Shoemaker’s business in transition after conviction

By Patsy R. Brumfield/NEMS Daily Journal

TUPELO – Embattled entrepreneur Ray Shoemaker’s former health care network is in transition to new names and new leadership.
The Tupelo businessman’s life is in transition, too, as he waits to see if federal prison is in his future.
Under advice from his attorney, Shoemaker won’t speak publicly about what’s going on, but documents reflect a lot.
• Shoemaker removed himself, and in some cases his wife, Nanette, from control over Tupelo-based Rural Healthcare Developers Inc., and a new leadership group is in place.
• A Hinds County circuit judge last week granted a temporary reprieve to two small hospitals formerly associated with Shoemaker after the state Division of Medicaid cut off crucial funding May 25 because of Shoemaker’s March 2 federal conviction in a Batesville hospital bribery-kickback scheme.
• Shoemaker sold his interest in a downtown Tupelo club and lost his interests in two businesses he had with his wife.
Meanwhile, the Mississippi Department of Health is considering whether to approve licenses for the hospitals because of their leadership changes to RHD’s new board under its new name, Team Health Inc.
Questions about RHD/ Team Health Inc. were referred to Jackson attorney Michael Heilman, who did not respond to Daily Journal inquiries.
Shoemaker, who grew up in Walnut Grove, founded Rural Healthcare Developers Inc. in December 2007. Earlier he said the for-profit business’ aim was to acquire financially distressed health facilities and turn them around.
Since his conviction on federal charges, business moves can be seen through documents filed with the Mississippi Secretary of State’s Office.
At first, he moved his wife to president of RHD, but after she filed for divorce April 30, additional changes occurred.
Ultimately, both Shoemakers were “removed” from RHD/Team Health and replaced by Tupelo minister Elston Charles Kemp across the health-related companies.
Shoemaker also sold his Atlanta Bar & Grill 50 percent ownership valued at $30,000 to relative Odarrieus Shoemaker.
On May 11, RHD officially changed its name to Team Health Inc., accepted the Shoemakers’ resignations and elected new officers: Carol Harris, a Lena physician, as president, Kemp as vice president, RHD employee August Geeter of Cordova, Tenn., as secretary and Georgia businessman, musician Curtis Sanders as treasurer. By July, Sanders replaced Geeter as secretary.
Filings also show that Shoemaker relinquished his 100,000 RHD/Team Health shares, which then were divided between the officers – 80,000 to Harris and 10,000 each to Kemp and Sanders. How much they paid for their shares is not public information.
In return, RHD/Team Health got the Belzoni hospital, a Port Gibson hospital’s management contract and a contract with a senior health program in Smith County. Kemp is listed as the hospitals’ chief executive officer.
A third hospital under RHD/Team Health management in Erin, Tenn., is being sold to a local health care business.
While the Department of Health considers the hospital licenses, the Claiborne County Board of Supervisors, which owns the Port Gibson facility, considers whether to make a change in its management.
County Administrator James Johnston said last week that the board is reviewing proposals by potential management companies, although it may continue with Team Health Inc.
One issue there, which Johnston says had nothing to do with Shoemaker’s conviction, is the arrears in RHD/Team Health’s lease payments, which Johnston insists are “not more” than $1 million. He said a management decision may come at the board’s next scheduled meeting Aug. 6.
As for the Medicaid funding, Circuit Judge Winston Kidd issued a temporary order continuing payments to the two hospitals – Patients’ Choice Medical Center of Humphreys County and Patients’ Choice Medical Center of Claiborne County.
Without Medicaid funds to pay for services to the poor, these facilities effectively would be out of business, court filings show.
In its filing, the Division of Medicaid said termination came because the hospitals were ineligible to be Medicaid providers because they hadn’t obtained approval for their change in owners. The state agency’s attorneys also said the court did not have juris-diction over the process and that judge’s intervention would be premature while the hospitals’ appeals were ongoing.
The hospitals, through Heilman Law Group, told Kidd they would close and hundreds of employees would lose their jobs by late July without Medicaid payments.
On July 16, the judge ordered Medicaid to continue payments, saying without the order “the hospitals, more than likely, will be forced to close” and cause a “great disservice” to the counties’ residents. He also ordered the hospitals to post a $100,000 bond as potential repayment to Medicaid if the payments ultimately were deemed illegal.
How or if the federal prosecutors will accept these business transactions won’t be known until Shoemaker is sentenced. No date for that is set yet.
The business activity, outside of the Medicaid developments, could be seen as attempts to protect assets from the divorce action or federal forfeiture.
It’s not unusual for a federally convicted person to be ordered to forfeit certain assets or make restitution for monies lost.
Shoemaker maintains that a $12,000 payment to him in 2006, while he was a top executive at the Batesville hospital, was a loan from then-Panola County Administrator David Chandler, and that a $250,000 payment for use of his nonprofit corporation, Kaizen Consulting, aimed at helping the hospital purchasers gain financial advantages only a nonprofit could secure.
Shoemaker was once hailed by Modern Healthcare magazine as an “Up & Comer” under 40 in the industry, then Memphis Business Journal cited him as “Turnaround King” in a story about his career.
Shoemaker’s attorneys have asked Senior U.S. District Judge Neal B. Biggers Jr. to throw out his conviction or order a new trial.
patsy.brumfield@journalinc.com