Shoemaker faces business challenges after conviction

By Patsy R. Brumfield/NEMS Daily Journal

TUPELO – Ray Shoemaker isn’t talking publicly about the future of his health care management business or the financial impact of his recent federal conviction.
But in the meantime, Rural Healthcare Developers Inc. of Tupelo has lost contracts for management of two hospitals and several senior programs.
It also faces corporate dissolution for non-payment of $15,259 in 2010 state taxes.
Shoemaker’s Tupelo office declined comment when contacted by the Daily Journal last week.
On March 2, the 38-year-old man dubbed the “turnaround king” of rural health care by industry publications heard a guilty verdict 10 times in U.S. District Court in Oxford.
A jury found him guilty of participating in a kickback-bribery scheme while he was a top executive at Tri-Lakes Medical Center in Batesville. He also was found guilty of embezzling $250,000 from the hospital in April 2006.
He and his attorneys insist he isn’t guilty and plan an aggressive appeal.
But his legal problems won’t end when Senior U.S. District Judge Neal B. Biggers Jr. pronounces his sentence in a few months. Maximum sentences on his conviction charges add up to 145 years in prison and $5 million in fines.
Thursday, Biggers granted Shoemaker’s attorneys more time to file appeals to the district court.
He still faces another embezzlement charge and a DUI-3rd indictment in Lee County, which were put on hold because of the federal trial.
And the Department of Justice could seek financial forfeitures of anything Shoemaker used to facilitate the crimes or acquired or benefited from as a result of money he gained through the Tri-Lakes scheme, which ran from about May 2005 through June 2007. It’s unclear if that timeframe includes March 2010, when Shoemaker is accused of lying to the FBI about kickback payments.
Questions linger about how potential forfeits could affect Rural Healthcare Developers, a $165,000 gift to Shoemaker’s church, at least one car he bought and various other business enterprises he’s part of.
Calls and questions to the U.S. Attorney’s Office went unanswered late last week.
Friday, Shoemaker’s pastor, the Rev. Jeffrey Daniel at White Hill Baptist Church in Tupelo, said he isn’t worried about the church gift, saying Shoemaker wasn’t a church member until 2007 or 2008. Daniel also said he hasn’t heard anything from the federal government about the donation.
Shoemaker financed his church gift through a $116,649 three-year bank loan taken out Nov. 1, 2006, along with $50,000 cash.
Rural Healthcare Developers’ website states that it manages four hospitals and several psychiatric programs for senior citizens through other rural hospitals.
Immediate fallout occurred a week after Shoemaker’s conviction, when Claiborne County terminated RHD’s management contract for its Patients’ Choice Hospital there. Supervisors’ attorney Carroll Rhodes of Hazlehurst said his clients decided they should act before problems arose for the small community hospital and the senior psychiatric programs overseen through RHD.
A few other RHD contractors said they had concerns about how Shoemaker’s conviction could affect federal payments to their health care programs.
Officials with Medicare and Medicaid, the two major federal payors, did not respond last week to specific questions about Shoemaker or RHD.
But Atlanta Medicare spokesman Bob Moos said convictions for certain crimes can put a provider on an “exclusion list,” which stops payment to that provider.
Francis Rullan, director of communications for Medicaid in Mississippi, said his office is not controlled by Medicare rules but sometimes follows its decisions.
“Our office continues to monitor Mr. Shoemaker’s case very closely,” he said last week. “We take these convictions very seriously and we will do everything in our power to ensure the integrity of the Medicaid program.”
Administrators at two RHD-run hospitals – in Belzoni and Raleigh – said that while they wait to learn about any fallout, they have high praise for the viability Shoemaker brought back to their facilities.
Nothing seems out of the ordinary in Humphreys County, where Shoemaker bought the hospital in April 2008 and renamed it Patients’ Choice Medical Center of Humphreys County.
R.D. “Dickie” Stevens, supervisors’ president, said last week he’s not aware of any changes at the hospital and hasn’t heard about any financial problems there.
Paula Lang, a nurse who’s the facility’s chief executive officer, said the Belzoni community “has really been blessed” by Shoemaker’s revitalization of a faltering facility. She backed up Stevens’ impressions and said all programs at the hospital are running well.
What will happen to the Belzoni hospital isn’t clear but its purchase falls after prosecutors say Shoemaker profited from the Tri-Lakes schemes.
In Smith County, hospital CEO Dr. Paulette Butler praised Shoemaker and RHD for putting her facility back on sound footing.
“This is finally a viable hospital,” she said, noting the management relationship with Shoemaker has gone well since its 2005 beginnings.
Butler said she’s going to let the justice system work its course. In the meantime, she’ll work on an alternative in case Shoemaker’s conviction causes a disruption to their hospital contract.
It’s another story in Erin, Tenn., where RHD managed its local hospital, called Patient’s Choice Medical Center.
According to news reports, Shoemaker’s company in early February failed to meet payroll, then made the next payroll only to fail to make the following payday. The county commission was forced to take over the hospital and bring in another manager.
Mark Hicks, managing editor at the local newspaper, The Stewart Houston Times, said the commission will meet March 26 to vote on a proposed lease agreement. Likely, he said, the county will assume the debt on the building and property and pay off other loans, like for equipment, at the 100-employee facility.
Rural Healthcare Developers of Louisiana no longer operates South Cameron Hospital, a psychiatric and substance abuse facility. Spokesmen for it and for Pacer Health Management Corp, also in Cameron, said they were purchased last June by Frontier Hospitals of Florida.
At another facility RHD ran in 2010 – Flint River Hospital in Montezuma, Ga. – administrator Phillip Eastman said Monday the RHD relationship lasted about two months two years ago. In late 2010, RHD’s website states, Shoemaker was its interim administrator and announced state approval for a seniors psychiatric program there.
As for other senior psychiatric day programs listed on the RHD website, spokesmen for most of them said they are not run by the Tupelo company any more.
In one instance, King’s Daughters Hospital Administrator Darrell Weaver in Yazoo City said he’d wanted the hospital to operate its own program for several years and the Shoemaker prosecution just sped up that change.
Butler said RHD still runs the senior program in Raleigh.
INCORPORATIONS
An Internet search for Shoemaker-related companies reveals a wide web of incorporations from Louisiana to Georgia.
While the search was not exhaustive, it reveals numerous Mississippi incorporations ranging from good standing to dissolved, which usually means the business failed to make its annual report or update and pay a filing fee.
Still in good standing with the Mississippi Secretary of State’s office are Shoemaker creations Urban Healthcare Developers LLC in Belzoni, Healthcare Foundation for Rural Healthcare Developers in Belzoni, Healthcare Foundation of Northwest Mississippi in Batesville, and Kaizen Consulting, Managing and Researching, the nonprofit that was renamed Physicians and Surgeons Hospital Group when it bought Tri-Lakes in 2005.
Shoemaker incorporated Rural Healthcare Developers Inc. on Dec. 11, 2006, as a private, for-profit organization with one share of common stock. Its registered office was listed at 2553 Main St., Plantersville, with Shoemaker as incorporator, president and director.
In 2007 and 2008, Shoemaker incorporated what appear to be sister companies in Louisiana, Arkansas, Georgia and Florida, and registered the Mississippi company in Tennessee. He also incorporated three Louisiana psychiatric corporations with names that began with the word “Pacer.”
All these sister companies either are dissolved with charters revoked or not in good standing for failure to file annual reports, which usually requires payment of a filing fee or franchise tax.
One month before Shoemaker was indicted in the federal kickback/bribery scheme in early 2011, he was indicted by a Lee County grand jury on a DUI-3rd offender charge.
Yet, his business activity continues in the area.
In September 2006, Shoemaker and his wife incorporated Mississippi Business Support Services Inc., which Tupelo city records show secured the privilege license in 2009 to operate a food franchise at 3982 N. Gloster St.
That franchise continues to operate but the company’s charter was administratively dissolved by the Mississippi Secretary of State’s Office in December 2011.
In September 2011, Shoemaker incorporated Atlanta Bar amp& Grill in Tupelo with Dr. Maurice A. Clark in a 50-50 partnership. Records show each man put up $30,000 to start the business. State records show the charter is in good standing.
Also in good standing is RKA Development LLC, which Shoemaker and his wife, Nanette, incorporated a month after Atlanta Bar amp& Grill’s paperwork. Mrs. Shoemaker reportedly holds a 90 percent membership in RKA leaving him with the rest. Its business address apparently is their home in west Lee County.
While Shoemaker isn’t available to talk about his financial situation, state tax records show he was delinquent on three 2010 property tax bills totaling about $58,145. On Jan. 11, 2011, Lee County tax records show he paid off those debts with the Mississippi Department of Revenue.
His legal defense, led by Ashland attorney Steven Farese Sr., doesn’t come cheap, either.
Tupelo-based Rural Healthcare Developers Inc. faces corporate dissolution for non-payment of $15,259 in 2010 state taxes, although state agency spokesmen say the situation can be put back on solid ground.
In Jackson last week, Rep. Willie Bailey pondered what the possible financial implications might be for Shoemaker’s hospital in Belzoni, where Bailey is attorney for the Humphreys County Board of Supervisors.
He said, frankly, he hadn’t given any thought to the possibility that the U.S. Department of Justice might go after the property as part of a conviction fine, forfeiture or restitution the court might order Shoemaker to pay.
“You call me the first Monday in April – we’re going to talk about this,” he said of the supervisors.
patsy.brumfield@journalinc.com