South Mississippi businessman Ted Cain, wife fork over $14.2 million for Medicare fraud

May 29—South Mississippi businessman Ted Cain and other defendants have reimbursed the federal government $14.2 million, plus post-judgment interest, for defrauding Medicare while operating Stone County Hospital in Wiggins.

Cain, who owns the hospital, and controls nursing homes and other businesses through a management company, refinanced the 134-bed Woodland Village Nursing Center in Diamondhead for $14 million to cover the payment, according to court records. The total judgment in the civil case applied to Cain and Tommy Kuluz, still chief financial officer of Corporate Management Inc., a Cain company that received a management fee for Stone County Hospital oversight.

Stone County Hospital, Corporate Management Inc. and Julie Cain, Ted Cain's wife, also were each held liable for a portion of the total judgment. The U.S. Attorney's Office for Mississippi's Southern District proved at the federal trial in Gulfport that the Cains defrauded Medicare by charging for work they did not perform, while Kuluz signed off on fraudulent reports submitted to Medicare.

The payment brings to a near-close a case originally filed 17 years ago this week by a whistleblower who had worked briefly at the hospital. U.S. attorneys stepped in to take over the case in 2015, with a nine-week trial held in early 2020.

A jury found $10.9 million in Medicare fraud. Under federal whistleblower law, Judge Henry T. Wingate tripled total damages against Ted Cain to $32.6 million.

The 5th U.S. Circuit Court of Appeals later lowered total fraud damages to $4.6 million, finding the government's delay in taking over the case "inexcusable" and limiting the number of years for which fraud reimbursement could be collected. The tripled damages then amounted to $14.2 million, less than half the original judgment.

Where other lawsuits stand

The U.S. Attorney's Office filed another lawsuit against the Cains in November 2022 that alleged the Cains were trying to avoid paying the fraud judgment against them by transferring most assets into trusts set up for their children. In response, the Cains maintained the trusts were set up "for legitimate estate planning purposes."

Now that the judgment has been paid, the U.S. Attorney's Office has voluntarily dismissed the case involving the Cain's assets.

Gulfport Memorial Hospital has been leasing the hospital in Stone County from a. Cain company since November 2019. The hospital is now called Memorial Hospital Stone County.

Gulfport Memorial has since sued the Cain company, Wiggins Acute Care Hospital LLC ,for $453.127 to cover repair and replacement of an HVAC system. Wiggins Acute Care denies owing the money.

This story was originally published May 29, 2024, 1:43 PM.

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