Lawsuits Filed Over Closed Crittenden County Hospital (UPDATED)

The Crittenden Hospital Association was negligent in not paying the insurance premiums for an employee for nearly a year, an attorney alleged in a lawsuit filed in Crittenden County Circuit Court in Marion.

Also, a second lawsuit will seek to determine what happens with a local sales tax that recently passed to help support the now closed Crittenden County hospital.

In late August, the board of trustees of the Crittenden Regional Hospital (CRH) in West Memphis announced it would close its doors on Sept. 7 after “exploring all possible options with legal and financial advisors.”

A lengthy statement by the board said the decision was “difficult,” but the facility could no longer keep up with the changes occurring in the health care industry.

The board cited larger economic struggles, declines in patient volume, and lower reimbursements as significant financial pressures on the facility. It also said that despite being licensed for 140 beds, its occupancy rate was around 45%, one of the lowest in the Mid-South.

“The hospital’s financial struggles were further compounded by a significant number of physician departures and two recent fires, the most significant of which shut down the facility for more than six weeks,” hospital leaders said in a statement. “Even the expansion of Medicaid in Arkansas and impressive enrollment rates in the Private Option by citizens in the service area were not enough to overcome these issues.”

NEGLIGENCE, SUMPTER CLAIMS
Attorney Denny Sumpter of West Memphis filed a lawsuit Friday against Crittenden Hospital Association, hospital CEO Gene Cashman, hospital board president David Raines and CIGNA insurance on behalf of his mother, Deloris Sumpter.

The suit is seeking at least $75,000 in compensatory damages as well as at least $75,000 in punitive damages, the suit noted.

In the five-page filing, Denny Sumpter said his mother worked for the hospital for 35 years and that CIGNA became the third party administrator for the hospital’s insurance plan in early 2014.

“Sumpter and spouse participated in the plan. The plan required for Sumpter to share in the responsibility to pay a portion of the premium due to provide health coverage. CHA (Crittenden Hospital Association) was responsible for the remaining portion of the premium due to the plan,” Denny Sumpter, a former state representative, said in the suit. “(Deloris) Sumpter fully paid her portion of the premium due for health insurance coverage for herself and spouse. CHA knowingly and intentionally converted funds paid by Sumpter for her Spouse’s health insurance coverage when CHA utilized the funds dedicated for health insurance coverage for other means.”

His mother was not notified that the money would be used for another purpose, Sumpter said in the suit.

“CHA and CIGNA did not notify plaintiffs that the plan was not properly funded to insure the payment of their claims so that they could obtain insurance coverage elsewhere,” Sumpter said.

Sumpter said in the suit that he believes the actions of Cashman, Raines and the hospital were improper.

“The defendants … committed ordinarily and grossly negligent acts, intentional acts, acts of conversion and breach of fiduciary duties owed to the plaintiffs,” Sumpter said.

Sumpter is asking for a jury trial as well as attorney’s fees if the suit is successful. The case has been assigned to Circuit Judge Victor Hill of West Memphis.

Attempts to reach people at the hospital Monday for comment about the lawsuit were not successful. A phone number in Memphis listed for Cashman was disconnected, while Raines said he had no comment when reached by phone.

TAX DILEMMA
The suit was the second one filed in as many weeks in connection with the hospital.

State Sen. Keith Ingram, D-West Memphis, filed suit Aug. 28 in circuit court against the state Department of Finance and Administration.

Ingram is asking for a temporary restraining order to stop the collection of a one-cent sales tax for the hospital.

Crittenden County voters approved the tax in June and it was set to be collected later this year.

However, hospital officials announced last month that the collection of the tax would not have provided enough capital to help keep the hospital open.

An attempt to reach Ingram Monday about his suit was not successful.

Crittenden County Judge Woody Wheeless said Monday that the tax issue is in uncharted territory.

“I want it removed. But this is the first time in Arkansas’ history that someone is asking to remove the tax before the tax is collected,” Wheeless said, noting the issue will likely be settled by a judge. “We will follow the law accordingly.”

No court date has been set to hear the issue.

Wheeless said the county’s attorney and attorneys for the hospital are working on the issue.

Sen. Ingram offered a lengthy statement on his concerns regarding the collection of the local sales tax for the now-closed hospital:

“During the one-cent sales tax campaign the Committee to Save our Hospital responded to questions raised by the Quorum Court and others as to what would happen if the hospital was closed or sold.  The Committee responded that the tax would not be collected.

“In filing the petition, we hoped to stop the collection of the sales tax until such time as the voters could either repeal or extend the tax.  The earliest date for an election would be early December.  Otherwise, tax collection would begin October 1^st, and the county would have had two and one-half months or more of taxes collected to be used for a purpose that no longer exists.  Our state constitution prohibits a tax which is raised for one purpose being used for another purpose.  Also, I respectfully disagree with Judge Wheeless’s statement that the county would have been required to post a bond.  If a bond is required, it will not be one that the county would have to post.

“In conversations with the Department of Finance and Administration, they advised me they would need a court order prohibiting them from collection of the tax.  Otherwise, they would be legally bound to collect the tax until such time as the voters repealed or extended the tax.  I discussed this with County Attorney Joe Rogers, and I was advised that the county could not file an action to stop the taxes because, in essence, the county would be suing itself, that it would take a taxpayer’s action to get the order entered.  That is why I filed the petition and got the Ex-Parte order entered.

“My fear is if the county uses the taxes for any other purpose than to benefit Crittenden Regional Hospital, they are going to invite an illegal exaction lawsuit, and the county is also going to have the problem of figuring out how to refund these taxes.  More importantly, this goes completely against what we assured the taxpayers when they voted for this measure.  The ballot title clearly states that the adoption of a 1% 5-year sales tax shall be distributed by the county and used to repair, improve, renovate, equip, operate and maintain a hospital known as Crittenden Regional Hospital which is owned by the county and leased to the Crittenden Hospital Association.

“I am concerned that not honoring the commitments made during the sales tax campaign could negatively impact voters’ confidence in the future.

“It would seem to me that we would be well served if the county attorney, working with us, would agree to a temporary restraining order in the collection of the sales taxes until we can have an election to decide the wishes of the voters.”