A financially struggling hospital that closed Monday because it could not pay $30 million in debt faces a lawsuit alleging that administrators withheld money from employees' paychecks for insurance but failed to pay the premiums for 2014.
Denny Sumpter, a West Memphis attorney and former state representative, filed the action against the Crittenden Hospital Association, which oversees Crittenden Regional Hospital in West Memphis; hospital Chief Executive Officer Gene Cashman; association Chairman David Rains; and Cigna, the third-party insurance provider for the hospital.
Sumpter claims in the five-page lawsuit that his mother, Deloris Sumpter, who worked in the hospital's medical records division for 36 years, was recently billed $28,000 for a medical procedure that her insurance should have paid.
His father, Roger Sumpter, also faces a bill of $100,000 for surgery that will not be paid by insurance, Sumpter said.
Cigna was named as a defendant because the company did not notify plaintiffs that premiums were not properly funded, the attorney said.
The attorney said he has spoken with about 50 other hospital employees who may eventually seek to be added as plaintiffs in the lawsuit.
"This is a clear case of money being taken from employees but not given to the third-party insurer," Sumpter said. "Employees are left holding the bag."
Cashman did not return telephone messages Tuesday.
Rains said he could not comment about the case and referred calls to the association's attorney, John Tishler of Nashville, Tenn. Tishler did not return a telephone message Tuesday afternoon.
The hospital closed Monday, saying it faced "insurmountable obstacles" despite voters passing a 1 percent sales tax two months earlier that would have helped fund the facility.
The tax would have begun collections in October, but Crittenden County Judge Woody Wheeless said county attorneys will ensure the tax is taken off the books.
In an Aug. 25 letter to Crittenden Regional Hospital's 400 employees, Cashman wrote that the sales tax, which was estimated to generate about $6 million to $7 million a year, was not enough. "Even with funds from the sales tax scheduled to take effect later this year, our situation is simply not sustainable as a business," Cashman wrote in his letter.
Administrators said earlier this year that the 150-bed hospital was losing $6 million a year as a result of an increase in uninsured patients, federal cutbacks in Medicaid reimbursements and doctors who either retired or moved to other health facilities.
Cashman estimated in June that the hospital was facing $30 million in debt. Cashman took over the West Memphis hospital in October 2012, after leaving a similar position with Select Medical Corp., a long-term acute-care facility in Columbus, Ohio.
The hospital closed for a month after a June 6 fire burned an unoccupied intensive-care room on the second floor. Water from the sprinkler system damaged floors, ceilings and walls, and workers spent the month replacing materials.
The hospital reopened July 18.
In the lawsuit, Sumpter is seeking damages, reimbursement for insurance costs and attorney fees.
"This has gone beyond unfortunate," Sumpter said. "This moves into the realm of wrongdoing. It's not bad management, this is breach of faith.
"Losing a hospital is devastating," he said. "Losing a job is devastating. But then the hospital left its employees with medical bills. More than likely, some [former hospital employees] will have to file bankruptcy on their own accord."
Sumpter said he filed his lawsuit to find answers to two questions -- who made the decision to forgo paying employee premiums and what happened to the money withheld from employees' weekly paychecks.
"This is big," he said. "I don't know how much it will end up being. Bills are still coming in, and some have had surgery within the last month and those bills will be coming soon."
State Desk on 09/10/2014