SRHS Ambulatory: Quick Review of Tax Returns

The below was sent in by a friend regarding SRHS Ambulatory Services, Inc.  Several months ago we reviewed the real estate transactions by SRHS Ambulatory Services and found them to have been conducted at arms length. That is, there was no outward evidence of insider dealing on the sales.

There is too much information on the returns to discuss in a single email.  Suffice it to say, this non-profit entity:

  1. Has had various officers, all of whom are or were SRHS employees (Trulove, Shoemaker, Holland, Crews, Barnes-Taylor)
  2. Receives K-1s from (and thus is a part owner of) two for-profit LLCs: Mississippi Coast Endoscopy and Ambulatory Surgery Center & Ocean Springs Surgical and Endoscopy Center). The income from those two entities for the 2013 tax year was $761,000.
  3. Reports Total Assets as of 12/31/13 of $11.5M.
  4. Of that total, $7.6M is real estate with a basis of $6.4M.  However, there is no debt, loan, mortgage, etc. identified on the return.  So where did the money come from to buy this real estate, which is unidentified in the return?
  5. The real property owned in Jackson County by this entity can be viewed by going to http://mapping.co.jackson.ms.us/jacksoncountyflexwebmap/
  6. Of the total assets, $3.2M is cash.  This cash is accumulating with no reported distributions to SRHS (which federal law would prohibit since this is a 501(c)(3) entity).

We will be posting the 990s shortly.

AG’s Opinion on SRHS Real Property Holdings

 

Roy Williams

Office of the Attorney General July 3, 2009

2009 WL 2517267 (Miss.A.G.)
Office of the Attorney General
State of Mississippi
  Opinion No. 2009-00327
  July 3, 2009

Re: Charitable contribution by community hospital

Roy Williams
Wilkinson, Williams, Kinard, Smith & Edwards
P.O. Box 1618
Pascagoula, Mississippi 39568-1618
Dear Mr. Williams:
Attorney General Jim Hood has received your opinion request on behalf of Singing River Hospital System in Jackson County, Mississippi, and has assigned it to me for research and reply.
INQUIRY AND RESPONSE
May real property held by the county for the benefit of the board of trustees of a community hospital be titled in the name of such community hospital or community hospital system?
The title may not reflect the board of trustees as the owner, but may show the board of trustees “on behalf of” the county.
BACKGROUND
Singing River Hospital System (“System”) in Jackson County, Mississippi, is a community hospital system organized and existing pursuant to the applicable laws of the State of Mississippi.
You explain that the System owns several pieces of real property, title to which is currently held in the name of Jackson County. Previously, the county inadvertently conveyed to a third party a piece of such real property. In order to prevent such occurrences in the future, the System would like the county to convey title to the board of trustees all real property currently held by the county for the use and benefit of the System.
APPLICABLE LAW AND ANALYSIS
You cited community hospital statutes Sections 41-13-15(1), 41-13-15(4) and 41-13-35(5)(j) and (o) as support for the proposition that community hospital boards of trustees are authorized to hold title to the real estate comprising the community hospital. Those statutes are set out below.
Section 41-13-15(1) provides in part as follows:
  Any county and/or any political or judicial subdivision of a county and/or any municipality of the State of Mississippi, acting individually or jointly, may acquire and hold real estate for a community hospital
We have recognized community hospitals as being “political subdivisions” for certain specific purposes. See, e.g., MS AG Op., Gore (June 4, 2008) (community hospital is political subdivision for purposes of PERS); MS AG Op., McDonald (February 01, 2008) (for purposes of contracting with county to provide ambulance service). However, neither the community hospital nor the hospital Board of Trustees is a political subdivision within the meaning of 41-13-15(1), but rather is an arm or instrumentality of the county.
The next code section you cite is Section 41-13-15(4), which provides that:
Owners and boards of trustees, acting jointly or severally, may acquire and hold real estate for offices for physicians and other health care practitioners and related health care or support facilities, provided that any contract for the purchase of real property must be ratified by the owner, …
Finally, Section 41-13-35(5)provides that board of trustees are authorized
(j) To let contracts for the construction, remodeling, expansion or acquisition, by lease or purchase, of hospital or health care facilities, including real property, within the service area for community hospital purposes where such may be done with operational funds without encumbrancing the general funds of the county or municipality, provided that any contract for the purchase of real property must be ratified by the owner;
and,
(o) To establish and operate medical offices, child care centers, wellness or fitness centers and other facilities and programs which the board determines are appropriate in the operation of a community hospital for the benefit of its employees, personnel and/or medical staff which shall be operated as an integral part of the hospital and which may, in the direction of the board of trustees, be offered to the general public. If such programs are not established in existing facilities or constructed on real estate previously acquired by the owners, the board of trustees shall also have authority to acquire, by lease or purchase, such facilities and real property within the service area, whether or not adjacent to existing facilities, provided that any contract for the purchase of real property shall be ratified by the owner. The trustees shall lease any such medical offices to members of the medical staff at rates deemed appropriate and may, in its discretion, establish rates to be paid for the use of other facilities or programs by its employees or personnel or members of the public whom the trustees may determine may properly use such other facilities or programs;
These statutes do authorize boards of trustees to “hold” real estate for physician offices and support facilities (41-13-15(4)), to acquire real property for hospital purposes (41-13-35(5)(j)), and to acquire real property for the benefit of employees and personnel (41-13-35(5)(o)). However, these statutes do not provide authority for the board of trustees to hold title to all of the real property held by the county on behalf of the community hospital.
The Supreme Court recently recognized the limited authority of a community hospital board of trustees to act independently of the board of supervisors in Green County v. CMI, Inc., 2009 WL 1477226 (Miss.), issued May 28, 2009 (not yet published). The Court held that the board of trustees had no authority to enter into a sale or long-term lease of the community hospital without the approval of the board of supervisors. In so doing, the Court pointed out that Section 41-13-35(5)(g) grants the Trustees the authority to acquire property, but not the authority to alienate property. That statute authorizes boards of trustees:
To contract by way of lease, lease-purchase or otherwise, with any agency, department or other office of government or any individual, partnership, corporation, owner, other board of trustees, or other health care facility, for the providing of property, equipment or services by or to the community hospital or other entity or regarding any facet of the construction, management, funding or operation of the community hospital or any division or department thereof, or any related activity, including, without limitation, shared management expertise or employee insurance and retirement programs, and to terminate said contracts when deemed in the best interests of the community hospital;
While this statute does authorize the board of trustees to acquire property on behalf of the hospital for the purposes enumerated, we do not believe it authorizes the board of trustees to hold title to the property of the hospital.
CONCLUSION
With regard to community hospitals, the county is the owner of all of the capital assets, including real property. The board of trustees operates the hospital on behalf of the county. In limited circumstances enumerated by statute, the board of trustees may acquire real property for the benefit of the hospital, but at all times, it does so on behalf of the county and, as per the Supreme Court, may not “alienate” such property without approval by the board of supervisors. Thus, it is our opinion that title to the community hospital’s real property may not be transferred to the board of trustees; however, the title may show ownership in the county for the use and benefit of the hospital board of trustees, or similar language to distinguish it from other non-hospital real property, so as to accomplish your purposes.
If this office may be of further assistance to you, please let us know.

Sincerely,

Jim Hood
Attorney General
By: Ellen O’Neal
Special Assistant Attorney General
2009 WL 2517267 (Miss.A.G.)
© 2015 Thomson Reuters. No claim to original U.S. Government Works

Know Them by Their Deeds

As you sift through what is real and what is razzle dazzle, something to keep with you:

Beware of false prophets, which come to you in sheep’s clothing, but inwardly they are ravening wolves. Ye shall know them by their fruits. Do men gather grapes of thorns, or figs of thistles? Even so every good tree bringeth forth good fruit; but a corrupt tree bringeth forth evil fruit. A good tree cannot bring forth evil fruit, neither can a corrupt tree bring forth good fruit. Every tree that bringeth not forth good fruit is hewn down, and cast into the fire. Wherefore by their fruits ye shall know them.

Matthew 7:15-20

McKay’s Response vs. Reality on SRHS,JCBOS Open Meetings

On the issue of a joint open meetings between the Jackson County Board of Supervisors and the Singing River Health System Board of Trustees, Mr. McKay responded to us on Scott Taylor’s blog:

Today at the BOS meeting I brought up the issue of a joint meeting with the BOS and BOT. I suggested we meet for a work session and even suggested we do this quarterly or semi annually. None of my fellow BOS members spoke in support. In fact, none of them said anything. Like I said, I got no support at this time. However, I believe that the board will be open to this in the near future after some of the legal battles have been resolved.

Which seemed fair enough until we reviewed the audio recording of today’s meeting, wherein Mr. McKay proposes and shoots down the idea in the same breath. A transcript (emphasis added):

I’ve been asked “would we consider a work session with the board of hospital trustees?” I think that’s a good idea at some point, this is not the point right now. But I think that possibly quarterly, semi-annually we need to have an open work session to talk about what’s going on in the hospital. To keep us more informed on a daily basis of what’s happening. And so, I would support that 100%; having a work session with the hospital system and allowing you to sit there and listen to it. (unintelligible) Of course you couldn’t talk about the legal matter and other things like that, but there are a lot of things we could talk about. A way to go forward and keep us more informed than we have in the past.

Likely the reason the idea got no support from any other board member is because Mr. McKay himself didn’t support it. We have replied to Mr. McKay, hopefully he will square his words to us with what he actually said in the meeting.

Razzle Dazzle

HMS_KilbrideWe aren’t talking Broadway, but if you’re thinking football, you’re on the right track. Razzle Dazzle, also known as dazzle camouflage, was used during World Wars I and II in order to help defeat anti-ship measures. Since it was impossible to “hide” a ship at sea, dazzle camouflage was designed in an attempt to confuse the observer. The patterns made it difficult for the enemy to determine the ship’s speed, heading, size, type, etc.

The loud patterns call attention to the ship, draw the eye in, yet confuse the enemy. Sound familiar?

USS_West_Mahomet_(ID-3681)_cropped

It’s becoming clear that the retirees of Singing River Health System are getting the razzle dazzle. Despite all manner of words and statements from the Board of Supervisors, there have been few actions that support them.

Take notice that now the language of Billy Guice, SRHS, and the JCBOS is now becoming focused around “saving SRHS” and preventing bankruptcy. Guice admitted to WLOX that he feels the system can weather this storm.

Let’s not allow Guice and the JCBOS to stand up straw men, just to take credit for knocking them down.

Let’s not allow the razzle dazzle to distract from the facts.

 

McKay to Propose Joint Open Meeting of SRHS/JCBOS

Update: June 29, 2015

An attendee at the Board of Supervisors meeting informs us that McKay talked about the below idea, but felt it wasn’t a good idea at this time. He made no motion. He apparently had a change of heart in the 10 hours between his statements to SRHS Watch and arriving at the meeting.

ORIGINAL POST BELOW

In the comments section of SRHS Trustee Scott Taylor’s blog, SRHS Watch responded to a comment by District 5 Supervisor John McKay. Eventually we proposed to Messrs McKay and Taylor:

In the interest of cooperation and expedited resolution, will you and your respective boards extend and invitation to each other to have a properly noticed joint meeting/work session? That way the the public could see how the sausage is being made. Resolution of small items e.g. disposition of real estate, could be executed quickly with resolutions from both boards simultaneously.

There both groups would have the opportunity to work on a framework for future oversight of hospital operations and pension plan sustainability.

Obviously litigation related matters would require an executive session, but both boards should make a commitment to conducting as much in the public session as possible.

McKay has agreed to bring our proposal to tomorrow’s meeting of the Jackson County Board of Supervisors. We hope all there will support this and that the SRHS Board of Trustees expedite their meeting process and re-schedule so as to allow quick response and participation in the proposed joint meetings.

A joint open meeting between both boards would be taking a huge leap towards more transparency and improved governance. Instead of waiting for the new law to take effect, SRHS could make a good faith effort and restore goodwill to the public and retirees by having open meetings sooner than required. Hopefully working under a focused agenda with the JCBOS will give them some practice.

You can read Scott Taylor’s post and the comment thread here.

 

By Which Authority Can JCBOS Raise Taxes to Support SRHS?

Billy Guice and the Jackson County Board of Supervisors would have you believe that there is no statutory authority in Mississippi law whereby the county can levy a tax to support a county-owned hospital.  Below we have copied several statues which authorize taxes, donations, and/or expenditures in support of hospitals, even those that are not “community hospitals.” Coastal counties and municipalities receive special treatment, with no limitation placed on the amount that can be donated for the purposes of charity wards.

The funds need not be in the form of donations. The county has power to tax and spend.  Under its authority for expenditure, the county may contract with any group, public or private, to spend county money, so long as the group returns to the county “good and valuable consideration” in the way of caring for “indigent sick” or “for the promotion of public health of the county.”  There is no dispute that SRHS excels at both of these functions. Shouldn’t the county and Board of Supervisors recognize the great financial burden saddled upon SRHS to provide care for inmates, Chancery court commitments, those without health insurance, “the indigent sick,” etc.? Continue reading

Guice, JCBOS Standing in the Way of Resolution

This week saw a media barrage from the Jackson County Board of Supervisors and their hired gun, Attorney Billy Guice of Ocean Springs. After weeks of not commenting or releasing only vague and nebulous statements, Guice came out swinging on Monday, attacking everyone involved in the pension plan failure, excepting the JCBOS. In an earlier post, SRHS Watch suggested that Guice was hired not to find resolution, but to defend the JCBOS. Having run out of defensive maneuvers, Guice has now resorted to offensive ones.

This week Guice, as attorney for the JCBOS, has attacked:

Guice skillfully stopped short of District 5 supervisor John McKay and didn’t attack any retirees. Continue reading

No One “Mans Up,” Everyone Lawyers Up; Guice Worried About SRHS Solvency?

$345,000+ to Billy Guice & LaPorte
$500,000+ to Dentons and Dogan & Wilkinson
? to Franke & Salloum
? to Daniel Coker Horton & Bell
? to FTI Consulting
FBI Investigation
DA Investigation
Grand Jury review

 For we wrestle not against flesh and blood, but against principalities, against powers, against the rulers of the darkness of this world, against spiritual wickedness in high places.

Ephesians 6:12

 

All the king’s horses, and all the king’s men, couldn’t put the pension plan back together again?

Billy Guice stated that had SRHS management “manned up” to the pension problems, we wouldn’t be here today. The problem is staring all of Jackson County in the face. Here in present day all players have yet to “man up” but all involved have “lawyered up,” much to the benefit of Mr. Guice and his ilk.

Jackson County and Singing River have spent well over $1 million in “attempting” to solve the problem. For all the lawyers, accountants, and consultants, not one has managed to find a workable solution.  It’s time for leadership, brave and bold new thinking, and for the players to shed the bunker mentality.

The good ol’ boys are circling the  wagons. It’s difficult to pass off as coincidence the concurrent releases by Singing River Health System, Billy Guice, and Tony Lawrence. Billy Guice sees fit to tell you there is nothing more the county can do, but that he is not yet finished with his investigation. What more is there to investigate? How to bill enough for a fleet of Mercedes, maybe a new Hatteras? According to his statements on WLOX he is now investigating on how to keep the system solvent.

His statement should be setting off alarm bells. He’s focusing on keeping the hospital solvent. That suggests that the hospital will not only be defaulting on obligations to pension holders, but also on those to other creditors, e.g. Wall Street bond holders. The supervisors have already committed the county to repaying back that money, in the case that Singing River cannot. Not so for the pensioners. Is SRHS really in such bad shape so as to need yet another round of studies and investigations?

Are the business processes and procedures of a hospital really within the purview of an attorney? Maybe he stayed at a Holiday Inn Express last night. Do we really need to spend another taxpayer dime on an attorney with no healthcare management experience trying to come up with “solutions?” There has been very little return on the investment thus far. The JCBOS needs to cut its losses and ties to Bully Guice.

In any case, SRHS recently spent hundreds of thousands of dollars on real management consultants who specialize in health care. This was at the behest of the Wall Street bond holders and their insurer, Assured Guaranty.  FTI was touted as the hospital’s saving grace, the same company that turned around Coca Cola. They reviewed nearly every aspect of SRHS’ business processes. This resulted in the layoffs of several employees, the reshuffling of dozens of others, the closure and outsourcing of an entire department, terminating Roy Williams’ son’s contract,  the hiring of new auditors, the discovery of the accounting adjustment, the exit of several C-suiters and VPs, and thus the “discovery” of the underfunded pension plan. Little did FTI know there would be so many threads on which to pull and where all of those little threads would lead.

Does Mr. Guice feel he can do a better job than did FTI? Does FTI need to be called back in and have their scope expanded? Should the Board of Supervisors act in association with Assured Guaranty to leverage control over SRHS? What specifically is causing Mr. Guice to worry about the solvency of the health system? What makes him have little confidence in the current turn-around plan? What makes him express the need for a turn-around artist at SRHS?

 A Farce

Let’s review some of the volleys exchanged between all of similarly aligned interests:

  • SRHS sues Gentry Williams for over billing, yet retains his brother Brett Williams as counsel
  • The supervisors defend all of their trustee appointments
  • The supervisors re-appoint a trustee
  • A week later the supervisors ask all the trustees to step down. Not one trustee obliges.
  • Singing River and the Jackson County BOS sign a Joint Defense Agreement
  • The JCBOS alleged never provides any information to the SRHS Board of Trustees, yet threatens them
  • SRHS finally outlines a plan
  • The county says it disagrees with the plan and essentially calls SRHS management a bunch of liars
  • The supervisors throw their appointed trustees under the bus
  • SRHS responds through their attorneys, reminding JCBOS of their Joint Defense Agreement

All of this is a charade. The supervisors have spent seven months and hundreds of thousand of dollars pretending to give a damn about SRHS and the retirees. Based on what the trustees and SRHS are saying, Billy Guice and the  JCBOS has done nothing to help them. Whether or not this is all a well-rehearsed dance or legitimate, all of this silly in-fighting does nothing to help the retirees. It’s time to “man up” and do the right thing.

Let’s not fund another act of this kabuki theater. Vote them all out on August 4th.