Indianapolis, In. — James G. Burkhart, former CEO of ASC and respected community leader, will face sentencing on June 29, 2018 after pleading guilty to wire fraud, mail fraud, and conspiracy. The DOJ, led by US District Attorney Josh Minkler, announced on October 12, 2016, that they had halted a fraudulent scheme, “just in time,” so that seniors residing in ASC facilities would not be “harmed.” However, according to McGowen, federal 5 Star ratings of ASC facilities (licensed by HHC) have seen a dramatic decline in their quality of care ratings since Burkhart’s departure.
Between 2012 and 2015, when the government alleged that residents were put at risk due to Burkhart’s ownership of and involvement in vendors providing valid goods and services to residents of HHC nursing homes, quality of care ratings, as measured by the Center for Medicaid and Medicare (CMS) star rating systems, rose from 2.41 on average to 4.08 a 69% increase for the HHC nursing homes. After the raid of Burkhart’s home and Burkhart’s firing and replacement by ASC’s owners (the Jackson family), HHC’s legacy nursing homes’ quality of care ratings have fallen by 28.51% and are now at an average of 2.92 as of May 8, 2018.
Financial losses have begun to accumulate at the HHC nursing homes and may soon outpace the extra payments of $150 million annually that HHC receives from the Federal Government, stated McGowen. According to McGowen, during Burkhart’s 12-year leadership of ASC, HHC netted over $1.1 billion dollars from its long-term care operations. This windfall was made possible by Burkhart controlling costs and driving quality and census to levels where ASC could generate a profit for HHC without the extra payments.
The government claimed Burkhart engaged in a “…scheme, which is characterized by unbridled greed, deceit, and theft from programs….” Actually, while Burkhart did earn profits from providing valid goods and services, they were provided at or below market rates, and were often lower than costs paid for these same services prior to Burkhart forming his own or becoming affiliated with ancillary companies to serving HHC nursing homes, said McGowen. Along with Burkhart’s leadership, this produced savings of millions of dollars each year to Indiana Medicaid, McGowen added.
While Mr. Burkhart earned over $1.1 Billion for HHC, he also earned hundreds of millions of dollars in management fees, rents, and profits from sales of real estate for the owners of ASC, stated McGowen. “In fact, but for Burkhart’s willingness to take “put options” (described by HHC officials“…as ‘a form of insurance’ that allows them to sell their nursing homes for prearranged terms…”), the Jacksons may not have been able to sell real estate in 2012 for over $200 million,” McGowen added.
McGowen indicated, these put options were also a prerequisite for the purchase of other nursing homes licensed by HHC; and, landlords of these properties insisted that Burkhart be listed as “key man” in the leases and all management agreements. Without Burkhart there to accept these puts, HHC may find itself operating over 80 facilities in more than 40 Indiana counties and using Marion County tax payer dollars to provide for the care of residents outside of Marion County.
