The assets for the bankrupt Saint Camillus Medical Center in Hurst were sold at auction last week just as the CEO of a now-defunct hospital system that bought St. Camillus was sentenced to 21 months in prison.
There is much to unpack there, so we will try to walk through the details. St. Camillus opened in 2016 as a private hospital owned by Physician Synergy Group (PSG), which owned and operated several hospitals in North Texas. One PSG campus was Pine Creek Medical Center, which made headlines when it closed in 2019 after federal authorities accused the hospital of fraud and faulty patient care.
St. Camillus Medical Center
On the surface, it looks like challenges during the pandemic took their toll on St. Camillus as on other hospitals in the area, including Trinity Regional Hospital Sachse, which was recently purchased at auction by Medical City Healthcare. However, legal filings allege a different reason for the end of the hospital, which filed for bankruptcy last year.
According to Tarrant County court documents, St. Camillus and PSG claim that now defunct Houston-based hospital operator United Memorial Medical Center misappropriated protected information to purchase the hospital and cut PSG out of the facility’s management.
In 2022, PSG admitted defaulting on its lease of St. Camillus but had plans to acquire the hospital outright from its former owner. According to PSG’s suit, UMMC approached PSG to enter into a joint venture where UMMC would own the hospital, and PSG would operate it. To facilitate the JV, PSG says it shared confidential financial information with UMMC about the business and that UMMC used the information to decide to purchase the medical center and then cut PSG out of the deal entirely. PSG says that being unable to operate the hospital would cause the company to lose its hospital and medicare licenses and be unable to pay a $9.6 million loan.
After what PSG called an unlawful purchase, the company said it had a new buyer lined up who would allow PSG to continue operating the hospital. The suit sought an injunction against the eviction of PSG from the hospital, but UMMC completed the purchase in 2022. Last year, St. Camillus filed for bankruptcy, and its assets were auctioned off last week.
United Memorial Medical Center
So, what was UMMC? UMMC was a for-profit Houston-area hospital operator that once had several locations. Before it shut down, it looked into expanding into North Texas and applied to operate a 23-bed hospital in Hurst.
But the system made headlines for all the reasons. Houston’s Fox 26 reported on a CMS letter from 2021 describing operating rooms with rusted equipment, dirty cabinets with debris, cockroaches, an open floor drain that allowed pests to access the OR, staff without proper certifications, and poor infection control methods. The Houston Chronicle reported that the system replaced its governing board following the CMS incident. Though much heralded during the pandemic for its COVID-19 protections, in 2022, Becker’s Hospital Review reported that the Centers for Medicare and Medicaid Services terminated the UUMC Medicare contract for failing to meet specific health and safety standards. The hospital said it would continue to treat Medicare patients without being reimbursed.
UMMC’s owner and CEO is Syed Rizwan Mohiuddin, who has a lengthy list of legal issues dating back to 2001. The Indo-American News called him an “accomplished businessman and entrepreneur” before beginning his leadership role at UMMC. Last week, the Chronicle reported that Mohiuddin was sentenced to 21 months in prison for obtaining a $8 billion loan with fake documents, but that wasn’t his first run-in with the law.
In 2001, he was sentenced to 10 months of community supervision in Travis County for selling gasoline without a license. In 2012, the Chronicle reported that he had been sentenced to 21 months in prison for wire fraud. The Chronicle also reported that Mohiuddin was accused of an elaborate scheme to avoid paying his creditors and controlled multiple businesses. He eventually paid $6.1 million to close the case, but mortgage lenders, insurance companies, and the IRS claim he owes $30 million.
In December, UMMC agreed to pay $2 million and other contingent payments to resolve False Claims Act violations for overcharging and double billing the government for COVID-19 tests billed to the State of Texas or the City of Houston. The system and one of UMMC’s other principals, Ravishanker Mallapuram, have agreed to pay the funds. The settlement came after a former UMMC employee blew the whistle on the system. The employee will receive $300,000 due to whistleblower laws.
“The case alleges UMMC made millions by overbilling those health care programs and intentionally double billing for COVID-19 testing,” said U.S. Attorney Alamdar S. Hamdani for the Southern District of Texas. “Instead of returning those monies to America’s taxpayers, they allegedly pocketed the money for themselves. Finding the wrongdoing and lost monies in these types of cases involves complexities akin to playing three-dimensional chess, but know this, the SDTX will not stop in its quest for justice until it can claim checkmate.”
So, where do we stand today? UMMC no longer operates hospitals, and St. Camillus is closed (even though Google says it is still open). Bidders bought most of the medical equipment from the hospital, so it is unclear if UMMC would even have the equipment needed to operate the hospital if it were to begin operations there.
The current ownership of the property doesn’t clear up much. According to the Tarrant County Appraisal District, UMMC owned the former Saint Camillus property from April 2022 to May 2023, when it was purchased by a company called DFW Interests LLC. DFW Interests was created just weeks before it bought the property. The appraisal district lists a Houston address for DFW Interests–a property in West Houston that is also the address of other companies connected to known associates of Mohiuddin.
As it stands now, we have a mostly empty hospital in Hurst that was purchased by a now-defunct Houston health system whose CEO was just sentenced to 21 months in prison. We will update as we learn more.