Two behavioral health care companies began laying off employees Friday, the same day the businesses dropped their appeal of a suspension from the state's Medicaid program levied because of bribery allegations made against their owner.
The layoffs at Trinity Behavioral Health Care and Maxus Inc. came about two weeks after the companies lost the ability to bill Medicaid, which had made up about 99 percent of their income, and after a recent attempt at selling the companies fell through.
Michael Scotti, a Chicago attorney who represents the companies, confirmed the layoffs on Friday. He said Trinity and Maxus will continue to operate, but he didn't yet know how many employees would keep their jobs.
"The final staffing I do not think has been determined, but there will be sufficient staffing to maintain license requirements so that hopefully in the future the companies can be relit and again provide Medicaid services in the state of Arkansas," he said.
Scotti said Ted Suhl had attempted to sell the companies both as one entity and separately.
"Unfortunately as of this time, there has not been a deal," he said, noting that he couldn't name the parties involved.
"Mr. Suhl and management know that the patients and employees are suffering because of this. They are very disappointed that despite their best efforts to prevail in the courts and in direct negotiations with DHS that they were unsuccessful," he added.
The two companies were suspended from the Medicaid program in October based on allegations made by Steven Jones, a former deputy director at the Arkansas Department of Human Services.
As part of a plea agreement with federal prosecutors, Jones admitted that he accepted at least $10,000 in cash bribes or other items of value in exchange for providing inside information from the Human Services Departments that benefited the owner of two mental-health companies.
After Jones' plea, the Human Services Department determined that Suhl, the owner of Trinity and Maxus, was the person Jones accused of paying the bribes. Suhl hasn't been charged with any crime and has denied wrongdoing.
Before the suspension, Trinity treated about 90 children at its Warm Springs inpatient facility. Maxus, which does business as Arkansas Counseling Associates, provided outpatient care to more than 2,500 Medicaid beneficiaries. Combined, Medicaid has paid the two companies about $23 million to $29 million per year since 2009.
Since October, the two companies have fought the suspension, saying that it would force them to go out of business before they could appeal the decision in violation of their due process rights.
But Friday, the two companies sent a one-page letter to Administrative Law Judge Vicki Pickering, asking that she dismiss the appeal of the suspension.
Little Rock attorney Charles Banks, who also represents the companies, said Friday that Suhl decided not to fight the administrative suspension after U.S. District Judge Kristine Baker declined to extend a temporary restraining order that had kept the Human Services Department from enforcing the suspension.
Baker's restraining order ran out Nov. 21, which allowed the agency to cut off Medicaid payments.
"When you analyze Judge Baker's order, it pretty much set a pathway that would make the merits of our administrative appeal less than what we'd hope for. We just made a decision ... to not spend the time, effort and money and the court's resources on a matter that we didn't think we could prevail on," Banks said, noting that the companies also won't appeal Baker's decision.
Amy Webb, spokesman for the Human Services Department, said Friday that the suspension will remain in effect while investigations into the allegations made against Suhl remain ongoing.
"We will check quarterly to see if there's still an ongoing investigation, and if there is, then the suspension will continue," Webb said.
Webb said that the agency's quarterly checks will be with the office of the Chris Thyer, U.S. attorney for the Eastern District of Arkansas; the state Office of the Medicaid Inspector General; and the attorney general's Medicaid fraud unit.
Webb said the agency would continue to work with patients of the two companies to find other providers if they choose.
So far, 50 Medicaid beneficiaries have been discharged from Trinity since the suspension. Of those, 40 returned to their homes, and 10 were transferred to residential treatment centers.
Thirty-five children remain at the inpatient facility. Eight of those are waiting to move to another treatment center where Medicaid will pay for their services.
Webb said the Human Services Department was still working to contact the parents of the other children to arrange for their transfer to other facilities if they choose.
Children at Trinity have been receiving free care since the Medicaid suspension went into effect.
On Friday, Scotti said the free care will continue until the children can be moved to other providers.
In the meantime, Scotti said the companies were still exploring a sale that would allow the companies to be reinstated to the state's Medicaid program.
"If the company was sold, that would allow the infrastructure and the employees to stay together to continue serving patients, assuming that that sale was approved by DHS and the new owner was able to bill for Medicaid services," Scotti said.
Webb said that in the event of new ownership at the companies, the department would make a decision on the suspension based on how the sale is structured.
But she noted if Suhl was employed in any position at the business, the suspension would remain in effect while he was under investigation.
Metro on 12/06/2014