Former hospital administrator defends $17M he was paid

Published 12:30 pm Saturday, February 15, 2020

The former administrator of a south Mississippi hospital is defending the $17.7 million that he and his wife were paid over a decade to run the facility.

Ted and Julie Cain are defendants in a civil lawsuit claiming they defrauded Medicare of $13 million for their work at Stone County Hospital.

The U.S. government joined the whistleblower lawsuit in 2015 to try the charges directly.

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The Sun Herald reports Cain’s testimony in his own defense signals a trial that has lasted three weeks is nearing an end.

If jurors find for the government, the Cains could be forced to pay $39 million, including the Medicare reimbursements plus triple damages.

A former hospital executive, James Aldridge, brought the charges, and would get a share of the money under the federal False Claims Act.

Cain testified Thursday that he earned the salary, which climbed to more than $1,000 an hour at one point. He said he has invested more than $30 million in the rural hospital, almost half in loan guarantees and the rest from his pocket.

“A good business decision?” he asked in response to a question from his lead attorney, former Gov. Ronnie Musgrove. “No, it wasn’t. I wanted to keep it open. I started it. I was committed to it. The community needs it.

Stone County Hospital had closed three times before he bought it in 2001, Cain testified. Without him, he said, the hospital, now leased to Memorial Hospital at Gulfport, would never have succeeded.
“By the time we got it, it had been closed almost two years,” Cain testified. “It was a mess. It was trashy.”

Cain gave tens of thousands of dollars to Musgrove’s campaigns, and served on the state Board of Health, denying rumors that he bought his seat. Cain was later forced off the board when lawmakers reconstituted it.

He said he hired his wife after other administrators quit, with Cain saying they weren’t used to running a small rural hospital.

“I ran out of options,” he said. “I talked her into it. Her first answer was, ‘No,’ but I insisted.”

He said revenue at the hospital tripled from $7 million in 2004 to $22 million or $23 million in 2011.

Cain’s company, Corporate Management Inc., received a management fee of up to 15% of hospital revenue.

Julie Cain preceded her husband on the witness stand.

“I am someone who gets on the floor and works with the employees . . . ” she testified. “I have rolled my sleeves up. I did what I needed to do.”

Julie Cain told U.S. District Judge Henry T. Wingate that she fired Aldridge, the whistleblower, after he ordered an employee to put a bucket above a ceiling tile in a patient room to catch leaking water. The bucket fell.

“He said, ‘If you fire me, you’re going to pay for this,’ ” Cain said. “I had my back up against the wall . . . I had to protect my staff and my patients.”

Wingate ruled Cain couldn’t testify about Aldridge because he’s not a witness in the case.