More Trouble For Tennessee Hospitals

F.J. Thomas

Knoxville, Tennessee (WorkersCompenstion.com) – Some health facilities may be hoping for a better year in 2020. Last month, WorkersCompensation.com reported on 11 hospitals that had filed for bankruptcy amid issues of mismanagement and allegations of fraud. According to a recent report from WVLT, a Tennessee hospital is having trouble meeting payroll for a third time this year.

Jellico Community Hospital, located in upper rural east Tennessee, was purchased by Rennova Health in early 2019. Just three months after the purchase, WVLT reported that the hospital was late in paying its employees for a second time. Additionally, the news station reported that employees had been notified that their health insurance had been cancelled due to non-payment of premiums even though the money had been deducted from their paychecks.

Earlier this month, WVLT again reported that employees had not been paid on time. The report also stated that, according to the station’s source, the hospital’s internet had been disconnected due to non-payment. WVLT was unable to obtain a statement from the hospital in response to the allegations.

This isn’t the first time Rennova Health has been under scrutiny due to alleged hospital financial woes. In 2018, the Florida-based company purchased Jamestown Regional Medical Center, located in middle Tennessee. A few months later on June 11th, Rennova appointed Michael Alexander as the new CEO of the facility. The next day on June 12th, federal Centers for Medicare and Medicaid Services terminated the provider agreements with the hospital. Three days later the hospital shut its doors. It was the only hospital in the rural county.

Newly appointed CEO Alexander indicated at the time that no one was aware that CMS was going to terminate the agreements and stop paying claims. In an interview with WATE, Alexander indicated a commitment to re-opening the facility. “Our commitment to the community is that we’re going to take that chance,” he said. “We’re going to do everything we can to be here and to provide care to the people that need it with the hopes that we will be reinstated and we’ll be able to recoup those payments for what we’ve done.”

In the aftermath of the sudden closure, WVLT reported that former employees alleged that the company did not send in Social Security withholding or taxes, resulting in some of the employees receiving audit notices from the IRS for unpaid taxes. WTVF also reported that the hospital had failed to pay liability insurance as well.

In an article in the Independent Herald, a CMS Report indicated that the facility owed more than $4 million to vendors that resulted in their inability to provide some health services. Originally the facility was set to close in mid-May; however a last minute diversion kept the facility open until June. Rennova acknowledged the decline in payments, citing a new billing service contract as a partial cause. The company issued a statement, ““We recognize that JRMC is an integral part of the community; we look forward to filling the health care needs of our customers and the long-term success of the hospital to serve the needs of the community”.

In August, a Federal contractor approved the hospital’s Medicare application. Rennova indicates that the reopening is on track, but it has not reported a target date at this time.

As the Jamestown hospital was in his district, Democratic Representative John Mark Windle called for an audit in light of the allegation made by former employees in June. Shortly after, Rennova CEO Seamus Lagan filed a $100K lawsuit against Windle for Assault Libel & Slander. The suit alleges that Windle called Lagan an “Irish gangster” during a television interview, according to reports from WBIR. The case is still pending.

The financial troubles have taken a toll on Rennova, resulting in the company’s late filings of financial statements which violated compliance regulations. According to reports from WBIR, last year’s reports revealed $13.6 million in losses from operations from the Jamestown hospital in 2018. In the year prior, the company reported an overall $50.1 million loss; however the improvement in reported loss were attributed to markup of the Jamestown property and other accounting changes. Additionally, at the end of 2018, the company reported only $7,000 in cash flow to operate, and had received a judgement for non-payment of rent at the Florida headquarters. Even with substantial losses however, Lagan received a half million dollar salary as the highest paid employee in the organization.

The company has since released un-audited 2019 financial statements on its website.

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