The company that used to pay state Sen. Jeremy Hutchinson of Little Rock $9,000 a month in lawyer fees filed suit against him Friday, seeking to recover at least $383,805.
The company is trying to argue Hutchinson was the company's lawyer and not the company's lawyer at the same time, said the defendant's attorney, Tim Dudley of Little Rock.
Lobbyist Milton R. "Rusty" Cranford of Bentonville pleaded guilty June 7 to helping executives within Preferred Family embezzle $3.5 million, much of it going to illegal campaign contributions and bribes to lawmakers. Nonprofit companies such as Preferred Family, a behavioral health service provider receiving Medicaid reimbursements, are barred by law from lobbying for additional taxpayer dollars.
Cranford's plea said Hutchinson being retained as an attorney amounted to a bribe. Hutchinson has denied the allegations through his attorney.
Friday's civil suit by Preferred Family in Independence County Circuit Court seeks to recover the $383,805 award to an ex-employee who sued one of the company's subsidiaries in 2014. Hutchinson represented the subsidiary but failed to show up for hearings or respond to court motions in the dispute the suit says. The earlier suit involved is David Coleman v. Health and Human Resources of Arkansas. Health Resources is a Batesville-based subsidiary of Preferred Family.
Hutchinson failed to notify the company of missed deadlines and court appearances in the case, also in Independence County, the new suit claims. The company "learned of the judgment for the first time from its banking institutions, who were processing the garnishments" in the Coleman case. The order of garnishment went out Feb. 21, 2017, according to the new lawsuit.
The suit, filed Friday, also reserves the right to seek recovery of the retainer fees and gifts Preferred Family paid Hutchinson, a sum estimated at $500,000 in a federal criminal case involving the lobbyist responsible for Hutchinson's hiring.
Hutchinson hasn't been charged in the federal investigation. Dudley said Friday his client cannot reasonably be acknowledged to be Preferred Family's lawyer, as stated in Friday's suit, and be recipient of a bribe only disguised as a lawyer fee at the same time.
"They attach a letter as an exhibit in this lawsuit in which they say they are raising his retainer fee because of the good job he's doing," Dudley said.
Still, Preferred family's suit seeks to leave the door open for further recovery and asks for a jury trial, the suit says.
"Mr. Hutchinson may have caused additional and material financial injury to [Preferred Family and Health Resources] through additional acts and omissions, as suggested by his invoicing and receiving monthly payments of [totalling] $108,000 in 2016 and $271,000 in 2013-2015 without corresponding evidence of any legal work," the lawsuit says.
Cranford said in his plea an Arkansas lawmaker identified as "Senator A" in court documents was paid a retainer as a form of bribe along with receiving cash and other gifts either from the company, Cranford or other Cranford lobbying clients. Total value of the gifts and retainers is estimate at $500,000 in the plea.
Preferred Family has either dismissed or suspended at least four members of its top management team since November after being briefed on the investigation in October, the company says.
"Today's Preferred Family Healthcare is a different organization than the one led by the executives who came from Alternative Opportunities before the merger of AO into PFH in 2015," the company said Friday. "After the merger, as we became aware of significant wrongdoing by certain executives and consultants, we removed those who put personal gain over the PFH mission."
Dismissed executives included the chief executive, chief operating and chief financial officers of the company.
Preferred Family has 47 locations in Arkansas and other operations in Missouri, Oklahoma, Kansas and Illinois. In Arkansas, the company's finances are now subject to monthly review along with unannounced inspections of facilities by the state Department of Human Services, the agency and the governor's office has confirmed.
Preferred Family is cooperating with federal investigators, the company's statement said.
"As part of that investigation, PFH reviewed its relationship with Jeremy Hutchinson and based on that review, today filed a civil lawsuit against Hutchinson and the law firm of Steel, Wright, Gray & Hutchinson," the statement said. "The lawsuit alleges significant malpractice on Hutchinson's part in his representation, or lack thereof, of PFH."
Hutchinson's law firm disavowed any role in the matter in a statement Friday. "As a professional association, the firm's partners manage their own clients and caseloads, with few exceptions," the law firm's statement said. "In this matter, no other members of the firm performed any legal work or received any fees from this client.
"We are reviewing the complaint, but as for the allegations contained in it, we would refer all questions to Mr. Hutchinson or his attorney."
The dismissed Preferred Family executives are CEO Marilyn Nolan, chief operating officer Bontiea Goss and chief financial officer Tom Goss, all of Springfield, Mo.
Hutchinson's 2012 campaign contribution and expenditure report shows a $2,000 contribution from the Cranford Coalition, Rusty Cranford's lobbying firm. The Cranford Coalition also donated $2,000 in 2013, reports show.
Additional 2013 contributions include $2,000 each from Cranford, his wife Karen Sue Cranford and son Chase Cranford. Marilyn Nolan contributed $500. Pro 1 of Springfield, a thermostat manufacturing and import company with Tom and Bontiea Goss on its board, gave $2,000.
NW News on 06/16/2018