A Coast hospital paid Ted and Julie Cain millions over the years. Did they earn it?
Whether Ted and Julie Cain worked for the millions Stone County Hospital paid them continues to be the focus of a Medicare fraud civil trial about to wrap its second week in U.S. District Court in Gulfport.
Stone County Hospital Inc. is paying legal bills for the four defendants in the case, with former Mississippi Gov. Ronnie Musgrove serving as lead defense counsel on a team of four attorneys.
The U.S. Attorney’s Office is trying to prove the Cains and two co-defendants defrauded Medicare of $13 million, most in salaries paid to Ted and Julie Cain from 2004-2013. Ted Cain bought the hospital in 2001 and it is currently being leased
Assistant U.S. Attorney Angela Williams of Jackson and two Justice Department attorneys from Washington, D.C., are representing the government, while a whistleblower who brought the case to the government’s attention is represented by attorney John F. Hawkins, also of Jackson.
A former hospital administrator, James T. Williams, testified Thursday that he was unaware of Cain’s salary even though he reviewed cost reports the hospital submitted annually to Medicare for reimbursement. The salary is listed in those reports as management fees, but does not indicate most of the money went to Cain’s salary.
Williams said the CMI management fee caught his eye because the figure was high, but he did not question it or take steps to see if it could be reduced. Williams said he reported to CMI and his boss there was Starann Lamiar, then the company’s chief operating officer and a co-defendant in the case.
Evidence shows that Cain’s salary climbed from around $1 million in 2004 to more than $3 million by 2009, most of it paid by the small, rural hospital.
Williams was unable to say how much work Cain did for the hospital. He did say Cain regularly attended management meetings in 2013 and 2014, but the government’s attorneys pointed out that Cain knew by then he was under investigation.
On cross-examination, Musgrove made the point that Cain’s salary grew as hospital revenue climbed under CMI management. He asked if the hospital would have benefited from an increase in revenue from $7 million in 2005 to $20 million by 2010. Williams acknowledged the revenue increase would help the hospital.
Williams took over hospital administration from Julie Cain, Ted Cain’s wife. The hospital paid her from 2004 until 2012, when she was administrator. Her salary had climbed to $279,000 by the year 2011.
Williams said that he never heard any complaints about Julie Cain and she appeared to have been doing her job as administrator. But he also acknowledged that he had limited contact with her before he went from regional director at CMI, mostly overseeing nursing homes, to the hospital administrator’s job.
While he worked for CMI, Williams also testified, that Starann Lamier directed him to buy nursing home supplies from Quest Medical, another company Ted Cain owned. “I was told up front that we got all our supplies from Quest Medical.” He said he did question the cost of Quest medical supplies during a financial meeting while he was working at CMI.
Musgrove said Quest Medical closed in 2012 or early 2013, when Williams became hospital administrator.
The fourth defendant in the case is Tommy Kuluz, the chief financial officer at CMI. He helped prepare and signed off on cost reports submitted to Medicare, as did Lamier.
This story was originally published January 31, 2020 at 4:00 AM.
