A key official at the Arkansas Department of Human Services will resign at the end of the month after a little more than a year on the job, exiting in the run-up to a lawmaking session he targeted for stricter nursing home oversight.
Jerry Sharum’s departure from the Division of Provider Services and Quality Assurance is set for Nov. 28. He’ll leave behind draft legislation that would strengthen the state’s ability to vet nursing home owners, as well as a new system for monitoring the finances of current owners, he said in an interview Friday afternoon.
Sharum said he’s proud of the work his team has accomplished, but he noted it is in “the second year of a four-year plan to move from an admittedly disjointed operation … to [an] operation where everything works together.”
The draft legislation, as written by Sharum, would require nursing home licensing applicants to provide more detailed information on who owns the real estate and who will handle day-to-day management, according to a copy reviewed by the newspaper.
It also affords the state a better opportunity to look deeper into the history of applicants and their partners when it comes to compliance with federal and state rules — rather than looking back at a one-year window, Sharum said.
Sharum wrote the proposed legislation “over the summer” and has been discussing it with provider groups and other agency divisions, he said. He’s encountered “questions, but never opposition,” noting the response has been positive.
Separately, the department will hire a full-time certified public accountant to monitor finances at nursing homes, Sharum said. That job is currently being handled on a part-time basis by someone who is not a CPA.
Sharum’s brief tenure was busy. Within weeks of his promotion, the state seized five cash-poor nursing homes through the receivership process — taking this step for only the second time since the 1980s. During the takeover, Sharum signaled the need for greater money monitoring, saying “finances are a leading indicator for problems” that directly affect the quality of care for residents.
Later, Sharum directed the agency’s decision to reject, for the first time, a nursing home licensing transfer, emails show. The denial drew a lawsuit from the spurned operator in what could be a test of the law officials have said they want to strengthen.
Also looming over the agency was the shadow of Skyline Health Care’s 2018 collapse. The out-of-state firm was licensed to operate 1 in 10 Arkansas nursing home beds at the time of its crisis. The company collapsed nationwide as its owners failed to pay vendors and walked away, jeopardizing care for residents.
Amid the tumult, Sharum spoke out about his desire to give the state more control over denying nursing home ownership applications and more insight into the finances of existing owners.
His goals met broad consensus. The state’s top Medicaid fraud investigator, the state’s nursing home lobbying association and a leading advocate for nursing home residents supported the endeavor.
Rachel Bunch, director of the Arkansas Health Care Association, said Friday that her members continue to “favor a prudent vetting process.”
“We haven’t necessarily taken an official position, but generally speaking, this is a topic we recognize that DHS wants to make some change on, and we’ve been supportive of that publicly for some time,” Bunch said, referring to the Human Services Department.
Martha Deaver, president of Arkansas Advocates for Nursing Home Residents, has long called for improved vetting of licensing applicants, directing particular ire at out-of-state nursing home “owners who have a history and pattern of taking the money and not giving the care.”
In his interview, Sharum said he will join a California-based technology company as in-house counsel — though he will remain in Arkansas working remotely for the “foreseeable future.”
In a resignation letter dated Oct. 28, Sharum called the job “the highlight of my career” and said he was “extremely proud of all the things we have accomplished.”
Hired as an agency attorney in 2010, Sharum was paid roughly $113,000 a year in his current role, according to the state’s transparency website. His September 2019 promotion was to replace Craig Cloud, who had led the Provider Services and Quality Assurance Division since its 2017 creation.
An announcement about Sharum’s replacement could come as soon as this week, department spokeswoman Amy Webb said.
Cecilia Vinson, director of the Office of Long Term Care, which reports to Sharum, has been on paid leave since August, Sharum said. The office is tasked with inspecting nursing homes and signing off on licensing transfers.
LAW AT ISSUE
A n A rka n sa s D e m o - crat-Gazette investigation in April 2019 found the state had allowed the transfer of two licenses in 2018 to a trust managed by Christopher Brogdon of Atlanta, who owed tens of millions of dollars to swindled investors as part of a federal civil fraud judgment against him.
The newspaper’s story focused on who acquired the nearly two dozen licenses that were once controlled by the national nursing home chain Skyline Health Care, which failed as its owners claimed insolvency.
The newspaper’s investigation, which came at the tail end of the 2019 legislative session, exposed shortcomings in how the state vets potential providers and found the state had not taken any steps to improve that oversight after the Skyline collapse.
Skyline was licensed to operate 10% of the state’s 25,600-bed nursing home capacity when it went under.
In response to the article’s findings, Webb at the time said the agency was not aware of the fraud judgment against Brogdon. Even if it had known, the department may not have been able to reject the transfer of licenses to Brogdon because existing state law allows denial only for four narrowly tailored reasons, she said.
Changing that law, Arkansas Code Ann. 20-10-224, was among goals shared by Sharum and others. The law is simultaneously facing a courtroom test after the state, under Sharum’s direction, took the unprecedented step of denying a licensing transfer.
Brogdon still holds the two licenses — one of the facilities is in Hazen, the other in Lonoke — but he was blocked late last year from getting others in Hope and Horseshoe Bend.
Emails show that Sharum directed the Office of Long Term Care to “prepare a memo with the recommended denial” of those homes. Sharum cited the fraud judgment first raised by the newspaper, as well as an internal spreadsheet listing fines, inspection findings and poor “star ratings” at Brogdon’s out-of-state nursing homes.
The letter to Brogdon formally denying the transfer said he failed to prove 11 nursing homes linked to him in Alabama, Arkansas and Oklahoma complied with state and federal standards the prior year — one of the reasons for which the law allows a denial.
Brogdon sued, with his legal team contending the state made its decision based on “gossip about Christopher Brogdon” and then worked backward to justify the denial.
Pulaski County Circuit Judge Mary McGowan heard arguments on the state’s motion to dismiss the lawsuit on Nov. 6 but had not issued a ruling as of Friday evening.
FINANCIAL OVERSIGHT
Sharum was in his first month on the job when the state took over five nursing homes operated by Keith Head amid a cash crunch.
When the state intervened, more than 100 staff members at the homes had gone unpaid, utility companies had issued shut-off notices, medical supplies were nearly exhausted and cash balances were gone, according to court documents the state filed at the time.
Several warning signs of corporate financial stress facing Head and his business partner foreshadowed the crisis, the newspaper later reported.
Among the signs: The owners owed more than $560,000 in unpaid fees and penalties to the state agency and had been court-ordered in 2018 to sell a different nursing home’s license after failing to pay rent.
Officials at the time said they wanted to formalize ways to pay closer attention to nursing home finances.
The financial surveyor — the position for the CPA, once hired — has access to information that nursing homes submit on an annual basis, as well as trust fund accounts the facilities manage on behalf of residents, Sharum said.
“One of the tensions is we don’t want to be in the business of being their accountant or auditor,” Sharum said. “We want to go in when they have flags that impact safety.”
Information for this article was contributed by Andy Davis and Kat Stromquist of the Arkansas Democrat-Gazette.