Saturday, July 7, 2012

I Sold My Hawthorne Clinic, and Then....

      I sold my clinic, Hawthorne Medical Center, on March 16, 2010 and watched everything go downhill after that.  A year and a half later the office closed in disrepute, and the buyer got away with a fortune.
     The clinic patients were abandoned, all the employees lost their jobs, and the buyer filed for Chapter 7 bankruptcy for more than $12 million. How did she do it?  It was a feat of great ingenuity. 
     The buyer, Patricia McCullough, demonstrated just how successful a person who is single-minded about her purpose, and completely self-serving, can be.  A little charisma honeyed into the right places goes a long way.
     Pat McCullough was the first buyer who stepped forward when I put the medical clinic up for sale, and the consultants I was using recommended I sell to her.  She was a registered nurse who wanted to run a clinic, she said, to "help people" and put what she learned into a second clinic she hoped to open, eventually, on property in Picayune, Mississippi. 
     I wanted to sell the clinic to devote myself full-time to developing a residential farm community for adults with autism.  My son Carmine, age 23, is severely autistic and needs supervision twenty-four hours a day.  There are virtually no places for adults with autism to live in Florida.  What happens when their parents are gone?  I wanted him and others with autism to have safe, meaningful, non-institutional lives.
     Pat spent a year and a half scrutinizing the clinic's accounts, especially the patients' billing numbers and amounts still owed the clinic by insurance companies.  She recruited accountants, billing experts, and financial specialists.  During the long period of due diligence her bank (Silver State), along with many others, was shut down in the banking crisis that became headlines for the next few years.  Pat requested that I finance a large part of the loan for her clinic purchase, and--ready to move on--I did.
     Hawthorne Medical Center had been very busy--8,000 patients--and was a successful and much-appreciated clinic in an under-served rural community.  The staff was large, there were two physicians and four mid-level providers when I sold it, and the clinic offered many services on-site, such as ultrasound, stress testing, x-ray, casting and splinting, a range of minor surgeries, gynecologic procedures, and pediatrics.  All the bills were paid and the building, land and equipment were debt-free.  I felt sadness about leaving but hoped to remain involved as a consultant, since Pat had no experience with patient care or clinics and urged me to assist in the transition.  Most physicians who sell a clinic continue to work alongside a new owner for at least a year, sometimes two or three. 
     Pat owned a horse farm in Lexington, Kentucky.  It was odd that after the purchase of the clinic, which had required my presence twelve to sixteen hours a day, she took long weekends off, and commuted from Kentucky to Florida.  A few months after assuming ownership she took a three-week vacation to France.  I spent a month working for her, to smooth the transition--in that time Pat barely spoke to me and showed no interest at all in the mechanics of the office, billing, coding, the clinic philosophy or the flow of patients.  After that month she banned me from the property without explanation and would not accept phone calls, inquiries or advice.  Two months later she stopped making monthly payments on the mortgage.
     Pat sold office equipment for quick cash and entered into leases--but never paid them.  She hired billing specialists and housed them in a separate building to focus on collecting the accounts receivable quickly.  Employees from that time tell me she slandered my name daily, accusing the clinic of having committed fraud, and building up her "case" against me.  She borrowed large amounts of money against falsified reports of clinic collateral, and showed no interest in the mission of the clinic or its patients.  She petitioned everyone for money, including banks, mortgage companies, churches, and patients.  She persuaded some providers to work for nothing, or to postpone their paychecks.
     Here was a clinic that hadn't needed to borrow once its start-up loan was satisfied, had good affiliations with vendors, and had never been in arrears on bills--now, under Pat's leadership, it was being depicted as a "struggling medical center trying to do good for poor, rural people, and desperate for financial help."  Pat shed tears in public to express her grief, which helped her secure loans and postpone bills.  With demanding creditors and other vendors, however, she argued and threatened, because that's what kept them at bay.  She did not pay the IRS, property taxes, or the telephone, electric, and equipment maintenance bills.  
     She never told me she had found anything fraudulent about the clinic operations--in fact she said the clinic was a paragon of excellence.  But staff say she was on the phone with State Legislator Bill Nelson almost immediately after the sale, asking him how to report a doctor for fraud.  She entertained creditors in private, telling suspicious employees to stay home on days they might disaffirm her stories about the clinic's financial status.  The clinic was in dire straits when Pat was petitioning for donations;  it was wildly successful when she asked for bank loans.  She ignored my petitions to step in (at no cost) and assist her or, if her concerns about wrongdoing were valid, to answer them.
     Employees were forced to sign a document saying they would not speak to outsiders about anything at the clinic.  This vow of silence was broken frequently, when they called me in a panic to say that Pat wasn't issuing paychecks, that she was denouncing me as fraudulent to patients and people in the community, and that she was billing insurance companies, illegally, for services using my Medicare and Blue Cross provider ID numbers.  In addition she was running the clinic for weeks at a time without a Medical Director, a violation of the Florida Medical Board.  Employees reported Pat to the Labor Board and began to picket outside the office.  This made news on TV 20 and in the Gainesville Sun
     Pat had two objectives:  1)  to take in as much money from all sources as possible, and to make it "disappear;"  2)  to launch an all-out attack on me and the clinic she had bought, so as to place blame for her planned annihilation of the business on my shoulders, thereby diverting attention from her own wrongdoing.
     She never intended to run a clinic.  She focused from the start on how to cash in on the clinic's good reputation, financial integrity, and accounts receivable.  She seized the clinic assets, obtained bank loans with trumped-up collateral, persuaded the federal government to launch an assault on me, and left the scene with $12 million in hand.  "Where did it go?" we who watched her sleight-of-hand asked, dumbfounded.  But no one else seemed to care.  It was much better publicity and much less work, I suppose, for the media and government to "catch a doctor" than to unravel the ingenious tactics Pat used to wreak damage on everyone around her, smiling at the ease of it all.  Pat managed to come out looking innocent, even maligned.  
     The once-thriving medical center closed in just over a year.  The building is gutted now, and the property overgrown with weeds and teeming with snakes. 
     I foreclosed on Pat's loan in December 2009.  I opened a new medical office, Colasante Clinic, in February 2010, hiring staff who had been fired by Pat, and accepting patients who were without a doctor.
     Pat filed counterclaims against me, accusing me of having sold her a fraudulent clinic, and effectively halted the foreclosure action.  There were no grounds whatsoever for her claims, but my lawyers said it was standard procedure for a buyer who fails at a business to accuse the seller of having sold something nonviable, or fraudulent.
     In June 2010 Pat McCullough used Barry Cohen's high-profile law firm in Tampa, Florida to file complaints of great persuasiveness, I imagine, with Medicare and the FBI, inciting them to raid and forfeit my new clinic.  Although there were no grounds for such action, the government doesn't need grounds, just "reasonable suspicion."  Pat McCullough is probably hoping for a tidy whistleblower fee, destined to pay out after her bankruptcy is forgotten.
     On June 7, 2011 Pat McCullough filed for bankruptcy and was granted forgiveness for more than $12 million by the United States Bankruptcy Court, Eastern District of Kentucky.  The debt to me for her purchase of Hawthorne Medical Center was not included in this figure.  Ninety-eight creditors were listed in her petition, and none of them will get paid. 
     How did she do it?  How did we all fall for it?  Am I so easy to manipulate?  Is the United States Government?


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