High cost to petition audit

A petition calling for a closer look into the closure of Pauls Valley's hospital in 2018 and any possible wrongdoings could prove to be a costly move for local taxpayers.

That's the first thought of Pauls Valley's city attorney, Jay Carlton, when asked about a petition now circulating that requests an investigative audit of the city of PV.

At the center of the petition, which is seeking signatures for a couple more weeks, are all aspects of the former local hospital both before and after it closed nearly two years ago.

“The cost of it,” Carlton said about his top concern with the petition.

“If the petition is certified by the election board and goes to the state auditor I would expect them to contact us. In my opinion they would tell us to encumber $80,000.”

In that scenario Carlton says that money, which is the top estimated cost, wouldn't necessarily be spent, but it would essentially be held back to cover any expenses related to the audit.

“In a time when there are furloughs for employees, a cut in services and an extreme decline in sales tax revenues because of the virus pandemic, a cost like this is really difficult on the city,” he said.

“The city would like to get furloughed workers back to the job, and this maybe even leads to more furloughs.

“It's a horrific shame to encumber $80,000 with COVID-19 killing our sales taxes.”

With much of the criticism from petition supporters focused on the hospital's closure back in October 2018, Carlton tells the PV Democrat the entire process stretching out over years simply involved a group of local folks working hard behind the scenes to keep the medical facility open.

Those folks are trustees of the PV Hospital Authority, who also serve as members of the city council.

“No one wants to close the hospital on their watch. With the hospital's closure our town was diminished greatly, economically, and it was a terrible loss of services to the citizens.

“The only parameter was no one do anything illegal. Within the bounds of the law, do what we could to save the hospital.

“Toward the end that's what the hospital authority was hoping to do. We had at least three potential buyers – each one promising the world and then not delivering.”

•••

One of the areas listed on the petition is a request for auditors to look closer at the city's dealings with nursing home facilities across the state.

The reference is to Pauls Valley being among a handful of municipalities in Oklahoma acquiring the licenses to nursing homes as a way of pursuing a federal program, the Nursing Facility Upper Payment Limit program, which is better known simply as UPL.

The program is meant to provide additional Medicaid monies to qualifying nursing homes to be used to help residents of those facilities and the healthcare needs of participating cities like Pauls Valley.

For a time those monies through UPL looked to be the answer to PV getting the money needed to save its hospital.

The idea to get involved in UPL came from the NewLight Healthcare company, which for several years was paid by the city to manage the hospital here.

Before NewLight stepped away two years ago after a potential hospital buyer came into the picture, Carlton says company officials not only introduced the idea but actively worked to make the UPL program a reality in Oklahoma, including getting some legislation passed at the state Capitol in Oklahoma City.

“That's where the saving of the hospital would come,” he said. “The hope was UPL. There was no other way to save the hospital. No manager had figured out another way.

“The hope of saving the hospital – it was tied to UPL. All decisions made from then on were substantially based on the idea UPL would go into effect and be just as successful as it was in Texas.”

With UPL and the future of Pauls Valley's hospital now linked the city of PV then started the process by acquiring the licenses to the nursing homes, which ultimately numbered more than two dozen.

“The number of homes was purely driven by NewLight. Of course, the whole idea behind UPL was to make money to help our hospital.”

Then came an unexpected wave of negative reports coming from media and other sources criticizing the UPL program and towns like Pauls Valley for holding the licenses to multiple nursing homes.

Carlton says he's still confused where all the negative publicity came from since the UPL program had experienced a high level of success for cities and nursing homes in other states like Texas.

“The attacks on the program no doubt led to its downfall,” he said, referring to the program never being put in place for Oklahoma.

The city attorney also says any claims the city has been hit with all kinds of fines and lawsuits because of UPL and the nursing homes is a “delusion” and simply untrue.

•••

According to Carlton, another potential “flaw” to the petition is an item “held up as a fraudulent $2 million loan” related to the hospital.

“This document believed to be the smoking gun for a fraudulent loan is not understood.”

Offering a copy of the document shows it's a security agreement not related to any kind of loan, Carlton says.

“Fraudulent, no. Ineffective, yes. It was a flawed security agreement meant to protect the CD's NewLight was pledging to the bank,” he said, referring to Pauls Valley National Bank.

“It's not a loan. It was in conjunction with NewLight pledging collateral for the bank to continue lending in support of the hospital.”

In the case of this particular document the security agreement attempted was actually done wrong, which was later corrected allowing NewLight to recover hospital related debts owed to them.

Carlton says NewLight was pledging its own money to the local bank, which allowed the bank to increase its legal lending limit with loans meant to keep the local hospital open.

“If it was not for Pauls Valley National Bank the hospital would definitely have closed years before,” he said.

“They did all they could. It's not just because Patrick (Grimmett) was on the hospital authority, but the bank had always supported the hospital. The bank had been doing this for years. It just had built up to the point where they couldn't have done any more.

“The authority borrowed a lot of money, but it was all in the spirit of saving the hospital.

“Take all the passion out of it and just look at the cold, hard numbers and the hospital probably should have closed in 2013 if not before that.”

• Another area of “concern” listed on the petition is the use of a half cent sales tax, which Carlton said was approved by voters to help with the overall benefit of the hospital.

• He says it did take some time but hospital authority trustees were able to rework two city loans to help pay back wages and benefits for former hospital employees with the only exceptions related to pending civil lawsuits.

• With the recall petition process listed as a concern, which previously focused on three city council members, Carlton stresses no challengers signed up to run against any of those same members when the opportunity was there.

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