed, including but not limited to approximately three years of pay pursuant to his employment contract, bonuses, retention payments and benefits.”

The lawsuit also states that Melgar, who is of Guatemalan descent, was replaced with a non-Hispanic person. The lawsuit suit accuses UK of discrimination based on national origin and breach of contract.

The suit asks for lost pay and benefits, compensatory and punitive damages and attorneys’ fees.

Melgar, now the chief financial officer at the University of Massachusetts Memorial Health Care system, didn’t respond to calls for comment.

UK spokeswoman Kristi Lopez said UK would not comment on pending litigation.

Melgar’s was the second lawsuit filed Wednesday against UK. Former dental faculty Raynor Mullins said he was fired after criticizing Gov. Matt Bevin’s Medicaid waiver proposal. His lawsuit alleges that Bevin officials pressured UK to get rid of him after the comments.

Melgar’s complaint is just six pages, but his name was mentioned as part of another lawsuit against UK, that of UK surgeon Paul Kearney, who lost clinical privileges after a UK panel ruled that he was rude and unprofessional. Kearney contends that he was targeted only because he had questioned the financial dealings of UK HealthCare and Karpf.

In 2015, Kearney told the Herald-leader that UK has a pattern of “getting rid of people who speak out,” including Melgar. When asked about the matter, Melgar said then, “I believe that I was treated unfairly and I am trying to resolve that with the university.”

Linda Blackford: 859-231-1359, @lbblackford