[A] former IDX executive told health care regulators he’s ready to save an embattled drug testing company within a month but will walk away if they wait more than a month to issue a permit for the deal.
Jim Crook Jr. has been leading an investor group, with minority partnership from the University of Vermont Health Network, to acquire Burlington Labs, which collects and processes urine samples to check for opiates. It operates locations across Vermont and two in other states.
He made his case before the Green Mountain Care Board on Wednesday, seeking to use an emergency process to apply for a permit, called a certificate of need, to acquire the company, which Crook says is in danger of going under. The board approved the request for an emergency process unanimously in a voice vote after taking public comment.
Al Gobeille, the chair of the board, said he hopes to have a decision on whether Crook’s team can buy the company in the next two weeks. In an interview, Gobeille said the matter is urgent because there are people working all around Vermont who need to have their urine tested, or else they will violate their parole.
“This is an emergency because the patients that are dependent upon our lab work need the lab work done in the quality fashion we’ve provided it to get themselves off their addiction to heroin, in most cases,” Crook said. “If this business isn’t in play, they don’t have a lot of other alternatives.”
Burlington Labs has served 2,000 people so far this year, according to Wednesday’s testimony. But it has been under investigation by the attorney general’s office since October for allegedly overbilling Medicaid.
Burlington Labs billed Medicaid for nearly $12.2 million in calendar year 2015, according to the Department of Vermont Health Access. In comparison, it billed for $2.8 million in 2014, $1.3 million in 2013 and less than $1 million in 2012 and 2011.
Crook’s lawyer Elizabeth Wohl from Downs Rachlin Martin wrote in a letter Friday that the company’s cash flow problems started in January once the state cut off payments to it because of the alleged overbilling. But the head of Vermont’s Medicaid fraud unit disputes several statements in her letter.
Wohl also wrote in the initial letter to the board Friday that Burlington Labs — which is separate from the acquisition company Crook has set up — reached a $6.5 million settlement with the state.
Jason Turner, the assistant attorney general who runs the Medicaid fraud unit, told the board in a separate letter that there’s been no settlement and the investigation is ongoing. He also wrote that the state didn’t withhold Medicaid money until March, and that when the state did withhold money, it was less than Wohl reported in the letter.
After the regulatory meeting, Wohl declined to comment on the inconsistencies between her letter and information from the attorney general’s office. She pointed VTDigger to the attorney general’s office to clarify facts of the investigation.
“The case has not settled,” Turner said in an interview. “The settlement negotiations have taken place and continue to take place, but no agreement has been reached. … I would say that there is no agreement as to the settlement at this time.”
In his letter, Turner said the state began withholding about 50 percent of Medicaid payments from Burlington Labs on March 25. “We understand that the difficulties at Burlington Labs predate the partial payment suspension,” the letter says.
His letter also says: “We are not sure why the letter of intent suggests that ‘if the applicant is not able to complete the purchase of Burlington Labs … the State of Vermont will owe the federal government approximately $1.3 million.’”
“We do not believe that the board’s decision regarding a certificate of need has any bearing on potential state liability to the federal government,” Turner wrote.
Crook, in front of the Green Mountain Care Board, said he does not think the billing issues at Burlington Labs had anything to do with fraud. He said they were most likely simple errors.
He said federal regulators decided to move from a fee schedule called ICD-9 to ICD-10 in the fall of 2014. At the time, he said, Vermont didn’t have a fee schedule posted for Medicaid, so Burlington Labs continued to bill with the old schedule, ICD-9.
At some time in 2016, according to Crook, the state asked to be paid back for the extra amount. “The business didn’t have the money, which is primarily what put us in the situation we’re in now,” he said.
Crook called himself “the backstop of the investor group” and said he became involved for three reasons: to help people with opiate addiction, to save the 180 jobs that would go away if the company went under, and because he appreciated the challenge.
“This is not a philanthropic pursuit, but it would be very hard for anyone to step into this business right now and do what we’re doing,” Crook said. “We are very, very, very pregnant with this company.”
Crook said he became involved in the company earlier this year when its leaders were seeking a creditor. He said he was willing to come on board only as an investor, and subsequently built up partnerships with several parties to build a new governance team for the company.
They include Chris Powell, a health information technology executive who could start as chief executive officer Monday, and the UVM Health Network, which would be an investor. Crook’s plan would also keep Michael Casarico, who founded Burlington Labs, on the board of directors.
Crook said of himself and his management team: “We (collectively) have over 100 years of health care revenue cycle experience. It’s really the only thing I know in all of the other businesses I’ve been involved with.”
At the hearing, Crook faced questions from reporters and health care advocates from Vermont Legal Aid about the alleged fraud. Gobeille, who generally intervenes during the public comment period at board meetings, answered many of the questions himself.
“The point is today’s matter is whether there should be an emergency (certificate of need),” Gobeille said. “We are not diving into what the AG is doing or what the issue is with Burlington Labs.”
Gobeille said in an interview that the board reserves the right to issue a conditional permit for the acquisition. He said anyone who is convicted of Medicaid fraud would not be allowed to work in the health care industry.
