Welltower lawsuit 'completely inexplicable,' HCP executive chairman says

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“I continue to be very disappointed and, frankly, dismayed ... that Scott is having to go through this situation, but he'll get through it," HCP Executive Chairman Michael McKee said.
“I continue to be very disappointed and, frankly, dismayed ... that Scott is having to go through this situation, but he'll get through it," HCP Executive Chairman Michael McKee said.

Healthcare real estate investment trust HCP still expects Scott Brinker to join the company in January as executive vice president and chief investment officer, despite allegations from his former employer, Welltower, that he violated the terms of his separation agreement by entering into discussions with a competitor, HCP Executive Chairman Michael McKee said Tuesday during a second-quarter earnings call.

McKee called the lawsuit “completely inexplicable.”

Toledo-based Welltower sued Brinker May 15, the day Irvine, CA-based HCP announced that he would join the company on Jan. 4, 2018. Brinker had left Welltower Jan. 3 after having worked there since July 2001 in various investment and portfolio management-related capacities, most recently as EVP and CIO. The REIT subsequently filed an amended complaint in July, claiming that Brinker forwarded confidential Welltower documents to his personal email account before leaving the company.

“I continue to be very disappointed and, frankly, dismayed as the process works out and, as we know the facts better than most, that Scott is having to go through this situation,” McKee said, “but he will get through it.”

Similar to comments that HCP President and CEO Thomas Herzog had made to McKnight's Senior Living in May, McKee told earnings call participants that HCP's legal counsel had reviewed Brinker's noncompete agreement “very carefully, line by line” and set up processes and procedures to respect Brinker's relationship with his former employer.

“When we started the interview process, we wanted to protect him from the situation that he finds himself in now,” he said. “And so we indemnified him from any liability arising from us extending the offer and him accepting it. That doesn't include any bad acts that he might have taken, if he did, in terms of exiting his employment. But it does cover some of the litigation costs here, and maybe all of them, protecting himself from this lawsuit, as long as there's no merit in the lawsuit.”

McKee said the legal action may mean that HCP incurs some “immaterial cost” related to hiring Brinker, “but we think that is a cost that we were willing to bear to bring what we think is a very special person onto our team.”

A trial date has been set for November, McKee noted, adding that Brinker has brought a countersuit for malicious prosecution and defamation.

“There is a pretty good basis, it appears, according to the lawyers,” McKee said. “That's not just a frivolous counterclaim.”

Welltower is seeking to be reimbursed for the millions of dollars that it paid Brinker in severance pay if it wins the legal battle, which McKee said is unlikely.

“As far as we can tell, there is no ‘there' there,” he said.

As part of the employment offer extended to Brinker, however, he said, HCP will “make him whole for that” if Welltower wins.

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