A dental implant manufacturer is suing its late CEO’s widow, claiming her husband, who died last spring at the age of 44, hid his cancer diagnosis from higher-ups, leaving the company unable to train a replacement in time.
That’s according to a lawsuit obtained by The Daily Beast, which accuses Liran Hagbi, the former chief executive of Noris Medical, of having misled the company’s chairman regarding his condition.
“Towards the end of 2021, Zvika Genis, the controlling shareholder and Chairman of Noris Medical, noticed that Mr. Hagbi was not adequately performing his duties and appeared to be sluggish and inattentive,” states the civil suit, which was filed Thursday in New York State Supreme Court. “On several occasions, Mr. Genis asked Mr. Hagbi if he was ill or if there was anything affecting his ability to perform his duties. Mr. Hagbi responded to each inquiry that he was not ill.”
Genis “was, of course, concerned with Mr. Hagbi’s health and well-being,” the filing continues, “but was also concerned that Noris Medical should function effectively.”
His fears were apparently realized on April 28, when Hagbi passed away.
As a result of Hagbi’s “misrepresentations,” Noris was allegedly “unable to prepare for Mr. Hagbi’s death or transition other employees into his roles.” Following Hagbi’s death, the lawsuit says “employees decided to terminate their agreements, vendors took their business elsewhere and Noris Medical lost significant sums of money.”
Since Hagbi was a corporate officer, the filing argues, he “breached his fiduciary duty owed Noris Medical by failing to disclose his terminal illness… and by intentionally misrepresenting that he was not suffering from any illness.” The former IDF soldier kept quiet even though he “knew that the seriousness of the illness would impede his ability to work and significantly impact the business,” according to the suit, which Noris brought against Hagbi’s wife, Neta, as the administrator of his estate.
Hagbi lived in Manhattan with his family and took the reins at Noris Medical in 2019, leading the Nesher, Israel-based firm from its U.S. base in Las Vegas, Nevada.
“At the heart of our business is the idea of helping clinicians execute a predictable minimally invasive surgery,” Hagbi told Medhealth Outlook, a trade publication, during his tenure at Noris Medical. “Plus, provide the doctor with prosthetic options to complete a reliable prosthetic restoration for their patient.”
Harris Cogan and Amelia Clegg, the attorneys representing Noris, did not respond to The Daily Beast’s inquiries on Thursday. Emails seeking comment sent to Noris executives in Israel and the U.S. went unanswered. Neta Hagbi was unable to be reached.
Publicizing a key executive’s adverse health status can be a legal and ethical minefield, with “no specific rule or duty that requires disclosure,” according to experts. However, as attorneys Susan S. Muck, David A. Bell, and Michael S. Dicke wrote in a 2020 memorandum shared with the Harvard Law School Forum on Corporate Governance, “the general consensus of legal scholars and commentators seems to be that the CEO is legally obligated to inform the board generally about a serious medical condition so they can plan an adequate succession strategy.”
This duty, the trio asserts, extends to other company officials “who, if they thought the CEO was slipping in carrying out his or her duties, would have a duty to report a clear enterprise risk to the board if the CEO would not tell the board directly.”
In addition to allegedly hiding his cancer diagnosis, the lawsuit also accuses Hagbi of having embezzled “in excess of $700,000” from Noris Medical.
After Hagbi died last year, the company reviewed all the payments the former chief exec received while at the helm, Thursday’s lawsuit states. The audit allegedly found that Hagbi had authorized payments to himself in excess of amounts to which he was entitled,” including “greater compensation than he was entitled to, personal expenses which he submitted as business expenses, and payments for unauthorized expenses.”
Noris Medical’s lawsuit argues it is “against equity and good conscience” for Hagbi’s estate to benefit from his “unjust enrichment,” and is asking for damages “in excess of $700,000,” to be determined at trial.