Ted Cain made millions ‘milking Medicare,’ federal lawyer says. A jury is about to decide.
A jury began deliberations Tuesday morning to determine whether husband and wife Ted and Julie Cain defrauded Medicare of $15.35 million, with help from two co-defendants, while heading Stone County Hospital from 2004 through 2014.
The trial entered its eighth week Monday with closing arguments.
At issue in the civil case are the salaries the hospital paid Ted Cain and his wife and how much work they actually did after he bought the rural facility in 2001. At one point, Ted Cain was earning $1,300 an hour for overseeing a rural hospital with a daily patient census of six to 10.
Attorneys for the United States who brought the case to trial say Medicare was wrongly charged $11.8 million over the years for Ted Cain’s hospital salary and $1.4 million for Julie Cain’s. Other improper Medicare billings, including depreciation on an $88,000 BMW the hospital bought Ted Cain, round out the total overcharges, government attorneys said.
Did Ted, Julie Cain work for hospital salaries?
The government’s attorneys said that he rarely showed up at the hospital. He did visit the cafeteria on Wednesdays and Fridays, when fried chicken and catfish were served. He was often dressed in his ranch clothes, they said, heading to his cattle company in Wiggins after lunch.
The Cains’ lawyers maintain he was the only person able to keep the rural hospital open. It had closed three times before he bought it. They also said both Cains worked hard, with Ted Cain involved in purchasing, hiring, contracts and other management duties.
Government attorneys say Julie Cain actually worked about 25% of the time, while the defense portrayed her as someone who rolled up her sleeves and worked hard daily.
On trial with the Cains are Starann Lamier, the former chief operating officer of Ted Cain company Corporate Management Inc., and Tommy Kuluz, who still serves as CMI’s chief financial officer. Kuluz and Lamier helped perpetuate the fraud, government attorneys say, although the two received none of the Medicare money.
One attorney tangentially involved remarked how rarely such civil cases go to trial. They are almost always settled beforehand.
The Cains had spent more than $1 million on their defense before trial, when attorneys’ hourly rates increase. If the jury finds Medicare fraud, the four defendants could be forced to pay triple damages, amounting to a total of almost $39 million.
Cain lawyers blame Medicare contractor
Tom Morris, a senior attorney with the Justice Department in Washington, D.C., delivered closing arguments for the government.
“The reason I got involved in this case was because I was really concerned about the brazen nature of this fraud,” Morris told the jury. “Ted Cain billed Medicare millions and millions of dollars for work he simply didn’t do.”
The lead attorney for the defense, former Mississippi governor Ronnie Musgrove, said Medicare’s contractor was at fault for not setting management salary ranges or flagging the salaries on annual cost reports submitted to the health insurance program for the elderly.
Musgrove talked about the 8½ years the government spent investigating the Cains.
“It proves the old adage to me, ‘Give them enough time and they can find anything,’ ” Musgrove told the jury. “ . . . They have used the broad reach of the federal government to say these people who provided quality health care in Stone County should pay this money back.”
Was Ted Cain good at business or ‘milking Medicare?’
Ted Cain bought the hospital in 2001, asking his wife to step in as administrator in 2003 at a salary of $177,899, which grew over the years. Julie Cain then signed the management agreement between the hospital and CMI. CMI oversaw multiple Cain companies.
The management agreement enabled Ted Cain to charge his CEO’s salary at CMI to the hospital. Musgrove said Cain not only worked for the hospital but also signed loan guarantees, contributed cash and paid off debt totaling $30 million.
“If Ted Cain was trying to take the money from the hospital, then why would he reinvest in the hospital?” Musgrove asked.
Morris said Cain was not the successful businessman portrayed by his attorneys.
“Had they put more money into the hospital and less money into Ted Cain’s pocket, the community could have benefited from a new hospital,” Morris said.
“ . . . Where does Ted Cain’s money come from? Milking Medicare, that’s what he was successful at. Ted Cain was a lousy businessman. His money came from milking Medicare.”
The burden of proof is lower in this civil case than it would be in a criminal trial. In a criminal case, prosecutors must establish guilt beyond a reasonable doubt to prevail. In a civil case, a “preponderance of the evidence,” meets the burden of proof, meaning chances are greater than 50 percent that the claims are true.
