Internal emails suggest Department of Human Services officials "worked backwards" to legitimize their first-of-its-kind decision to deny licenses to a prospective nursing-home operator, attorneys argued in court filings this week.
The filings surfaced new documents in a test of the state's power to determine who can run a nursing home. The case turns on whether the agency followed state laws when it rejected bids by Christopher Brogdon to take over homes in Hope and Horseshoe Bend late last year.
Dozens of exhibits submitted by Brogdon's attorneys include key records that the agency omitted from a response to an Arkansas Democrat-Gazette Freedom of Information Act request in December, though the newspaper's inquiry should have produced those documents.
"This was simple human error on our part, and for that we apologize," department spokeswoman Amy Webb said Wednesday about the missing records.
The unreleased records, obtained by attorneys through a similar request, include at least five emails not reviewed by the newspaper. They explain more about what happened when officials determined that companies associated with Atlanta-based Brogdon shouldn't take over the nursing homes.
Brogdon's attorneys filed a petition Tuesday that relies heavily on those documents, alleging that top officials put the companies through a sham process for weeks while already having made a decision.
"Rather than reviewing [the] applications on their merits ... [state officials] in this matter decided to deny the [applications] based on rumor, innuendo, and unrelated information they obtained, then worked backwards to try to defend these improper and arbitrary actions," the complaint says.
Brogdon's companies withdrew from the Hope and Horseshoe Bend homes on Dec. 4 after the denial, which meant they could not seek reimbursement for hundreds of thousands of dollars they spent after taking over the struggling homes in late September.
The abrupt pullout sent the homes into a tailspin, scattering more than 60 residents to other properties before their food and medicine ran out.
The companies filed the court challenge on the same day they withdrew from the nursing homes. The case is noteworthy because it is the first time the state denied a licensing change.
'PREPARE A MEMO'
Brogdon acquired a pair of Arkansas nursing homes in 2018 without the same scrutiny.
He was among the subjects of an ensuing Arkansas Democrat-Gazette investigative article in April 2019 on shortcomings in the state's vetting of incoming operators.
The article found that officials were unaware of a 2015 federal civil fraud judgment of $83.1 million against Brogdon when they allowed his companies to acquire licenses for nursing homes in Hazen and Lonoke in 2018 -- licenses they still hold.
Brogdon was found liable for misleading bond investors by using their money to prop up facilities outside the scope of borrowing and to bankroll a lavish lifestyle, according to the U.S. Securities and Exchange Commission.
At the time, Webb, who called the finding "concerning," said the state likely wouldn't have been able to turn him away, even if it had known of the securities case, because state law allows rejections of operator applications only for specific causes.
A more than 30-year-old state law limits the reasons for which the state can deny applications to transfer nursing-home licenses from one company to another. Those reasons, listed in Arkansas Code 20-10-224, are narrowly tailored and haven't previously been used to deny a license transfer.
Cheryl Nichols, who works for Brogdon as operations director, said in an Oct. 7 email to state officials that the April article included "partial & incorrect information." In a December telephone interview with the Democrat-Gazette, Nichols was unable to provide any specific concerns about the article.
One of the undisclosed emails shows that Jerald Sharum, the agency's director of provider quality, cited the fraud judgment disclosed in the April article when asking Office of Long Term Care Director Cecilia Vinson to prepare a memo to deny the license applications.
Vinson on Oct. 10 emailed Sharum a spreadsheet of fines, inspection findings and poor "star ratings" at other Brogdon properties.
"Okay, it looks like there is a lot there, especially when coupled with the other information you have discovered, including the $83.1 million fraud judgment from 2015 that was entered against Mr. Brogdon," Sharum replied. "Please prepare a memo with the recommended denial" and submit it for a legal review, he added.
In December, agency spokeswoman Marci Manley told the newspaper that the Office of Long Term Care had looked over the applications and decided Brogdon hadn't shown that his facilities were in "substantial compliance" with state and federal laws.
"OLTC had requested information in writing on October 12, 2019, and again during an in-person meeting on October 18, 2019," she wrote in an email. "The information that OLTC did have included [federal] ratings for each of his facilities in Arkansas and several other states."
Manley later added: "All reviews are case-by-case based on what we know about the applicant, which in the case of Mr. Brogdon included the [federal] ratings and Mr. Brogdon's management and issues related to other facilities."
She did not mention the fraud judgment or explain that as of Oct. 11, Sharum had directed the staff to draft the memo to deny the application, citing the judgment and the spreadsheet.
Attorneys for Brogdon's companies seized on that timeline in their filing this week, also writing that "gossip about Christopher Brogdon" persisted in the department before the formal denial, which came on Nov. 4.
Debbye Nye and Ashley Hudson of the law firm Kutak Rock are representing Brogdon in the Pulaski County lawsuit. Neither returned voicemail messages left Wednesday.
Webb did not respond to the allegations in their latest filing.
The state agency has argued that Brogdon's case should be dismissed and that the denial letter appropriately explained why he didn't get the licenses.
Brogdon failed to show that his other facilities complied with federal and state rules -- one of the reasons for which officials can reject applications -- agency attorneys argued.
At least five emails -- including Sharum's note to Vinson about the memo -- filed as exhibits were not provided to the Democrat-Gazette in response to its December request.
In one, Vinson used an emoticon associated with confusion or disappointment to greet news that Brogdon's Hazen and Lonoke nursing homes had not been cited for the worst-case violations in the past 12 months.
"Good to know :-/," she replied Oct. 1.
When asked about the five emails not provided, Webb on Wednesday chalked it up to an imprecise search.
This newspaper requested all emails that included the term "Brogdon" -- or other terms -- in a specific time frame. The agency's records team mistakenly searched his first and last name, rather than just his last name, Webb said.
"[T]hat difference mattered in terms of the results we got," she said.
Brogdon's attorneys in filings said state officials "ignored" numerous emails from his associates in November. One of his associates, Brandie Lamberth, repeatedly tried to reach Kenneth Hanft, who reviews licensing applications, according to an email the newspaper hadn't seen.
"Mr Hanft is always so quick to return my messages and such a wonderful man, it's honestly got me a little concerned," Lamberth wrote to Vinson on Nov. 15. "I hope everything is fine and he is just on an amazing vacation somewhere."
A Section on 02/13/2020
Print Headline: Newly-out filings shed light on nursing-home license 'no'