She defended her $50,000 pay raises. But Julie Cain doesn’t know why she got them.
Julie Cain had no college degree and no experience running a hospital, yet she was hired as administrator of rural Stone County Hospital at a salary that increased 50% over seven years, to $298,916 in 2010.
Cain told a jury in federal court Monday that she did not know for sure who set her salary or why she received increases of around $50,000 each for two years running. She was even unsure how often she was paid, but said it was probably biweekly as other employees were paid.
Her husband, Ted Cain, owns the hospital and Corporate Management Inc. in Gulfport, where he drew an even heftier salary for overseeing hospital operations.
The Cains and two co-workers are on trial in a civil case that alleges they defrauded Medicare. Medicare reimbursed the hospital for most of the salary expenses based on cost reports the hospital and CMI filed.
Medicare regulations requires that costs be reasonable, necessary and related to patient care. Attorneys for the Justice Department and a whistleblower who once worked at the hospital are trying to prove the Cains’ salaries were none of those things.
The Cains insist they worked hard to revive the 25-bed hospital, which was closed when Ted Cain bought it in 2001.
The Cains first met years ago, Julie Cain said, when she started work as a secretary at Driftwood Nursing Center, which was owned by Ted Cain’s father. She worked at a number of nursing homes owned by a Cain family member or Ted Cain, whom she married more than 30 years ago, eventually becoming an administrator.
Her husband asked her in 2003 to run the hospital, she said.
“I think I was a really good manager,” she testified. “Mr. Cain saw that in me.”
She said she left the job in 2012 to spend time with their two children, who would have been around 10 and 11 years old.
“I didn’t want to work the hours it took to manage the hospital,” Cain said, “because I had small children at home. I was missing a lot.”
As administrator, she signed a management agreement with CMI that allowed her husband’s company to be paid up to 15% of net patient revenue for hospital oversight. She said she did not question the contract or the percentage CMI charged, while on the other hand testifying that she watched costs at the hospital.
“I know the people at CMI,” Cain said. “They were people of integrity and knowledge. Nothing prompted me to be concerned in that area.”
She also said she was not aware that CMI’s management fee had in one year exceeded 15% by almost $400,000.
She was unable to produce emails from her work at the hospital, saying she is not a computer person and had to be shown how to use a mouse.
She said her role in running the hospital has been minimized.
“I worked in that hospital,” she told the jury. “I gave it my blood, sweat and tears from day one. I tell you, when I walked in that hospital, it was chaos and laziness.
“ . . . Yes, I am Ted Cain’s wife. But more than that, I was the administrator of Stone County Hospital . . And I was a good one.”
Ted Cain’s management fee, which climbed to more than $3 million a year, comprised most of the CMI management fee, testimony has shown. However, Julie Cain said she reported to another CMI employee, Starann Lamier.
John Hawkins, the attorney for the whistleblower in the case, pointed out to Julie Cain that her husband’s salary went from $889 an hour to more than $1,300 an hour, based on reports submitted to Medicare. He asked her if it seemed important to know how much of Ted Cain’s salary CMI was allocating to the hospital.
“I don’t really know how to answer your question,” Julie Cain said. “What was important to me at the time was working with these fine folks on the floor of the hospital . . . I was a worker bee. That’s why I was there.”
Lamier and Tommy Kuluz, who gathered information for CMI office reports submitted for Medicare reimbursement, are co-defendants in the case.
The U.S. Attorney’s Office is expected to wrap up its case this week. The four co-defendants, represented by a team of four attorneys, have said their defense will take about a week to present.
This story was originally published February 4, 2020 at 4:00 AM.
