A parking lot sits empty outside of the closed Crittenden Regional Medical hospital in West Memphis. | (Photo by Mark Friedman)
The closing of Crittenden Regional Hospital put about 400 people out of work, and their woes were compounded by the discovery that they were already uninsured.
Several employees filed a lawsuit in Crittenden County Circuit Court last month because their medical bills were unpaid even though the hospital withheld health insurance premiums from their paychecks.
“We don’t have a firm grasp of … where the money went,” attorney Denny Sumpter of West Memphis told Arkansas Business. “What’s clear is it didn’t go to pay for the health insurance.”
He is seeking class-action certification for the lawsuit. Defendants named in addition to the hospital are former CEO Eugene Cashman, other officers and Cigna Corp. of Bloomfield, Connecticut, which was the third-party administrator of the hospital’s self-insured plan.
Because the hospital filed for bankruptcy protection, lawsuits naming the hospital as a defendant have been put on hold. But the case against the other defendants should move forward.
“We were told that none of these [medical] bills were going to be paid,” Sumpter said. “Losing your job is one thing, and the hospital closing is devastating, obviously, to the community. But … to see this wrongdoing that occurred is infuriating. That goes beyond the blow to the community.”
The U.S. Department of Labor is looking into the health insurance issue, according to an affidavit Cashman filed in the bankruptcy case.
Cigna, Cashman wrote, claimed it was owed $32,000 for administrative fees and would not handle claims for the Crittenden Regional employees until it was paid. Cashman said the $32,000 was sent, but Cigna then said more was owed for stop-loss premiums. The hospital didn’t have the money to pay that, so Cigna canceled its contract, he said.
“The true amount owed on health insurance claims is still unknown,” Cashman wrote.
A spokesperson for Cigna couldn’t immediately be reached for comment last week.
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