Worth $1,000 an hour? Ted Cain testifies he rebuilt rural hospital that closed three times.
Ted Cain started his first business when he was 10 years old and has worked long hours since then, the 66-year-old told a jury in federal court Thursday.
Cain was on the stand to justify the salary of $15.2 million that rural Stone County Hospital paid him from 2004-2013 for oversight, and the $2.3 million he paid his wife over the same period to serve as hospital administrator.
Attorneys representing the United States claim the Cains defrauded Medicare of $13 million, most of which represents their pay reimbursed by the federal insurance program for patient care. Assistant U.S. attorneys have spent about three weeks presenting their case in the civil trial.
If the government prevails in the case, the Cains could be forced to pay around $39 million, which includes the Medicare reimbursements plus triple damages. A whistleblower who originated the case, former hospital executive James Aldridge, would be awarded a portion of any money recovered.
Attorneys for the Cains and two co-defendants who are business associates have been putting witnesses on the stand for the past week. The defense is expected to wrap up with Cain’s testimony, followed by that of Tommy Kuluz, a co-defendant and chief financial officer at Cain’s management company, Corporate Management Inc.
Cain said he earned the salary, which climbed to more than $1,000 an hour at one point. He also said that 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 was ‘a mess’
The hospital had closed three times before he bought it in 2001, he said, and the people of Stone County had no emergency room. “I’m almost positive people died because of it,” he said.
Without him, he said, the hospital, now leased to Memorial Hospital at Gulfport, would never have succeeded.
Cain said he was born and raised in Wiggins, where his father took in elderly veterans from the time Cain was 2 years old. The elder Cain eventually opened and operated nursing homes.
Young Cain acquired 48 chickens when he was 10 years old, he said, and started selling eggs. As a teenager, he helped out at his father’s first nursing home. He didn’t get the “plum” jobs, he said. Instead, he mopped floors, cleaned up patients and hauled garbage to the dump daily.
He said he always took to heart what his dad told him: “You can work 40 hours a week and pay your bills, but if you want to make money you’ve got to work more than that.”
By age 18, Cain was working as administrator at one of his father’s nursing homes. He eventually opened his own nursing homes and has started many other businesses, including Corporate Management Inc., which oversees at least a dozen of his companies and received a management fee of up to 15% of Stone County Hospital revenue for oversight.
“It was not a hospital at all when I bought it,” Cain testified. “By the time we got it, it had been closed almost two years. It was a mess. It was trashy.”
He said water from leaks had stained the walls. The halls were strewn with limbs and leaves.
He also had a hard time convincing the community the hospital would remain open and getting people to work there. He described his efforts to bring aboard physicians and staff.
He said he hired experienced hospital administrators. They quickly grew frustrated and quit, he said, because they were not used to running a small rural hospital.
Cain hires his wife to run hospital
He finally asked his wife, a nursing home administrator, to run the hospital, he said.
“I ran out of options,” he said. “I talked her into it. Her first answer was, ‘No,’ but I insisted.”
“ . . . There was no team,” he said. “There was no organization. It had to be built.”
He said revenue at the hospital tripled from $7 million in 2004 to $22 million or $23 million in 2011. Unpaid debt naturally increased, he said, because more patients meant more people unable to pay their medical bills.
The Cains’ salaries climbed, too.
Cain said he moved CMI’s offices to Wiggins so that he could be closer to the hospital.
Attorneys for the government and the whistleblower, who set off the federal investigation more than 10 years ago, will cross-examine Cain after Musgrove finishes his questions Thursday.
Julie Cain says she worked hard
Julie Cain preceded her husband on the witness stand. She said that her most important duty at the hospital was making rounds so she could check on patients, families and staff.
She said she hired physicians, approved contracts, updated policies and procedures, and performed other duties as hospital administrator.
During her hours-long testimony, the defense established her familiarity with many of the hospital’s employees.
“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.”
The whistleblower in the case, James Aldridge, worked as chief operating officer at the hospital for about two months, testimony has shown.
Musgrove wanted Julie Cain to testify in front of the jury about why he was fired. The presiding judge, Henry T. Wingate, said he would hear her testimony about Aldridge outside of the jury’s presence before deciding whether to allow it.
Once the jury was escorted out, Cain said she fired Aldridge over a potentially dangerous decision involving a patient. He ordered an employee to put a bucket above a ceiling tile in the patient’s room to catch water from a leak. The bucket fell.
Aldridge, she said, tried to blame and fire a subordinate. She fired Aldridge instead.
“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 that she could not tell the jury about Aldridge. He is not being called as a witness in the case, Wingate said, so his credibility is not an issue.
On cross-examination, Assistant U.S. Attorney Angela Williams asked Julie Cain about reams of paperwork the defense had submitted as evidence that she was on the job as administrator.
Williams was able to show some of the documents were unrelated to Cain’s job at the hospital and that she signed some paperwork that others had drafted. Williams also introduced emails showing that questions from managers were in some cases directed to Starann Lamier, the fourth defendant in the case and a former CMI manager.
Government attorneys maintain Lamier handled much of the hospital management work at CMI.
The attorney for Aldridge, John Hawkins, also cross-examined Cain. She told him hundreds of hospital employees would testify to her work ethic. If that were the case, Hawkins asked, why didn’t the defense call more of them to testify and why did only one of her five administrative assistants over the years take the stand to say Cain did her job?
Several employees, he said, testified that she was at the hospital less than 25% of the time.
Cain bristled. “I was never there 25% of the time,” she said. “I was there at work. I’m telling you, it’s untrue.”
This story was originally published February 13, 2020 at 5:00 AM.
