Phoenix Rehab & Nursing Faces Another Lawsuit, City Awaits Financial Records

May 20th, 2014

(Carmi)-The City of Carmi continues to wait for financial information from Phoenix Rehab & Nursing, Inc. 

The skilled care facility owes the city approximately $500,000 in revolving loan fund payments and utility expenses. 

At the May 5th council meeting, aldermen instructed Administrator Lil Fortner to turn over general ledgers and related financial documents to City Attorney Greg Stewart for review.

Stewart told the council Monday that he received no information from Phoenix.  He did make the council aware of another lawsuit that has been filed in White County by Select Rehabilitation.

The therapy provider is seeking damages of $189,000 plus interest/attorney fees for alleged breach of contract.  Stewart says the complaint was filed on May 14th by a law firm in Chicago. 

The only additional item that Stewart could report was a phone call with former Congressman and SIU administrator Glenn Poshard.  He was instrumental in helping Phoenix secure state grants for the purposes of reopening a hospital in Carmi. 

Poshard had been contacted by his brother after media reports surfaced of the loan and utility delinquencies.   

Stewart said Poshard will be in Carmi on May 29th to speak to the Kiwanis Club.  He plans to meet with all of the “principal players” at Stewart’s office that day. 

“Unfortunately, I’m not sure there is anything that Glenn can do.  This is getting very legal.  It’s moving along at a pretty good pace.” 

“Again, the council is going to have to determine based upon the current status of the revolving loan the fact that we are about four years in default.  The fact that we are about $85,000 in the rears on utility payments.  What does the council wish to do?  To my knowledge, there has been no change on the liens or the judgments.  There has been a new filing.”

Alderman Keith Davis asked Stewart about the legal steps to turn off power to the facility on Webb Street.  Stewart had not researched the move.  But if the council wished to take that course of action, he recommended an orderly transition of 30-60-90 days so families could find new homes for patients. 

“We went through this back when Carmi Township Hospital closed.  The last thing I want to see is somebody hurt, injured, or die as a result of something that comes down to dollars and cents.  It’s not worth it.  That will be my opinion to you, no matter what the law says.”

Mayor Jeff Pollard said the community does need a hospital but the current situation is very disheartening.

“We are not the villains trying to close you down or trying to put people out of work.  We have been behind you 100 percent and tried to help.” 

“I think part of my frustration and Greg’s frustration is that we’ve tried to communicate with Phoenix.  We’ve tried to communicate with the board members.  They don’t seem to want to talk.  And things just keep getting worse and worse and worse.”

The rehab and nursing board consists of David Campbell, Fred Smith, Keith Hoskins, and Cindy Conley.  None of the rehab and nursing board members attended Monday’s council meeting.  Dr. Zahid Saqib and Angie Helsel of the Foundation Board were present.   

For her part, Fortner said Glenn Poshard would try to accelerate the issuance of Medicaid monies.  She added Poshard is willing to work with Phoenix and the city to bring emergency medical services to the county.  She requested additional time to resolve the financial issues.

“Dr. Poshard and I need time to share information within the requirements of HIPAA.  That is one of the things that has held us back on just laying out our general ledger.  When we began to review the records all through our general ledger, we have named names.  We are not to do that and disclose it outside our building.”

Fortner said auditors are currently compiling data for the city to review.  But the process has been slow. 

Fortner produced a one page fact sheet from the Healthcare and Family Services Department.  The letter stated the facility was owed approximately $1,477,440.20 in pending payments.  This amount is prior to any outstanding credit adjustments.

“Out of the $1.4 million that is owed, you owe $1.3 million.  That money goes straight out to get your bills caught up.  Where will your operating capital be?” asked Alderwoman Sheila Headlee. 

“We are a very small facility.  We can manage the working capital.” replied Fortner

“But you haven’t been the last two or three years.  What is going to change?” Headlee asked.

“Actually, it’s been within the last year that things started to go south.  Prior to that, we were holding our own.  But this last year has been very difficult for us.” Fortner responded.

“What has been the problem?” Headlee inquired.

“You know, I can’t even tell you that because I’m not entirely sure myself.  We are looking into it.  That’s why I brought my auditors in.  All disbursements are documented.  The issue is…I don’t have the answers yet.  That’s why I’ve called the auditors in.” said Fortner

The city is aware of $1.3 million in liens or judgments filed against Phoenix.  But Alderman Kenny Carter pointed out that additional suppliers could be owed. 

“This newest lawsuit is a service.  So any kind of supplier, we know nothing about.  I’m sure they aren’t getting paid either.” 

Carmi Township Hospital closed under mounting expenses in 2005.  Fortner was asked if history was repeating itself with Phoenix.  She said different issues have caused the delinquencies.  Namely, she said the state owes Phoenix $1.4 million. 

Stewart asked Fortner about possible credit adjustments, which could lower the payable sum.  She said the bed taxes would be owed.  But she was not aware of other outstanding credits. 

“You say you have a 5-star facility.  Obviously, you have good workers.  They are here…they care about their jobs.  The board seems like a good group of people.  So the common denominator that’s at fault…I hate to say is you,” argued Alderman Keith Davis. 

“The common denominator is that the state has not paid us,” replied Fortner 

“I understand that but you as an administrator over see everything.  So it is on your shoulders.  I’m not trying to be harsh but that’s the facts,” said Davis.

“And I’m sitting here today because of that,” admitted Fortner 

“So my question to you…you are asking us to work with you.  I don’t know if the rest of the council will… I’m speaking for myself.  Would you be willing to resign in all aspects with the company if the city is willing to help to keep this place open?” asked Davis 

“If I was able to do that and get this work done, I would have already done it.  I have been asked to stay.  I have told them as soon as we get all of this restructured on the monies that come from the state…we get the city paid first…and then the rest of the issues resolved…I have already asked my board to allow me to…I was not intended to be here this long.” 

“I came in here for one reason…that was to get a hospital based ER back online for this community and do whatever I could to make that happen,” said Fortner

Fortner said she was exhausted from working on the project.  She also admitted that mistakes had been made.  For example, Fortner said there was a point in time when the state was withholding funds because the paperwork was incorrect. 

“For that, all I can do is two things.  One, apologize for it…because I should.  And two, work diligently to correct it and put it in a situation where we can get someone in to run it without the hindrance of the past.  We are close to doing that.  But we need the Medicaid money to fulfill that effort.  Without money, we won’t be able to correct these issues and make everyone whole,” said Fortner

Alderman Davis said he spoke with two other facilities that have been receiving payments for Medicaid.  Fortner replied that Phoenix was one of the lowest Medicaid providers in the area.  Therefore, she said they were at the bottom of the payment list. 

Even if Phoenix receives the money it’s owed from the state and catches up on payments with creditors, Davis questioned the facility’s working capital going forward.

Since the last council meeting, the facility has lost 5 or 6 residents.  The current census is 23 patients.  Fortner said the public “laundering” of financial issues has harmed the facility. 

“When these issues are laundered on the front page of the newspaper and on the radio station, it is very difficult to garner confidence with even those people who have trusted us with their loved ones for all of these years.  We have been extremely successful in our patient care.  We have the best nurses, the greatest housekeepers, and the best dietitians that you can find in this region.” 

“We are an outstanding facility.  I’m very proud of the work our staff does.  But this kind of laundering out on the front porch harms them as well as us.”

The council replied that all of the information is public record.  City Attorney Greg Stewart accepted responsibility for bringing the issues to light in open session.  But he felt the taxpayers had a right to know what was transpiring. 

“When a business is dying, which is what you may be watching here…creditors line up.  It’s like watching people come to the casket.  I’m watching people walk up and they are creditors.” 

“Once those creditors walk up and see bad things happening, they want a piece of the action.  What happens next?  It scares the people you do business with.  Those people say…well I can’t do business with you anymore because I’m not really sure that you are going to deliver the product.” 

“That scares the employees.  The employees get scared and they have families to feed so they are getting ready to head out the door.  I’ve watched it.  The city can’t do anything about that.  The creditors are lining up.”

Stewart said the city’s options were limited.  The council could opt to file a foreclosure case.  But it would take months to move through the system.  Plus, Stewart said the creditors are already lining up.

He also told the council that they will have to decide whether a hospital is viable or not. 

“We’ve waited and we’ve waited and we’ve waited.  I’ve watched.  A hospital E-Room is a money loser.  I’ve worked with Welborn and Deaconess through the years.  You know why they wouldn’t come over here and do anything?  They said a hospital wasn’t viable.  I hope they are wrong.  But so far I haven’t seen the facts to say that they are wrong.  It bothers me.”

Fortner discussed the viability of the hospital.  She mentioned compartmentalizing the building and additional revenue from ancillary services.  The hospital would include 10 beds and an emergency room.

She estimated the project was 80-90 percent complete.  However, the building has set idle for several weeks or months, depending on who you ask. 

Dr. Saqib said the project was too important to abandon at this late stage.  He would like the financial house in order before Phoenix begins to solicit donations for the hospital completion.  

Dr. Saqib also said Fortner had too much on her plate.  She requested help in the past to run the facility.  Dr. Saqib said the board should have given Fortner a CEO to run the skilled nursing facility so she could work on the hospital.  He encouraged the council to look at the positives (i.e. Phoenix Nursing was opened).

Pollard reiterated the city had no answers for the state on the revolving loan fund.  Davis said the delayed payments have affected how much money the city could offer to other businesses.

Another update on the facility is expected after city leaders meet with Poshard on May 29th.  

Read previous story here.