Troubled Quapaw House Inc. of Hot Springs recently received more bad news.
Preferred Family Healthcare Inc. of Kirksville, Missouri, sued the alcohol and drug treatment services organization, saying it owes about $2.6 million in defaulted payments. PFH, which sold its Arkansas assets to Quapaw House a year and a half ago, filed its lawsuit last month in U.S. District Court in Hot Springs.
It’s the latest legal problem for Quapaw House. If you recall, in April at the request of Malvern National Bank, the Levi Hospital System was appointed the receiver of the nonprofit organization.
PFH said in its lawsuit that back in October 2018, PFH and Quapaw House signed a master lease and promissory note agreement. Quapaw House paid about $500,000 down for some of PFH’s assets and PFH was going to finance $533,400. Quapaw House also was going to pay PFH $140,000 a month for rent. (PFH had its own legal problems. A number of its executives — including Rusty Cranford of Rogers — were convicted of embezzlement and corruption.)
By June 1, 2019, Quapaw House had defaulted on the finance payments and most of the rent payments, PFH said in the complaint filed by attorney Ashley Rebecca Hudson of the Little Rock office of Kutak Rock LLP.
In June 2019, Quapaw CEO Casey Bright assured PFH that funding was on its way, the lawsuit said. But the payments never arrived, PFH said.
Quapaw House “made a small partial payment in October 2019,” but that was the last money PFH would see from Quapaw House, the lawsuit said.
Making matters worse, Quapaw House continued to occupy the buildings “without paying rent or providing reasonable communication about the status of the facilities,” the lawsuit said.
PFH is seeking damages for breach of contract and fraud.
“QHI committed fraud against PFH when it repeatedly misrepresented its financial condition to PFH through Casey Bright and [Quapaw House’s Chairman] Pat Parker,” the lawsuit said.
Both Bright and Parker were named as defendants in the case. Bright did not immediately return a text message and Parker did not return an email. A recording said Quapaw House’s phone number was not currently set up to receive calls.