Former Encompass Health Corp. CEO April Anthony violated her employment agreement and stole trade secrets when she secretly recruited employees to join a competing home health business that she left Encompass in June to lead, according to a new lawsuit filed Tuesday in Dallas County.
The lawsuit, filed by Dallas attorney Dick Sayles of Bradley Arant on behalf of Alabama-based Encompass Health and its holding company, EHHI Holdings, asks the court to award Encompass a temporary injunction that would bar Anthony from further violating her employment agreement, which included a nonsolicitation provision.
Moreover, the lawsuit alleges, Anthony tried to hide her conduct, including talking to employees through spouses’ cell phones, getting a third-party recruiter to do her recruiting bidding for her and pulling the strings behind an operation to acquire Encompass Health’s confidential standard operating procedures manual and policies and procedures in a restaurant parking lot.
“She had a contract with a covenant not to compete and not to solicit that was heavily negotiated, and she knew what she was entering into,” Sayles said. “These types of agreements are standard in this type of industry for a level of executive such as her. So the fact that she would do any of the things we have alleged is disappointing and stunning.”
Anthony, who resides in Dallas, did not immediately respond to a request for comment.
The lawsuit comes on the heels of at least five departures of high-ranking Encompass employees who followed Anthony to Homecare Holdings after her June departure.
Anthony founded Encompass, a home health and hospice business, in 2004. The company grew over the years primarily through acquiring small, local operators. Today, Encompass Health provides integrated post-acute healthcare services, offering both facility-based and home-based patient care. The company’s footprint includes 144 hospitals, 249 home health locations and 95 hospice locations in 42 states and Puerto Rico.
In 2014, HealthSouth Corporation bought Encompass from Anthony and her co-owners for $750 million. She agreed to stay on as CEO, and signed a five-year employment contract with the company Nov. 23, 2014. She signed another contract on Oct. 7, 2019, which included a nonsolicitation provision, a noncompetition provision and an agreement to “devote substantially all of her working time and efforts to the business and affairs of Encompass Health,” the lawsuit says.
All in all, the company has paid Anthony more than $371 million — including three put options Anthony exercised after the 2014 acquisition, according to the suit. Forbes estimates Anthony’s net worth to be at $760 million.
“In exchange for her significant compensation and the opportunity to continue as CEO, Ms. Anthony made a number of promises in the senior management agreement. … Ms. Anthony did not keep these promises,” the lawsuit says.
The case landed in Dallas County District Judge Kristina Williams’ court.
“I think this lawsuit and others like it are putting industry and corporate executives on notice that doing the right thing is not only the morally correct thing to do, but it’s legally required,” Sayles said. “I’m confident in the allegations we made in the petition and look forward to bringing it to the judge.
Encompass Health’s legal team from Bradley also includes associate Lane Webster from the firm’s Dallas office and partners Matthew Lembke and Dylan Black from the firm’s Birmingham office. Wachtell, Lipton, Rosen & Katz partners William Savitt and Sarah Eddy are also on Encompass Health’s legal team.