Leslie Newell Peacock reports on the uncertain future of Hope's hospital, a tangled story that includes a recent federal guilty plea by the hospital's owners related to another property in Texas:
Medical Park Hospital, which is a Level 4 trauma center with 79 beds, is the only hospital between Arkadelphia and Texarkana for people who live along the Interstate 30 corridor. It was purchased in 2008 by James A. Cheek, who was convicted with partner Herschel Breig in February for failure to pay $1.8 million in payroll taxes for employees at a bankrupt hospital they owned at Lubbock, Texas.
The letter was sent to Gov. Mike Beebe, Health Department chief Paul K. Halverson, U.S. Attorney Conner Eldridge, Attorney General Dustin McDaniel, 8th district prosecutor Christy McQeen, Sen. Larry Teague and Ann Roberts, assistant U.S. attorney in Lubbock, Texas. MPH chief of staff Dr. Dale Goins, vice chief and chief of pediatrics Dr. W. Ladell Douglas, chief of radiology Dr. Lawrence Bigongiari, emergency medicine doctor Dr. Paul D. Meredith, director of trauma and chief of medicine Dr. L. Joseph Parker, chief of surgery Dr. Andrew G. Szebenyi and chief of medicine and surgery Dr. Charles A. Vermont signed the letter.
The doctors wrote that they fear that a pattern they see in Cheek’s other operations — “purchasing, bankrupting and/or closing hospitals shortly after he becomes affiliated with or purchases them” — is being repeated in Hope.
“In recent months, the obstetrical unit was closed, layoffs have occurred, hospital employees have experienced delinquent paychecks or paychecks returned for insufficient funds, premiums on employee health insurance is not being paid, creditors and vendors are not being paid, property taxes have not been paid. In fact, MPH is scheduled to be certified to the State of Arkansas Commissioner of State Lands in May 24, 2012 for failure to pay property taxes. Presently, MPH owes some $3 million in unpaid federal and state employment taxes.”
Hospital executive director Marc Caton, who was hired by Cheek last June and is also the chief executive officer of Carraway Medical Systems, said the company is “working on all those financial issues.” (Carraway purchased MPH last year from Cheek company Shiloh.)
Cheek and Breig were indicted in Texas in August. Caton declined to comment on whether he knew his employer was facing indictment at the time of his hiring.
Doctors at the hospital, who would not speak publicly for fear of retribution, say they have concerns about use of insurance reimbursements. They cite problems with getting lab work done because of unpaid bills, and note the hospital recently limited its surgical service to weekdays only. They also believe hospital supplies have been shuttled to other, better functioning, hospitals.
Hope Mayor Dennis Ramsey said there has been concern about the future of the hospital for a couple of years, as rumors about a sale and knowledge of liens against the hospital and late payrolls have become known. The hospital is one of the largest employers in Hope, and the town has “a vested economic interest as well as health and welfare” interests. Ramsey praised the doctors at the hospital, citing a recent incident in which a friend in the emergency room got “treatment as good as you’d find anywhere.” But the cuts in staffing, including a pediatrician, an internist and emergency room physicians, have caused stress, he said.
Sen. Larry Teague of Nashville said that he doesn’t expect the hospital to sell at the upcoming Land Commission auction. “The whole dern community is frustrated. We know Hope can support a hospital … it may be the single greatest issue my district faces.”
Cheek and his brothers, Teddy and Wayne (now deceased), whose companies own hospitals in several states, have been cited in news stories about hospital shutdowns for several years. An Illinois newspaper reported in 2003 that James Cheek “has a track record of buying troubled inner-city hospitals and making them profitable by slashing jobs and asking creditors to write off massive amounts of debt.” That paper, writing about concerns about Cheek’s management of St. Mary’s Hospital in Belleville, noted that in 1989, Cheek, doing business as Gateway Medical Systems, signed a consent order with the Securities and Exchange Commission after the SEC cited him for violations of federal securities laws. Gateway Medical Systems had bought a hospital in East St. Louis that eventually had to close because of unpaid taxes and delinquent payments on bond debt.
In 2008, Cheek’s Shiloh Health Services took over a hospital in Plaquemine, La., and laid off half the 200 employees there. The hospital went bankrupt in May 2009.
Cheek and Breig were indicted in 2011 on charges of failing to pay payroll taxes to the Internal Revenue Service and one count of theft or embezzlement in connection with health care. A news release on the indictment said that between March 2006 to May 2008 “Breig and Cheek caused HMC to make thousands of dollars of expenditures for their personal benefit, while at the same time, failed to pay over to the U.S. payroll taxes withheld from HMC's employees' paychecks and failed to remit monies withheld from HMC's employees' paychecks for various employee benefits, including health insurance, dental coverage and group life insurance.” The indictment also alleged that the two embezzled $135,079 from Shiloh Health Services Medical and Drug Plans, by not forwarding employees’ premiums withheld from their pay. They agreed to plead guilty in February to one count of failing to account for or remit $337,470 in payroll withholding to the IRS. They are due to be sentenced this week.