- Associated Press - Friday, September 18, 2015

JACKSON, Miss. (AP) - The federal government is joining a whistleblower lawsuit alleging that owners of a Wiggins hospital unjustly bilked more than $12 million from Medicare.

The suit, filed in 2007 by a former administrator at Stone County Hospital and unsealed Friday, alleges that Ted and Julie Cain of Ocean Springs pulled down big salaries partially reimbursed by the federal health care program for older people. The suit claims reimbursements for those salaries to the Cains’ company, Corporate Management Inc., were unjustified.

Former Gov. Ronnie Musgrove, one of the lawyers defending the Cains, said in a statement that their expertise running hospitals, nursing homes and other facilities has improved care at a lower cost to taxpayers.

“We expect that when this matter is reviewed by the court, CMI will be fully vindicated,” Musgrove said of the Cains’ Gulfport-based company.

James Aldridge, who filed the lawsuit, said he rarely saw either Ted or Julie Cain performing management duties.

“They contributed little of value to this endeavor and nothing to justify their exorbitant salaries,” the lawsuit states. Aldridge would get a share of any money recovered by federal authorities. The Cains and associated companies could be subject to triple damages if found guilty.

The suit claims Corporate Management paid Ted Cain $21.3 million from 2004 through 2013, with Medicare reimbursing $10.4 million as part of the cost of running the hospital. The suit claims that Cain told Medicare he worked more than 65 hours per week on health care matters from 2004 through 2009, at the same time he was telling the IRS on tax returns he was working 10 hours a week on non-health care business.

The suit also claims Corporate Management paid Julie Cain $2.3 million from 2003 through 2013, with Medicare reimbursing $1.7 million. It also alleges Ted Cain wrongly received $47,635 from Medicare from 2002 to 2009 to cover the cost of two BMW automobiles that were his personal vehicles.

Because Stone County is classified as a critical access hospital, Medicare pays 101 percent of the cost of treating patients to help cover what are presumed to be higher costs in rural areas. The suit alleges that Stone County’s costs were so inflated to take advantage of this reimbursement plan that it was charging patients $1,200 a day when comparable hospitals averaged $350 to $450 a day.

“We will aggressively pursue providers who try to take advantage of these rules to line their own pockets,” Benjamin C. Mizer, head of the Justice Department’s Civil Division, said in a statement.

Cain gave tens of thousands of dollars to Musgrove’s campaigns, and served on the state Board of Health. In legislative hearings, Cain denied accusations that he had bragged about buying his seat. Cain was forced off the board when lawmakers reconstituted it.

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This story has been corrected to show the first name of the man who sued is James, not Brian.

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Follow Jeff Amy at: http://twitter.com/jeffamy

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