DHS Sues Physicians Specialty Hospital for $1.75 Million

Arkansas Department of Human Services is suing Physicians’ Specialty Hospital LLC for nearly $1.75 million, claiming the Fayetteville hospital hasn’t been paying dues that most Arkansas hospitals must pay.

Act 562 of the 2009 Assembly requires Arkansas hospitals to pay an assessment to support access by Medicaid patients to acute care, said Brandi Hinkle, deputy director of communications for the state agency.

The amount the hospital owes is $873,173, according to the lawsuit. The state agency is entitled to collect twice the amount due, charge 10 percent interest and collect attorney fees, documents show.

The period in which assessments are due is between Dec. 10, 2012, and July 1.

“After some initial payments in 2013 and 2014, further direct payments from the hospital ceased,” Hinkle said.

The lawsuit was filed July 5 in Washington County Circuit Court. Circuit Judge John Threet is assigned to the case.

Little Rock attorney Robert B. Briggs is representing the state agency.

Fayetteville attorney John Everett, who’s representing Physicians’ Specialty Hospital, didn’t think the state agency would sue because he thought it understood the hospital’s position.

He explained how complex and unfair the act is to the hospital. It’s the only one in the state that pays more than it receives from Medicaid, Everett said.

As far as reimbursements go for other hospitals, Medicaid is “effectively writing a check” to them, Everett said. They get “a hell of a lot more back than they pay.”

Assessments that are collected from hospitals are redistributed to them based on the number of Medicaid admissions, Hinkle said. Therefore, some hospitals receive more reimbursements because they serve a higher number of Medicaid patients.

The state agency has recouped some of the amount due from Medicaid payments owed to Physicians’ Specialty Hospital, Hinkle said. “But the hospital admits so few Medicaid patients that offset of the arrearage in this way will not likely erase the arrearage any time soon.”

On April 1, Physicians’ Specialty Hospital became part of Northwest Health System when a subsidiary of Community Health Systems Inc. purchased a majority interest in the hospital; however, the health systems are not named in the suit.

Northwest Health offered this response in light of the suit: “Northwest Health System is not party to this litigation, which is related to activities prior to the acquisition of Physicians’ Specialty Hospital.”

When asked why neither Northwest Health nor CHS were named in the suit, Hinkle said, when the suit was filed, the hospital “had not updated or revised any ownership documents on file with DHS. Therefore, no other entity was cited in the suit.”

The physicians who previously owned the hospital are: Chris Arnold, James Blankenship, Dean Bright, David Cannon, Wes Cox, Dan Fulmer, Stephen Pirotta, Mark Powell, Terry Sites and Lloyd Trichell.

After the ownership change, the group now has a collective 20 percent interest in the hospital.