James G. Burkhart could be back charge of 63 nursing homes currently operated by his former employer, American Senior Communities LLC (ASC). Burkhart was fired three days after the FBI raided the CEO’s home and ASC headquarters earlier this year.
It’s come to light Burkhart negotiated a series of contracts with Health & Hospital Corporation (HHC) of Marion County, Ind. The contracts, called put options, would allow HHC to sell their nursing homes to Burkhart under prearranged terms if it wanted to exit the nursing home business.
It is not known if the FBI is looking into those contracts as part of its ongoing investigation. Matt Gutwein, CEO of HHC, said the federal investigation has added complications to the agreements.
“We’re going to have to figure out what we’re going to do,” Gutwein says to the IBJ but provided no further details. “There are a lot of unknowns about Jim Burkhart right now.”
The contracts would give Burkhart all accounts receivable as well as title to the nursing homes’ physical assets, but not its real estate. Burkhart would not have pay to acquire the facilities.
HHC first negotiated put agreements in 2003 after it acquired its first nursing homes from private ownership. A loophole in the payment policies of the federal/state Medicaid program allows government entities to pay state Medicaid agencies extra fees that trigger higher federal matching funds up to the maximum payments, referred to as the upper payment limit program.
A speculated switch to managed care would eliminate the upper payment limit program and is a reason why HHC began negotiating put options, Gutwein says. HHC cannot exercise its nursing home put options with Burkhart until September 2017. It has no plans to do so as of right now.
“Under the circumstances as they exist today, the prospect that we would exercise those puts is extremely low,” Gutwin said.
Related: Indiana nursing home CEO fired