Noble Health to face trial after closing two hospitals in Missouri
A year after privately held Noble Health closed two rural hospitals in Missouri, patients and former employees are struggling with a broken local healthcare system or missing out on millions of unpaid wages and benefits.
Hospitals in Audrain and Callaway counties remain closed as state and federal lawsuits and investigations continue.
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In March, Missouri Attorney General Andrew Bailey confirmed the civil investigation. He previously told local radio that an investigation was “underway” into a “hospital issue”.
Bailey’s comment comes weeks after the U.S. Department of Labor’s Workers’ Benefits Administration notified executives associated with the Noble Health startup that they had violated federal laws and asked them to pay $5.4 million to cover unpaid claims for health insurance of employees, according to 13-. a page of a letter detailing the “intermediate findings” that was received by KHN.
The January letter confirms a previous KHN report that was reported by staff and patients who reported missing salaries; receiving unexpected bills for medical services for large amounts; and non-care, including cancer treatment. According to a letter from federal investigators, Noble hospitals and their corporate owners collected employee contributions for medical, dental and vision insurance in 2021 and 2022 but then failed to fund insurance plans.
Owners and managers “are aware of the harm done to members and have, in some cases, attempted to resolve individual member’s complaints,” the letter said, adding that “despite the volume and seriousness of the complaints and bills received,” they did not respond. .
“Tomfoolery” and “All Dirty”
Marissa Hagedorn, who worked as a laboratory assistant at the hospital, spent much of the past year starting a new job, caring for her 2-year-old son, who was born with spina bifida, and haggling over unpaid medical bills. She told KHN the family owes at least $8,000 for specialized care for son Ryder in St. Louis, of which $6,000 is in collections. As a Noble employee, Hagedorn said she was repeatedly told that her employee health insurance would cover Ryder’s care. This is wrong.
Noble “made everyone dirty,” she said. “We just wish there was some responsibility for this company that didn’t feel the need to act together.” Hagedorn’s story of unpaid bills, first reported by local Mexico Ledger newspaper, circulated among former Noble employees a year after the hospitals closed.
A former employee at Fulton Hospital has filed a class action lawsuit seeking to represent hundreds of employees from both hospitals.
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The Jan. 13 letter from federal officials called for responses by Jan. 27 to Noble corporate and hospital executives, as well as Platinum Neighbors, which bought the hospitals last April and took on all the responsibilities. The letter advised executives to contact the agency “to discuss how you intend to correct these violations, fund members’ claims, and seek compliance.”
Former employees say their claims are yet to be paid. Labor Department spokesman Grant Vought said the agency could not comment on the ongoing investigation.
Separately, the Kansas Department of Labor is considering the failure of Noble and Platinum to pay wages and severance pay to corporate employees. Agency spokeswoman Becky Shaffer confirmed that hearings were held in early February in half a dozen cases totaling more than $1 million in claims for unpaid wages and severance pay.
Dave Kitchens was among those who filed lawsuits against Noble Health. Kitchens briefly worked as a salaried employee before being hired as a corporate controller in October 2021, where he was responsible for financial reporting and data analysis. Kitchens provided KHN with an audio recording of his hearing and hopes to eventually receive more than $90,000 in lost wages, benefits and severance pay. During the hearing, Kitchens told the administrative judge, “I just wish I had what I’m owed.”
Kitchens, also named as a federal investigation trustee, said he was not part of Noble’s executive team. When asked by Kansas Administrative Law Judge James Ward whether he expected Noble or a secondary buyer of Platinum to pay him a salary, Kitchens replied that he “has no idea who’s in charge.”
“I think it was some kind of tomfoolery,” Kitchens said.
Rabbit Hole of Responsibility
Noble launched in December 2019 with executives who never ran the hospital, including Donald R. Peterson, a co-founder who was accused of Medicare fraud before joining Noble. Peterson settled the case without admitting wrongdoing and in August 2019 agreed to be excluded for five years from Medicare, Medicaid and all other taxpayer-funded federal health care programs, according to the Inspector General’s Office of Health and Human Services.
By March 2022, the hospitals were closed and Noble offered explanations on social media, including a “technological problem” and the need to “restructure their operations” to keep the hospitals financially viable. In April, Texas-based Platinum Neighbors paid $2 for the property and all obligations under a share purchase agreement.
According to court records, despite receiving approval for nearly $20 million in federal COVID-19 relief money prior to hospital closures — funds that are still not fully accounted for — Noble stopped paying its bills. Contractors including care agencies, a coronavirus testing lab and landscapers have filed millions of dollars in lawsuits.
In Audren County, where community members are still hoping to reopen a hospital or build a new one, county leaders have filed a lawsuit to repay a $1.8 million loan they made to Noble. Former Missouri Senator Jay Wasson also filed a lawsuit in September seeking repayment of a $500,000 loan.
This year, two Noble Health real estate agencies have filed for bankruptcy. In one of the Chapter 11 bankruptcy filings, the Fulton Hospital property in Callaway County is listed as an asset and a liability of nearly $4.9 million. The third bankruptcy filing filed by FMC Clinic includes Noble Health as a co-debtor.
In Kansas District Court, the Central Bank of the Midwest is suing Nueterra Capital over a $9.6 million loan Noble used to buy Audrain Hospital. The bank claims that Nueterra, the private equity and venture capital firm that added Noble to its portfolio in 2022, has become the guarantor of the loan.
Federal investigators have listed about a dozen people or entities associated with Noble Health as fiduciaries, who they say are personally responsible for paying millions of unpaid medical claims. The letter also details ownership of Noble Health for the first time. Owners included William A. Solomon with a 16.82% share, Thomas W. Carter with a 16.82% share, The Peterson Trust with a 19.63% share, and NC Holdings Inc. with a share of 46.72%.
NC Holdings is also listed in the share sale agreement with Platinum along with several signatures including Jeremy Tasset, chief executive of Nueterra Capital.
Tasset did not respond to a request for comment on this article. In an email to KHN in March 2022, the CEO of Nueterra Capital wrote: “We are a minority investor in real estate and have nothing to do with the operation of hospitals.” In May 2022, Tasset wrote in an email to KHN that “everything has been sold (including real estate) to Platinum Neighbors, a subsidiary of Platinum Team Management.”
It is unclear who owns and controls The Peterson Trust, which federal investigators have identified. Peterson, who is listed on Noble’s filings as a director and in other roles, did not respond to requests for comment for this article. He previously told KHN that his participation in Noble did not violate his exclusion from his reading of the law.
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He said he owns 3% of the company, citing guidance from the Office of the Inspector General of the US Department of Health and Human Services. Federal regulators can delist companies if someone under the ban owns 5% or more.
In March 2022, Peterson created Noble Health Services, which federal investigators note in their letter “was created to restructure the ownership of several Noble organizations.” Peterson dissolved that company in July 2022, according to a Missouri business document.
In September, Peterson posted on LinkedIn that he was “sitting in the Emirates Air Lounge in Dubai” to complete due diligence on “new business launches.”
The 2013 OIG Bulletin states that “an excluded person may not hold any management or leadership positions” and “may not provide other types of administrative and managerial services … except when they are not fully associated with federal health programs.”
KHN looked into a federal system designed to stop health care owners and executives from repeatedly cheating government health programs and found it failed.
OIG maintains a public list of people and businesses that are prohibited from participating in all federal health programs such as Medicare and Medicaid. The KHN review found the system to be devoid of oversight and rife with legal gray areas.
Following the KHN report, Oregon Sen. Ron Wyden, a Democrat who is chairman of the powerful Senate Finance Committee, said “it’s critical that federal watchdogs can ensure attackers don’t get into Medicare.” Sen. Chuck Grassley (R-Iowa) said the government needs to do more, and “private sector businesses also need to do better checks on the exemption list.”
“We can’t just depend on one or the other to do everything,” Grassley said.
Hospitals in Missouri have sold twice as much in recent months, according to publicly available data. The Oregon-based Saint Pio of Pietrelcina notified state officials of the change of ownership in December and requested that the hospital’s licenses be renewed, which was denied. In January, Audrain County officials, in their lawsuit, disclosed another owner named Pasture Medical, which incorporated as a Wyoming company on December 27, 2022.
“We didn’t crawl out of the rabbit hole on this,” said Steve Bollin, director of regulation and licensing for the Missouri Department of Health and Senior Services. Bollin’s agency, which conducts inspections and approves changes in hospital ownership, said he would support his agency in conducting financial audits.
“Maybe it’s not a bad idea if someone dives a little deeper. We don’t have a lot of ownership changes, but we’re going to need the right staff for that, including some really good accountants. [certified public accountants]”.
Kaiser Health News is a national health policy news service. It is an editorial independent program of the Henry J. Kaiser Family Foundation and not affiliated with Kaiser Permanente.