Luis Hospital resists going into receivership

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ST. CROIX - Federal regulators in December ordered Luis Hospital to immediately hire a receiver - someone who would take control and have absolute authority to hire, fire, obligate funds and change the way the hospital operates - to correct deficiencies inspectors had uncovered.

The mandate came in a Dec. 13 letter that the federal Centers for Medicare and Medicaid Services sent to Jeff Nelson, who was chief executive officer of Luis at the time, and to the Luis Hospital board.

The strongly worded letter, which The Daily News has obtained, criticizes the hospital's performance to that point in meeting the mandates of a settlement agreement and provides a glimpse into the situation that led to a variety of recent changes at Luis.

Going into receivership was not one of those changes.

Instead, shortly after receiving the letter in December, the hospital board made a counterproposal to CMS: Instead of a receiver, the hospital asked that it be allowed to hire a chief operating officer with a clinical background who would lead efforts to comply with the settlement agreement and would report directly to the board, not to Nelson.

Under a receiver, the hospital would have lost final authority to approve personnel changes and expenditures of hospital funds, according to the mandate in the letter.

The hospital's counterproposal allows the board to maintain control of the institution.

Since the receipt of the letter, the board selected Dr. Kendall Griffith as the chief operating officer.

However, on Jan. 25 and before Griffith assumed the position, Nelson resigned after another CMS survey.

The following day, the board appointed Griffith to take Nelson's spot as the interim CEO.


On Tuesday, Luis Hospital board chairwoman Kye Walker said that hospital officials hope that all the changes and the work done in the two months since the letter arrived will be sufficient to demonstrate that positive changes are well under way at Luis.

She said that during numerous conversations between hospital officials and CMS since the Dec. 13 letter, the federal agency has not revisited the idea of requiring the hospital to hire a receiver - which CMS called an "interim manager" - to run Luis.

This week, the deadline for hospital officials to finish a revised plan of correction to address deficiencies is Friday, as is the deadline for the hospital to achieve substantial compliance with the settlement agreement.

"What we're hoping is that they'll see the amount of work we've done, the open and transparent relationship we have with them and our commitment to achieving compliance," Walker said. "Hopefully, that is clear to them and they will not require us to have an interim manager."

The letter

The Dec. 13 letter, from J. William Roberson to Nelson, starts by simply saying that the hospital "has failed to live up to its commitments" under the settlement agreement.

It says that if the hospital has not achieved substantial compliance with the settlement agreement by the agreement's Feb. 13 end date, the hospital's Medicare provider agreement will be terminated - it would no longer be reimbursed by Medicare - and that no extensions on the deadline will be granted.

At this point, though, hospital officials have had multiple conversations with CMS and they are working together closely, Walker said. Hospital officials have requested extensions, and CMS already has extended the deadline for compliance - slightly - from today to Friday.

The federal agency also extended the deadline for the hospital to submit a revised plan of correction. The plan had been due Jan. 31, but the deadline was moved to Friday, to allow hospital officials to address deficiencies that were found during a January inspection by CMS.

CMS had not responded by press time on Wednesday morning to Daily News inquiries about the letter.

Walker acknowledged that all of the deficiencies will not be fully corrected by Friday - although some will.

The main thing, she said, is that "we must be able to show that we came up with a plan to correct it and that we will be executing that plan."

If a revised plan of correction is accepted by the federal agency - this is the hospital's third try, after CMS rejected the previous two plans - then additional conversations between CMS and hospital officials are likely, according to Walker.

Other issues noted in the Dec. 13 letter include the hospital's failure at that point to fully cooperate with a consultant on meeting the settlement agreement mandates; its failure for seven months to pay that consultant; the hospital's hiring of a new consultant who was not approved by CMS; and an "inadequate" contract with the new consultant.

The letter also states that a September survey showed a "significant decline in patient care."

Additionally, the letter notes the hospital's "precarious financial situation" and questions some of the hospital's expenditures.

Red flag

"CMS basically issued a red flag to the board when they sent us that letter," Walker told The Daily News on Tuesday. "Its purpose was to alert us as to some changes that needed to be made."

The board suggested bringing in a local clinical leader to be COO, she said, "because of course we can't afford an interim manager. And we do believe we have the talent and skill in-house to achieve substantial compliance."

Walker outlined some steps the board has taken that she hopes will convince CMS to give the hospital more time to come into compliance with the federal mandates.

Griffith, an interventional cardiologist, is now on board as interim CEO; the new consulting company - Premier - and its contract has been approved by CMS; and officials are putting the finishing touches on a plan of correction that will be submitted by Friday, Walker said.

An escrow account was also set up for the Premier contract, where hospital officials are depositing approximately $100,000 each month, she said. The hospital still owes the previous consultants $366,544, and last made a payment of $50,000 on Dec. 13, she said.

"With us doing all those things, hopefully they will extend the deadline," she said.

- Contact Joy Blackburn at 714-9145 or email

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