David Cox, who in 2002 supplied information to government investigators about a multimillion dollar scam by Vermont hospital administrators, has been hired to serve as the chief financial officer of the Marin Healthcare District.

The district is preparing to regain control of Marin General Hospital from Sutter Health beginning June 30, 2010.

Cox, 55, has been signed to a one-year contract that will pay him a base salary of $275,000 and provides for a performance bonus that could amount to as much as $55,000. The bonus will be paid at the discretion of the district's executive director, Lee Domanico, who hired Cox and determined how much to pay him. Domanico is paid an annual base salary of $450,000.

The contract also gives Cox up to $55,000 a year to purchase his own health care insurance and $10,000 to cover the cost of moving from Connecticut. He has leased a house in Kentfield.

Cox, who has already worked as a consultant to the district for several months, will serve as the liaison between the district and Dallas-based Affiliated Computer Services Inc., which is installing a new computer system to replace's Sutter Health's system at Marin General.

Cox is a graduate of Loyola Marymount University and has a masters in business administration from the University of Dayton. He has held finance and management positions with many health care related businesses during his career, including Sutter Health from 1982 to 1996, Fletcher Allen Health Care in Burlington,

Vermont and St. Mary's Health System in Waterbury, Conn. Most recently, he was the chief operating officer and chief financial officer for Louisiana-based Townsend Health in Florida.

It was while he was employed as chief financial officer at Fletcher Allen Health Care, a private nonprofit hospital, when Cox became embroiled in what prosecutors later described as a conspiracy by top Fletcher Allen administrators to lowball the building costs of a large expansion project on the hospital's campus. The so-called Renaissance Project included an expanded emergency room, a new birthing center and a parking garage.

Vermont's Department of Banking, Insurance, Securities and Health Care Administration, whose approval was necessary, OK'd the project at a cost of $173 million.

But according to papers filed in the subsequent prosecution of Fletcher Allen administrators, the hospital kept two sets of books: one for presentation to state regulators and one for themselves that outlined the true cost of the Renaissance Project. The project ended up costing about $364 million.

"This was the biggest project in the history of the state," said Jeanne Keller, a health care watchdog who runs a Burlington-based advocacy and consulting group. Keller helped expose the Fletcher Allen scandal.

Cox says William Boettcher, who was Fletcher Allen's chief executive at the time, fired him in July 2001 when he refused to take part in the scheme.

"I feel like I'm completely innocent," Cox said.

Nevertheless, Cox pleaded guilty to making false statements to health care regulators, a misdemeanor. He forfeited $25,000 and contributed 100 hours of community service to make restitution.

Boettcher, who pleaded guilty to conspiring to defraud a state regulatory agency, was sentenced to two years in prison and had to repay $733,000 to Fletcher Allen. The hospital's senior vice president at the time pleaded guilty to conspiracy charges, and Fletcher's chief operating officer pleaded guilty to three state charges of making false claims.

"It's hard to tell how long he was aware of what was going on," Keller said of Cox's role in the cover-up.

Keller said she is the one who suggested to investigators that they contact Cox after he left Fletcher Allen. Keller said Cox signed a nondisclosure agreement when he left so he couldn't talk to the press without forfeiting his severance package. But she said he was very forthcoming after investigators subpoenaed him, despite threats from Fletcher Allen lawyers.

"He not only spilled his guts for eight hours in his deposition but when they sent the transcript to him to make corrections, he added things to it that they hadn't asked him. He was incredibly forthcoming," Keller said.

"Really, his deposition blew the lid off the thing. He was a real hero for that," Keller said. "The hospital's entire board of trustees ended up resigning at the request of the governor."

Domanico said, "He fully disclosed this. I knew about it up front before he ever came in. He's the right guy for the job."

Larry Bedard, chairman of the Marin Healthcare District board, said, "I personally think there is some smoke but absolutely no fire there."

Contact Richard Halstead via e-mail at rhalstead@marinij.com