When Chilton Medical Center in Clanton, Ala., was closed by the Alabama Department of Public Health, and its license suspended in October, 2012, community leaders were stunned, much as residents in Hope were surprised by developments at their own Medical Park Hospital.
When Chilton Medical Center in Clanton, Ala., was closed by the Alabama Department of Public Health, and its license suspended in October, 2012, community leaders were stunned, much as residents in Hope were surprised by developments at their own Medical Park Hospital. But, what remained unknown to community leaders in both towns is that the local values of trust which were prevalent in the way business is conducted in both communities was violated by the same people, James Cheek, Herschel Breig, Teddy Cheek, and others connected with them, through the manipulation of the relationship between their respective hospitals and the Cheek group's Carraway Medical Systems, LLC, headquartered in Springfield, Mo. Clanton and Hope are remarkably similar. Both communities are located on interstate highways, near major metropolitan areas within each state. Both communities are the seat of county government in their respective counties. Both cities are active in industrial development, with both light and diversified industry. Both cities are regional tourist destinations, Clanton being host to a historic annual Peach Festival each June and Hope hosting its famed Hope Watermelon Festival each August. Clanton is to peaches as Hope is to watermelons. “This is a place where peaches really grow,” the Chilton County Chamber of Commerce website notes. “With over 700 acres and over 7,000 trees that can produce as much as 15 million pounds of peaches in a year, a Peach Festival was started in 1947 to celebrate the fruit.” Both communities are also connected with a rapidly growing community college, featuring nursing studies, law enforcement studies, funeral science studies, construction and building sciences studies, workforce development programs, distance learning programs and associate degree studies that transfer universally. Jefferson State Community College offers more than 120 University Transfer Programs, 20 Career Programs and numerous professional certifications, much like the University of Arkansas Community College at Hope. And, both community colleges have developed a new regional conference/performing arts center for each area, with the Clanton Conference and Performing Arts Center recently completed in much the same vein as Hempstead Hall on the UACCH campus. Consequently, a community hospital is of enormous importance to each city. Both communities began to understand the implications of what was developing at their respective hospitals when both hospitals began having difficulty meeting their payrolls. The turning point in Clanton began in an October, 2012 meeting of the Chilton County Hospital Board with Chilton Medical Center Executive Director Ted Chapin and hospital employees. In the published accounts of that meeting, Chapin discloses that the Alabama Department of Public Health has given Chilton Medical notice that it must present a plan for the hospital's continued operations at a Nov. 8, 2012, hearing at the state capital. What is not reflected in those accounts from the Clanton Advertiser is that Chapin had told the ADPH in August, 2012, that he knew the hospital was in trouble financially, according to ADPH's subsequent deficiencies report issued against Chilton Medical. According to the ADPH report, Chilton Medical had already had difficulty meeting its August, 2012, payrolls, and had already had its credit revoked by many medical vendors, and had closed its surgery because it could not pay surgical staff or buy supplies. Chapin's explanation that the ADPH wanted proof of a “financially viable” hospital that could provide “safe patient care” was the linchpin of an effort which began in October, 2012, to sell the hospital. But, SunLink Health Systems, of Atlanta, Ga., the owner of the real estate, would not agree to a sale. And, community leaders were only just beginning to learn how Carraway and the Cheek group did business. Allen Payton, chairman of the county hospital board, is blunt about what happened. “They had some pretty steep fees through some companies they controlled that weren't there to provide any services,” Payton told the Hope Star. Payton believes those management fees, which came off the top of annual revenues, amounted to about $150,000 per month. Over the course of the 19 months that Carraway and the Cheek group operated Chilton Medical, that likely totaled about $2.8 million. Payton said the hospital board has now learned that the hospital was at least $6 million in debt to its vendors, and owed at least $700,000 in unpaid employee federal withholding taxes. “They did the exact thing here that Cheek went to jail for; not paying payroll taxes,” he said. Payton said that he confronted Teddy Cheek with the facts after the ADPH findings. “I point blank asked him, 'What are you going to do?' He just looked like a man caught in the headlights,” Payton said. After the county hospital board went to court to have a receiver appointed for the hospital, the community began to learn more. “We had asked for a receiver to try to navigate through the debt,” Payton said. “That was after the Cheeks let the license lapse.” That occurred in November, 2012, when Carraway and the Cheek group signed a consent agreement with ADPH. ADPH Deputy General Counsel Brian Hale said the agreement gives the county hospital board time to find out whether it's worth attempting to salvage Chilton Medical. “The hospital will remain closed at this time, but its license will remain effective until Dec. 21, 2012, to allow another person or entity to submit an application for licensure to operate the hospital,” Hale said in the original announcement of the deal. That date has now been extended to tomorrow, March 15. “There is no further action pending on ADPH's part,” Hale told the Hope Star. “I cannot speak as to whether there are any actions pending with other Alabama authorities.” Payton is skeptical; in part, because of the age of the facility, which was built in 1950. “The current and past owners have not spent any money to upgrade,” he said. Payton said recommendations from receiver Don Ball will go a long way toward determining whether the county hospital board backs reopening Chilton Medical, or starting from scratch, buildings and all. “If they tell us we have to have $5-6 million to do upgrades, we won't do it,” he said. The Chilton County Commission agreed to loan the county hospital board $960,00 in November, 2012, to fund the hospital board's plan to determine whether to operate Chilton Medical or start over. The money was to come from the trust established from the original sale of the hospital, according to published accounts. Allen Caton, the current chairman of the Chilton County Commission, said the county was notified recently by ADPH of the cost to upgrade Chilton Medical, and that killed the loan. “My understanding is they are not going to give the certificate of need, unless the hospital comes up with $11 million; and, as far as the commissioners, they are very upset,” Caton said. “Right now, it's in limbo. We never gave them any of the money; we just committed. Right now, we're very upset because they might not reopen the hospital.” Caton doesn't want Carraway and the Cheek group involved in anything concerning the future of the hospital. “The whole family are crooks,” Caton said. Hospital receiver Don Ball agreed that Carraway and the Cheek group operated the same in Clanton as in Hope. “We are as determined as anybody can be to have these guys exposed,” Ball told the Hope Star. “Certainly, with this kind of management, there is no way for a hospital this size, in a rural community, to survive.” He said Carraway operated the hospital through a management fee system similar to that discovered in Hope. “It was a percentage of revenue; it would have been the same thing,” Ball said. “We don't have the documents we need; they were retained in Missouri.” Ball said the Golden Care unit that was announced for the hospital was never put into operation, but Golden Care, LLC, owned by the Cheek group, was paid a management fee. “There are some parallels concerning management fees for which there were no real services received,” he said. Renovation construction for the Golden Care unit at Chilton Medical was never completed because vendors refused to finish after they were not paid, according to the ADPH. “This hospital was smaller, and they didn't have time to bleed it,” Ball said.