Lawsuit accuses high-profile health care CEO April Anthony of stealing people, ideas from Encompass

April Anthony, founder of leading home health care company Encompass, is being accused of breaching her employment contract by secretly meeting with employees after leaving the firm earlier this year, resulting in five high-ranking executives joining her new competing venture.

Dallas-based Encompass Health, founded by Anthony in 1998, and Birmingham-based Encompass Health Corp., which trades on the NYSE and acquired Encompass Health in 2014, sued Anthony Tuesday in state court in Dallas.

The lawsuit accuses Anthony, 54, of Highland Park, of violating an employment agreement she signed in October 2019 that prohibited her, once she left Encompass, from recruiting away employees for two years or engaging in a competing business for a year.

The company wants those parts of her contract extended, arguing that Anthony was already breaking them while still at Encompass, said Dick Sayles, office managing partner at Bradley law firm’s Dallas office, which filed the lawsuit. In other words, the time frames would start over.

Anthony couldn’t be immediately reached for comment.

Anthony grew Encompass into one of the largest providers of Medicare-certified home health services in the U.S. before selling the company in 2014 for $750 million in cash and rollover equity in Encompass Health.

Since the acquisition, Encompass Health has grown its revenue from about $400 million a year to $1.1 billion, partly through acquisitions. That personally benefited Anthony, whose equity interest in Encompass Health was bought by the company, according to the lawsuit.

In total, Encompass Health paid Anthony more than $371 million between 2014 and 2020 to buy out her ownership interests, the lawsuit said. In addition, Anthony received over $7 million for serving as CEO of Encompass Health during that time period. She left the company in June.

Anthony’s acceptance of her “highly lucrative” compensation package also meant upholding the terms of her employment agreement, the lawsuit said.

“We’re just seeking to compel Anthony to abide by what she agreed to and fully understood,” said Sayles. “Agreements like this with high-level employees are standard and there’s nothing unusual in this agreement. We’re confident in our position.”

Sayles said non-compete clauses often extend up to five years. He described Anthony’s employment agreement as “lenient.”

Before exiting, the lawsuit said, Anthony was already meeting with employees and telling them she planned to engage with a competitor that was about to receive a $250 million investment each from herself and two private equity firms, Chicago-based The Vistria Group and Providence, R.I.-based Nautic Partners.

The new venture turned out to be Homecare Holdings, a Chicago-based home health business that competes directly with Encompass, the lawsuit said.

To lure employees away from Encompass, Anthony promised them equity interest in Homecare, which she told them would bring them anywhere from $4 million to $20 million within a few years, the lawsuit said.

Anthony took “extraordinary steps to hide her misdeeds,” according to the lawsuit, including asking an Encompass Health executive to use a spouse’s cell phone to contact Anthony’s spouse in order to speak. She told another employee that she would use a third-party recruiting firm to arrange an interview.

Five high-level Encompass employees have left for Homecare in the three months since Anthony’s departure.

Since May and June, former Encompass CFO Chris Walker and executive vice president of clinical services Janice Riggins resigned from Encompass to work at Homecare as the chief operating officer and chief clinical officer, respectively.

Both employees also signed employment agreements that included nonsolicitation provisions yet have tried to recruit Encompass employees for Homecare, the lawsuit said.

Walker and Riggins spoke to former Encompass vice president of integration Susan Stell, senior regional vice president of sales Bridgette Brown and regional vice president of home health operations Mishalene Nash, the lawsuit said. The trio recently resigned from Encompass to work at Homecare or its subsidiaries.

The exits by a group of top-tier employees caused Encompass to launch an investigation, the lawsuit said. “That caused some discussion internally, as you would imagine,” Sayles said.