It's tough enough for a hospital system to run its own HMO, but when the plan's chief executive officer is alleged to have embezzled money, it certainly can compound problems.
That's the case in St. Louis, where a federal grand jury has indicted the former CEO of 20,000-enrollee Community CarePlus, a Medicaid-only HMO now owned by Tenet Healthcare Corp. and several healthcare partners. The indictments were on six felony counts of mail fraud, embezzlement and money laundering.
The indictment charged James Sweat with stealing $165,000 from the company in a scheme that allegedly started when he lied about his past as a managed-care executive before he was hired as CEO in September 1996.
Sweat, 51, lives in Jacksonville, Fla., according to the indictment. He could not be reached for comment. His lawyer, Paul Simon Jr. of Helfrey, Simon and Jones in St. Louis, declined to comment on the case except to say that Sweat pleaded not guilty at his Aug. 19 arraignment in U.S. District Court in St. Louis.
If convicted, Sweat faces up to 45 years in prison and $1.5 million in fines.
The grand jury issued the indictment April 1, but the government suppressed it until Aug. 12 when Sweat surrendered to federal authorities in St. Louis, U.S. Attorney Edward Dowd said in a written statement. Sweat was released on $10,000 bond.
Community CarePlus lost nearly $4.3 million in 1996 and 1997, the two years Sweat was at the helm, according to current CEO Jerry Linder, who joined the company as chief financial officer in November 1997, after Sweat's departure. In 1996 and 1997, the health plan had revenues of $26 million and $28 million, respectively, company officials said.
The HMO rebounded last year with a profit of $225,000 on $24.7 million in net revenues, Linder said. Through July, it has broken even on net revenues of nearly $12.9 million.
According to the indictment, Sweat defrauded the health plan out of more than $65,000 in 1996 and 1997 by funneling money to HemmCare, a home healthcare company he controlled, for services that were never rendered. He also embezzled $100,000 from Community CarePlus and tried to use the money to buy an equity stake in the health plan by transferring the funds first to HemmCare's bank account and then to a joint account shared with his wife, Lois Hemminger, the indictment said.
Community CarePlus, also known as Alliance for Community Health, fired Sweat and six other executives in April 1997, three months before Tenet acquired its majority owner, St. Louis-based Deaconess Incarnate Word Health System. The HMO was launched in September 1995 by the Deaconess system, its flagship hospital, 324-bed Deaconess Central Hospital-now known as Forest Park Hospital-and several other healthcare organizations. Tenet, which owns 81% of Community CarePlus, declined comment on the indictment.