Tuesday, August 18, 2009

Carlyle Group's LifeCare: Legal Cases Post Katrina

News reports indicated LifeCare of New Orleans lost 24 patients after Hurricane Katrina, while Tenet Healthcare had 10 patients perish. That totals 34 patients for Memorial Hospital, owned by Tenet with LifeCare renting the seventh floor. Legal cases in the U.S. Court of Appeals, Fifth Circuit show 35 patients died. It's not clear under whose care the 35th patient expired.

The Carlyle Group considers risk management an area of expertise. They were unprepared for the risks of Hurricane Katrina, as patients suffered in a dead facility for up to five days. One could call it bad luck, as Carlyle closed on the LifeCare purchase just weeks before Katrina sideswiped New Orleans. Others could call it incompetence, as HCA helicoptered patients from it's powerless hospitals.

Having lived through the river flooding of a 725 bed hospital in Virginia and evacuated a 160 bed Texas Gulf Coast facility before a record Hurricane Gilbert, I know people within Memorial did their best in horrific conditions.

The trauma caused Robbye Dubois to resign as LifeCare's Vice President of Clinical Services. The legal case, Robby Dubois v. LifeCare Management Services LLC and LifeCare Holdings LLC No. 08-30227, states:

After several promotions, Dubois was named as LifeCare’s corporate Vice President of Clinical Services in 2003. She became overwhelmed with her job following Hurricane Katrina, however, and asked if she could change her employment arrangement. After an initial discussion with her supervisor, they agreed that she could be a consultant for LifeCare.
The company offered her a one year consulting agreement, but they never came to terms. Ms. Dubois sued for damages. She lost.

Dubois maintains that her resignation was not unconditional, as it was “based on LifeCare’s promise that she would remain employed as a paid consultant,” and that “when LifeCare backed out on its promise to keep plaintiff on as a consultant, the resignation was rendered ineffective.” However, as we have discussed, Dubois disagreed with the terms in the proposed consulting agreement and failed to further negotiate. There were no promises made.
If I were an attorney working LifeCare's 24 or 25 wrongful death lawsuits, I'd give Ms. Dubois a phone call. I'd also run down Earl Reed, former LifeCare CEO. Carlyle cut him loose two years after landfall. Does the Carlyle Group have risk managers monitoring such developments?

How Carlyle got the Bush White House to omit any mention of the hospital with the highest patient death toll is a testament to their political connections. Frances Townsend, author of the
Lessons Learned report, never shared the reason for her omission. But she did land a cushy job with Baker Botts, the law firm of James A. Baker, III, long associated with the Carlyle Group. Her job? Risk management consulting! Were any promises made?