Businesses with Ties to S.C. Lawmakers Raking in Millions in Medicaid Payments

June 4, 2013

Investigative Reports

Print Friendly, PDF & Email
By RICK BRUNDRETT

 

Over the past six fiscal years, medical businesses with ties to five S.C. lawmakers collectively have received more than $10 million in Medicaid payments, The Nerve found in a review of state Medicaid records.

Two of the lawmakers – Rep. Kris Crawford, R-Florence and an emergency room doctor, and Rep. Kit Spires, R-Lexington and a pharmacist – didn’t report any of their Medicaid amounts on their six most recent annual statements of economic interests filed with the State Ethics Commission, though Spires contends he is not required to do so.

The other three lawmakers with ties to businesses that received Medicaid payments during the period were Sen. Kevin Bryant, R-Anderson; Sen. Ronnie Cromer, R-Newberry; and Rep. Murrell Smith, R-Sumter.

Following is a breakdown of the total amounts listed under the lawmakers’ names or medical businesses with ties to them, according to The Nerve’s review of online records with the S.C. Department of Health and Human Services (HHS) from fiscal 2007 through 2012:

  • Spires: $2.9 million;
  • Cromer: $2.69 million;
  • Bryant: $2.54 million;
  • Smith: $2.08 million; and
  • Crawford: $321,613

The top three recipients are pharmacists and wholly or partly own pharmacies. Smith, an attorney, is a partner in a medical-supply company; Crawford works for a medical staffing company, owns a medical firm bearing his name, and is a partner in another medical company.

In addition to receiving Medicaid payments, companies to which Bryant and Smith have ties also have received tens of thousands of dollars annually in recent years from the state health plan, according to their income-disclosure forms.

In a written response last week to questions about reporting requirements on state income-disclosure forms, Cathy Hazelwood, chief lawyer and deputy director at the State Ethics Commission, told The Nerve that under state law, public officials who receive Medicaid payments individually in their private medical jobs must report those amounts on their annual statements of economic interests, which cover the previous calendar year.

Filers would not have to report Medicaid payments to medical businesses that they owned or were employed at, though they would have to list their total annual salaries if those businesses had Medicaid contracts with the state, Hazelwood said.

“Filers seldom do it correctly,” she said.

The State Ethics Commission, however, does not have jurisdiction over state lawmakers; they are governed by the House and Senate Ethics committees. Whether lawmakers should continue to have the authority to police themselves for ethics violations, and if so, how much authority they should have, could be debated today on the Senate floor if senators take up an ethics-reform bill (H. 3945) sponsored by Smith, who is a member of the House Ethics Committee.

Further complicating matters is how “government contract” is defined under state ethics law. HHS spokeswoman Colleen Mullis told The Nerve on Monday that the state’s 53,066 Medicaid providers have to sign an agreement regarding payment levels and policies, though she stopped short of describing it as a contract.

The state pays only primary Medicaid providers, not subcontractors, Mullis said.

‘It Will Be Corrected’

The Nerve’s review of online HHS Medicaid-payment records found that Crawford received more than $242,552 in Medicaid payments from fiscal 2007 through 2012 – in addition to $79,061 paid last fiscal year to Physicians Preferred Monitoring, described by Crawford as a home health-monitoring company in which he is a partner. He also owns another medical company, Crawford Medical LLC, according to his income-disclosure forms, though The Nerve’s review could not find a listing for that company in the HHS database.

Crawford was found guilty in November of misdemeanor charges of failing to file state income tax returns on time from 2004-2007, and was ordered to pay a $10,000 fine and the costs of prosecution expenses, according to media reports. A state Department of Revenue press release in 2010 said Crawford was the sole shareholder in Crawford Medical LLC for tax years 2005-2007, during which the business earned $976,084 in gross receipts.

Crawford is the main sponsor of a bill (H. 4095) this year that would accept Medicaid expansion funds under the federal health-care law commonly referred to as “Obamacare.” The bill, which was introduced on May 2, though it hasn’t moved out of the House Ways and Means Committee, would allow adults not already covered by Medicaid to receive federal Medicaid funds if they enrolled in a managed-care plan through HHS and set up a medical-savings account, as The Nerve previously reported.

Contacted last week by The Nerve, Crawford said he thought he had reported Medicaid payments on his annual statement of economic interests filed with the State Ethics Commission, but would amend his forms if he hadn’t done so.

“The same people doing the accounting for the company are doing the filing for me,” said Crawford, who noted he works for EmCare, a national medical-staffing company based in Dallas. “If there is something that is missing that was not correct, it will be corrected.”

Still, Crawford said it’s no secret in his legislative district that he treats Medicaid patients, noting, “All my voters know I’m a physician and know I’m an emergency room physician, and I think the average person knows an emergency room physician sees a lot of Medicaid patients.”

Crawford said he doesn’t “know what gets billed for me for Medicaid.” The Nerve’s review could not find a listing for EmCare in the online HHS Medicaid-payment database.

“HHS writes those checks to someone billing for me,” he said. “I get the same rate as everyone else.”

Asked whether his Medicaid-expansion proposal now before the Ways and Means Committee would benefit him financially, Crawford replied: “Most people lose money doing business with Medicaid. That is sort of the story with Medicaid.”

Ethical Loopholes

Like Crawford, Spires, the owner of Big S Discount Drugs in Pelion, didn’t report any Medicaid payments on his six most recent annual statements of economic interests, The Nerve’s review found.

But Spires hasn’t been bashful about introducing pharmacy-related bills. The Nerve reported in April that of 22 general bills sponsored by Spires since his first year as a House member in 2007, seven, or nearly a third, were pharmacy-related.

Contacted last week by The Nerve, Spires didn’t dispute the total $2.9 million in Medicaid payments to his pharmacy over the past six fiscal years, though he said he is not required to report those amounts on his income-disclosure forms.

“I’m just like any other pharmacy,” he said. “Everybody is paid the same rate. Nobody gets any special treatment.”

Spires didn’t list his pharmacy ownership on his most recent income-disclosure forms. State law requires public officials to report that information if they own at least 5 percent of outstanding stock in a company and if the total value of those shares is $100,000 or more; Spires said he owns no stock in his company.

Spires was an initial co-sponsor of Crawford’s Medicaid-expansion bill, though he removed his name from the bill, along with 24 other co-sponsors, after The Nerve’s May 13 story on the legislation and other Medicaid issues.

Cromer, who owns Lorex Drugs in Newberry and is part owner of the Union Family Pharmacy in Union, said Monday that he was not aware of the HHS online Medicaid database until contacted by The Nerve. He said he had been estimating his annual Medicaid payments to his Lorex pharmacy and the Union pharmacy, which he noted he is a 25 percent owner, on his annual income-disclosure forms.

A member of the budget-writing Senate Finance Committee, Cromer acknowledged that he routinely has voted on budget matters pertaining to HHS, which oversees the state’s Medicaid program. But he said he doesn’t believe there’s a conflict of interest because of the “large-class exception” allowed under state law, which allows lawmakers to approve legislation that benefits their companies if similar businesses within that industry receive the same benefit.

Cromer, who is the Senate Rules Committee chairman, added that he voted three times this year against the Medicaid expansion allowed for states under Obamacare.

Like Cromer, Bryant, president of the family-run Bryant Pharmacy and Supply in Anderson and a member of Senate Finance, said he has voted on HHS budget issues. But he said it’s not a conflict of interest for him because he’s “always voted against their budget,” adding he also has consistently opposed Medicaid-expansion proposals and increasing cigarette taxes.’

“I’ve told HHS they’re paying too much for Medicaid products,” Bryant said. “I have lots of Medicaid customers, and I appreciate their business, but the system is raping the taxpayer.”

Smith, a general partner with Sumter-based Reliable Medical Equipment of South Carolina, told The Nerve last week that he routinely has recused himself from voting on HHS’ budget section when the state budget is debated on the House floor. The law requires roll-call votes on state budget sections before the third reading of the budget on the House and Senate floors; state law also bans lawmakers who own more than a 5 percent share in a business from entering into a contract with a state agency involving the business if they voted on that year’s budget section dealing with the agency.

But Smith, who chairs the Healthcare Subcommittee of the budget-writing Ways and Means Committee, acknowledged he hasn’t recused himself from voting earlier in the budget process, though he said he has told his subcommittee that “I don’t vote on durable medical equipment.”

Like Cromer, Smith cited the “large-class exception,” noting, “If I were setting my own (Medicaid) rates, that obviously would be a conflict of interest.”

Smith said he couldn’t recall any time during budget presentations by HHS Director Tony Keck or the previous two directors when Medicaid funding for durable medical equipment was specifically discussed.

Besides his partnership in Reliable Medical Equipment of South Carolina, Smith said he was an owner of Abacare Home Medical LLC  for several years during the period of The Nerve’s review. He also is listed on his most recent state income-disclosure form as a general partner in another company, Assistive Technical Medical Equipment Services; The Nerve’s review could not find a listing for that company in the online HHS Medicaid-payment database.

Asked about the $2 million in Medicaid payments his medical-supply businesses received over the past six fiscal years, Smith replied, “Medicaid is a very small part of the durable medical-equipment business.”

My (profit) margins are so razor-thin in this industry,” he said.

Reach Brundrett at (803) 254-4411 or rick@thenerve.org. Follow him on Twitter @thenerve_rick. Follow The Nerve on Facebook and on Twitter @thenervesc.