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February 07, 2013 9:30 am

Losses from Cardwell paid back to PVHC

Written by Tribune Staff

Powell Valley Healthcare reaches settlement with management company

A settlement with Powell Valley Healthcare’s management company finishes making the organization whole from losses caused by its former chief executive officer — and current fugitive — Paul Cardwell, PVHC officials say.

The agreement announced Wednesday between Powell Valley Healthcare and HealthTech Management Services Inc., also resolves a lawsuit filed by the Powell Valley Healthcare board against HealthTech, which employed Cardwell to manage Powell Valley Hospital and its accompanying health care facilities. Powell Valley Healthcare had claimed HealthTech didn’t provide enough oversight of Cardwell.

Federal prosecutors say that while serving as Powell Valley Healthcare’s CEO between March and September 2011, Cardwell and accomplice Michael Plake of West LaFayette, Ind., conned the organization out of nearly $848,000 under the auspices of recruiting staff. Prosecutors say it was a scheme the two men had run for years at an Indiana hospital where Cardwell had previously been CEO. The $800,000 fraud from White County Memorial Hospital in Monticello, Ind., took place between early 2003 and late 2008, prosecutors say, but apparently wasn’t discovered until after the Powell fraud was uncovered in late 2011.

Cardwell absconded from federal authorities last August while out on a $50,000 unsecured bond. Plake, meanwhile, has been cooperative with law enforcement and is set to be be sentenced for the frauds from Powell Valley Healthcare and from the Indiana hospital on Feb. 25 in Cheyenne.

Powell Valley Healthcare previously received settlements from its crime policy insurers for some losses inflicted by Cardwell and Plake. The amount of HealthTech’s settlement was not announced, but it included reimbursing PVHC for all of its attorneys’ fees, Cardwell’s salary and benefits and other miscellaneous expenses. Cardwell’s compensation for his seven months as CEO totaled more than $150,000, according to hospital records.

Wednesday’s settlement announcement puts the Powell healthcare organization on a path toward recovery from Cardwell’s illegal actions.

“I’m pleased to have this behind us,” said PVHC Chief Executive Officer Bill Patten. But, he added, “We still have two more chapters before we’re finished with this book: the sentencing of Michael Plake and the capturing and conviction of Paul Cardwell.”

Board members were pleased as well.

“We’re ecstatic,” said Board Vice President Jim Beukelman. “It has been one long, drawn-out problem that the board has had to deal with. HealthTech was very fair with us, as were the insurance companies. That made it easier to settle.”

Eli Richardson, an attorney for HealthTech Management Services, said, “From HealthTech’s perspective, the settlement is an important step toward resolving this entire matter.

“We do feel that it was Powell Valley Healthcare’s cooperation in investigating this matter with HealthTech that enabled Cardwell’s and Plake’s scheme to be exposed quickly,” Richardson added. With that help, “we were able to both minimize the damage caused by the conduct and also maintain the trust and good relationship that the two (organizations) have maintained for many years.”

In the PVHC statement announcing the settlement, hospital officials wrote that “the working/management relationship between Powell Valley Healthcare and HealthTech Management Services has been one of cooperation, and both parties expect that relationship to continue and become stronger in the future.”

The resolution of Powell Valley Healthcare’s claims against HealthTech ends PVHC’s involvement in the civil lawsuit against Cardwell and Plake, Patten said.

“To the best of my knowledge, we’re just waiting for the sentencing and for Paul (Cardwell) to be caught,” Patten said. Other than that, “we’re done.”

That means HealthTech alone will push forward with the suit against the two men. That case remains scheduled for a June 24 trial date in federal court in Cheyenne, despite the fact Cardwell has not been located since disappearing in August.

“What the parties in the court will do in light of the fact that Paul Cardwell is missing remains to be determined,” Richardson said. “Going forward, the consequences of Cardwell’s absence remain to be determined” as well.

Federal District Court Judge Nancy Freudenthal, who’s presiding over both the criminal and civil cases against Cardwell and Plake, has refused to allow Cardwell’s attorneys to withdraw from the civil case.

Freudenthal in November agreed the attorneys’ position of having to represent a missing client was “unenviable.” However, the judge said it made the most sense for the attorneys to keep representing Cardwell to let the case proceed.

“While it is perhaps unfair that anyone other than Cardwell should suffer for his decision to flee, it seems only appropriate that Cardwell’s counsel should bear the added burden of navigating these proceedings in his absence,” Freudenthal wrote.

Criminal proceedings against Cardwell remain on hold until he’s caught.

According to court documents, Cardwell and Plake embezzled $847,884 from Powell Valley Healthcare by pretending an entity called “Plake and Associates,” was a physician and staff recruiting firm. In actuality, Plake was simply pocketing 25 percent of the money and returning the remaining 75 percent to Cardwell.

Indiana business records show Plake didn’t even create “Plake and Associates” as an official corporation until after the scheme broke down under PVHC and HealthTech scrutiny and Cardwell resigned his post.

Plake pleaded guilty in Wyoming’s federal district court in September to conspiracy to commit mail and wire fraud and conspiracy to commit money laundering. Court records say he also plans to plead guilty to defrauding the Indiana hospital at this month’s sentencing in Cheyenne.

3 comments

  • Comment Link February 11, 2013 2:54 pm posted by Mike Wilson

    Whew! Powell Valley Healthcare got their money. Now we can ignore making changes to the dysfunctional Hospital Board and inadequate Executive Leadership that looked the other way while Cardwell took advantage. Why was PVHC paying Cardwell's salary if he is employed by HealthTech, sounds goofy. PVHC is now hiring for positions in same departments it fired people in November. Interesting, don't you think?

  • Comment Link February 13, 2013 8:21 am posted by clipstein

    you tell me no one at the hospital knew what was going on????? I have a bridge that i will sell cheap....... They should be fired for being incompendent with our money.

  • Comment Link February 13, 2013 9:09 am posted by Greg

    Mike:
    Politics by any other name is still politics.

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