VCU Health settles suit with chief of staff accused of stealing trade secrets

vcu childrens hospital

VCU Health’s Children’s Hospital of Richmond at 1000 E. Broad St. (Mike Platania)

The former chief of staff of the CEO of VCU Health last week settled a lawsuit filed by the hospital system, which accused him of stealing trade secrets and other confidential documents from the organization, before being fired in March after less than two years on the job.

VCU Health on March 27 filed the lawsuit in Richmond federal court against Nkanta “Nick” Hines, claiming misappropriation of state and federal trade secret and computer crimes statutes.

The suit alleged “hundreds if not thousands of (VCU Health’s) most sensitive strategy, compensation, and administrative documents” were wrongfully downloaded by Hines – misdeeds the organization allegedly discovered during an investigation of claims of sexual misconduct against him.

The two sides settled the case April 12, stating in court documents they had reached a confidential agreement, prompting the suit to be dismissed.

VCU Health, via email, declined to comment on the case.

Hines was represented by attorney Daniel McDaniel of Spotts Fain, who did not respond to a request for comment.

Hines was hired in June 2016 to serve as chief of staff to VCU Health CEO Marsha Rappley.

A press release announcing his arrival stated Hines previously held executive roles at the American Board of Internal Medicine, Fresenius Vascular Care and the Hospital Corporation of America.

As chief of staff, VCU states in the lawsuit, Hines had access to the organization’s “most confidential and proprietary information,” including access to Rappley’s email and attendance at high-level executive and board meetings.

The information available to Hines included short- and long-term strategy documents, agreements with vendors, employees and partners, c-level financial information and investigations and internal audits. Per its 2016-17 annual report, VCU Health has total operating revenue of $3 billion and around 12,000 employees.

“Hines’ role with VCU Health involved the highest possible degree of trust,” the suit states.

The events that led to the lawsuit allegedly began in February 2017, when the health system claims it received an anonymous tip that Hines was forced to resign from his previous job at another organization due to claims of sexual harassment and misconduct.

While investigating that claim, which it said it wasn’t able to confirm, VCU Health says it found that Hines was fielding outside consulting work through VCU email.

While Hines denied the sexual harassment allegations when approached by VCU, the suit claims a second, similar tip was later received. Hines allegedly told VCU Health he was the victim of an online smear campaign by a disgruntled blogger, and again denied the allegations.

But that second tip prompted another investigation, during which VCU said it discovered Hines was developing his own outside consulting business, Capital Strategy Group LLC, a defendant named in the lawsuit. VCU also claims Hines used his work computer to incorporate the LLC.

VCU alleges Hines in early 2018 took proprietary documents from the organization and began emailing them to his personal email as well as downloading them onto a USB flash drive.

In March 2018, a third anonymous complaint was allegedly received, claiming Hines was involved in sexual misconduct while employed at VCU Health.

Investigation of that third claim reportedly began to expose Hines’ “widespread sexual misconduct and ongoing relationships with current employees of (VCU Health),” and revealed his “extensive downloading and transfer of (VCU Health) trade secrets … on a much larger scale than previously suspected,” the suit states.

Hines then allegedly cut communications with his employer between March 9 and 12, during which VCU Health claims he “used that time to remove all documents and personal effects from his office and to continue to misappropriate trade secrets … in anticipation of his pending termination.”

The suit claims VCU Health fired Hines on March 12, and found his office almost completely empty that day.

Rappley then sent a cease-and-desist letter to Hines, demanding he return flash drives and documents. He complied, but VCU later claimed he did not return all the documents it thought were missing. That pattern continued, until VCU ultimately sued Hines to force the return of the remaining documents.

VCU Health claimed seven counts against Hines and six counts against his LLC, and sought unspecified damages.

The health system was represented in the case by Williams Mullen attorneys Craig Mytelka, Alexandra Gabriel and Dirk Lasater.

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Michael Dodson