University administration is deferring to the Board of Trustees as it considers how to respond to a court decision in December that found fault with the business dealings of board chair April Anthony in her creation of a new home healthcare company four years ago.
A Delaware Court of Chancery last month ruled in favor of Encompass Health Corp. in a lawsuit against two venture capital firms and their leadership. Anthony was not named as a defendant in the lawsuit, but the court said her actions in working with those business partners in 2020 and 2021 to help create a new home health company while she was still CEO of Encompass Home Health amounted to a “breach of fiduciary duty,” a legal term for violation of the duty a corporate officer owes to her company. The 114-page judicial opinion said Anthony redirected acquisition opportunities, misappropriated confidential information and solicited Encompass employees to join the new company. According to the judge, Anthony’s actions violated her non-compete agreement with Encompass when she began building a new home health and hospice company with private equity companies Vistria Group and Nautic Partners.
The lawsuit was filed by Encompass and the home healthcare division spun off in 2022 called Enhabit Home Heath, formerly Encompass Home Health, the company founded by Anthony. The case went to a seven-day trial in late 2023, and the court’s decision and opinion were released Dec. 2, 2024.
The Delaware court decision ordered the investment companies to pay 43% of profits from VitalCaring Group, Anthony’s new home health company, and $1.62 million in mitigation damages to Enhabit. The judge also ordered VitalCaring to pay Enhabit’s attorney fees in the litigation. The decision received substantial media attention across the country last month in such publications as Axios, The Wall Street Journal, Bloomberg News, D Magazine and The Dallas Morning News.
Dr. Phil Schubert, president of the university, said the board is aware of the complexity of the case and the highly technical issue of non-competes and their enforceability and is still considering its response. The board will meet on campus this weekend.
“I think what the board generally is trying to do is understand specifically the things that are most relevant out of those court proceedings, as well as gain perspective from April in terms of her sharing things that would help provide more clarity with regard to what’s been written,” Schubert said.
Under the university’s governing structure, the Board of Trustees selects any new board members as well as its chair. The board has direct oversight of a single university employee, the president. And the president and others in the administration play no part in board member selection. Schubert said Anthony’s partners are considering an appeal.
Longtime Ties to ACU
Anthony, who graduated from ACU in 1989 with a degree in accounting, bought and owned her first business at age 25. She founded Encompass Home Health and Hospice in 1998, and it became one of the largest providers of Medicare-certified home healthcare services in the nation. Anthony sold controlling interest in the company in 2004. A decade later, she sold the remainder of the company to Birmingham-based HealthSouth Corp. for $750 million, staying on as CEO of Encompass Home Health until 2021. In 2022, she was named CEO of VitalCaring.
Anthony’s creation of Encompass contributed to her personal success, including her rank at #45 on Forbes’s list of America’s Richest Self-Made Women, which ties her with music star Beyonce Knowles. Forbes magazine estimates her net worth at $760 million.
ACU’s 2018 Alumna of the Year, Anthony has been a longtime supporter of the university. In 1998, at age 32, she was named to the university’s board of trustees and became the board chair in 2018, succeeding Dr. Barry Packer. According to her Forbes profile, Anthony and her husband, Mark Anthony, have donated $57 million to the university, a portion of which has gone toward the construction of several campus facilities as well as student scholarships. The Anthonys are credited with providing $15 million in funding for Wildcat Stadium, home to Anthony Field, as part of a $30 million gift in 2017. Bullock Hall is named for her parents and her brothers and their wives.
The Lawsuit
According to the Encompass lawsuit, Anthony partnered in 2020 with the venture capital funds and their leadership to begin an effort to repurchase and regain control of the company she founded. According to the lawsuit, Anthony and her financial backers offered as much as $3.6 billion for her former company. Over time, that effort did not pan out, so she began conversations with the venture capital firms to form a new company, according to the court decision.
The judge in the case said Anthony sought out acquisitions to the new company, which breached fiduciary duties to Encompass, of which she was still CEO. The decision highlighted efforts to keep the investment group’s plans secret with the use of clandestine meetings, messages passed through spouses’ phone numbers and screen sharing. It also said that Anthony’s business partners used code names for her in communication, such as “Voldemort” and “our Idaho friend,” to conceal Anthony’s participation.
“Anything like this is always serious, and I think what we want to do is exercise great care and discretion and act appropriately, not rushing to judgment, but being thoughtful, considerate and supportive in the way we navigate this,” Schubert said.
The lawsuit also highlighted actions by Luke James, a 2004 graduate and a member of the university’s Board of Trustees who served as chief financial officer of Enhabit. April communicated with James about joining the new company, and the Delaware court said they took “great pains” to hide their misconduct, and did so knowingly.
Despite the lawsuit, Schubert highlighted Anthony’s longstanding support for the university which he said should not be overlooked.
“The thing to remember is that April has given over 20 years of dedicated service to this university, and a significant number as chair of our board, and [she] has been an incredible leader and has been incredibly generous to ACU,” Schubert said. “That counts for a lot.”
Schubert said regardless of the case’s outcome, he knows Anthony is committed to the university.
“When you actually are in a leadership role with somebody like April, and you observe the character and the commitment that she and her family have exhibited to ACU, you’re not going to quickly just toss that out the window and make judgments off of a highly nuanced, highly complex legal proceeding in a state like Delaware.”
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