Preferred Family Healthcare to exit Arkansas operations

Marci Manley: PFH must help patients switch to other Medicaid providers.

Preferred Family Healthcare Inc., a Springfield-based behavioral health provider, is shutting down operations in Arkansas, but another health facility has struck a deal to acquire its assets in the Natural State.

Quapaw House Inc., a Hot Springs, Arkansas-based substance-abuse rehabilitation and behavioral health company, has signed a letter of intent to purchase PFH’s Arkansas assets, said Reggie McElhannon, a PFH spokesman.

McElhannon said PFH notified the Arkansas Department of Human Services on Sept. 11 that it would be ceasing operations in Arkansas at all current facilities by Oct. 12, unless additional time would be necessary in select locations to ensure client care is available.

He declined Springfield Business Journal’s telephone interview request, saying via email, “We are not in a position to discuss further these ongoing discussions or specific financials.”

Casey Bright, executive director of Quapaw House, did not return calls seeking comment.

The pending transaction stems from legal issues in Arkansas.

Alternative Opportunities connection
After former PFH employee Robin Raveendran, of Little Rock, Arkansas, was charged in June by Arkansas Attorney General Leslie Rutledge on two felony counts of Medicaid fraud, Arkansas DHS terminated its contracts with PFH.

The nonprofit had provided behavioral health services to more than 5,000 Medicaid recipients at 47 Arkansas sites, said Marci Manley, a spokeswoman for DHS in Arkansas.

According to a news release from the Arkansas attorney general’s office, Raveendran allegedly scammed the Arkansas Medicaid program of $2.2 million.

Additionally, former PFH employee Helen Balding, who had lived in Fayetteville, Arkansas, was charged Aug. 21 by the attorney general’s office with two counts of Medicaid fraud. She is identified as an accomplice to Raveendran and accused of making false statements knowingly causing the state’s Medicaid program to overpay PFH from January 2015 to October 2017.

Balding’s charges are the latest in a string of criminal cases involving several former PFH employees and executives as part of an embezzlement scheme that also implicated several Arkansas legislators. Federal prosecutors have charged several people in connection with the scheme to defraud the federal government: Milton “Rusty” Cranford, of Rogers, Arkansas; former Rep. Eddie Cooper of Melbourne, Arkansas; and Donald Jones, a Philadelphia political consultant and lobbyist.

The plot included illegal lobbying and advocacy services, as well as unlawful payments and kickbacks, all of which violated the nonprofit’s 501(c)(3) status.

Also implicated were local PFH CEO Marilyn Nolan, Chief Operating Officer Bontiea Goss and her husband Tom Goss, who served as the group’s chief financial officer. The three C-level executives were terminated from their positions in January, according to PFH officials. Federal prosecutors have not charged them.

PFH was formed through the 2015 merger of Alternative Opportunities in Springfield and Preferred Family Healthcare in Kirksville. According to past SBJ reporting, current leadership at PFH is Michael Schwend, who is president/CEO, Tom Weber, CFO, and Mendie Schoeller, chief compliance and ethics officer. The nonprofit no longer staffs a COO.

Former PFH Chief Clinical Officer Keith Noble pleaded guilty this month to concealing a felony.

“We are deeply saddened that the misdeeds of a few former Alternative Opportunities leaders and employees, and the resulting loss of DHS contracts and suspension of Arkansas Medicaid payments, has led us to this outcome,” McElhannon said via email. “PFH is working with employees to find the best possible path forward to help support the transition of clients and work. We are extremely grateful and proud of their support, and we are committed to doing everything in our power to support their transition to new employers. We also understand the critical importance of smooth transitions for our clients and are actively working with DHS and other providers to achieve this goal.”

McElhannon declined to answer questions regarding any potential financial impact of the closing in Arkansas or in the other four states it continues to operate.

Manley said PFH had Medicaid claims in Arkansas totaling $36.2 million for 2017.

Medicaid transition, future plans
As is allowed in its health contracts with providers, DHS gave PFH 30 days’ termination notice, Manley said. PFH is required to comply with the beneficiary transition to new providers, she added.

DHS will facilitate the transition by compiling a list of Medicaid providers in the counties where PFH has previously served patients, and Manley noted letters have been sent to those impacted. In addition, she said a banner on the homepage of the DHS website offers a list of providers.

Information regarding Arkansas operation changes also are noted on the PFH website, which says, in part, “PFH is not the target of any criminal investigations, and in fact we are cooperating with government authorities regarding investigations into the misdeeds of several former leaders and employees.”

Even with a pending asset sale between PFH and Quapaw House, Manley said the beneficiary transition would continue over the next few weeks. Any new owner would go through accreditation and meet provider requirements, she said.

McElhannon said PFH plans to continue providing community services for individuals with developmental disabilities, child welfare, employment services and behavioral health, as well as its 16 residential substance use disorder programs and numerous outpatient sites in Missouri, Oklahoma, Kansas and Illinois.

According to past SBJ reporting, PFH this year notified several nonprofit tenants at its Springfield office, 1111 S. Glenstone Ave., that they would need to vacate the rent-free space. Those tenants, Court Appointed Special Advocates of Southwest Missouri, Girls on the Run and The Doula Foundation, have either left the building or plan to do so by the end of the year. McElhannon said Sept. 19 he had no updates on company plans for the extra space.