By David Howell

            Batesville doctor Robert S. Corkern is the latest defendant to face federal charges in a multimillion-dollar health care fraud involving a former management contract with Tri-Lakes Medical Center in Batesville.

            Corkern has been charged with one count of conspiracy to defraud the U.S., one count of bribery involving federal programs and three counts of loan and credit fraud.

            The charges against Corkern follow federal charges already filed against Tri-Lake’s former chief executive officer Ray Shoemaker and Batesville businessman Ernest Levi “Lee” Garner Jr. According to an FBI investigation, Shoemaker, Garner and former county administrator David Chandler were involved in an elaborate kickback scheme prior to the sale of the hospital to Corkern.

            Although charges against Chandler for his alleged role in the scheme has not been released, court documents show that he has a hearing set December 14 in federal court in Aberdeen. According to the documents, Chandler will appear in court for a proceeding described as “waiving of indictment/filing of information/ taking of plea as to counts one and two.”

            Appearing in federal court Tuesday, Corkern pled not guilty and was released on a $40,000 bond. Garner and Shoemaker have also pled not guilty in a March hearing.

            The trial for Shoemaker and Garner was pushed back from October 31 to December 12 by U.S. District Judge Neal Biggers Jr. with the entry of Corkern as a new defendant.

The Allegations

            Shoemaker and Corkern face embezzlement charges after investigators allege they used proceeds from a $4 million line of credit for their own “personal and corrupt benefit.” According to the indictment, Shoemaker received $250,000 and Corkern received $291,508.63 — after claiming the line of credit was needed to keep the hospital in operation.

            Backing up to 2005, Corkern had entered into an agreement to purchase Tri-Lakes Medical Center from the City of Batesville and Panola County. Using a non-profit organization, Physicians and Surgeons Hospital Group (PSHG), Corkern purchased the hospital in November 2005 for $27,325,000, with money borrowed from UPS Capital Business Credit and Stillwater National Bank and Trust. The United States of Agriculture (USDA) providing a guarantee for 90 percent of the loan.

            After the purchase, Corkern initially received a $2.1 million line of credit from Stillwater for working capital to run the hospital.

            In December 2005, David Vance, working as a consultant for Corkern and Shoemaker, who was the hospital’s Chief Executive Officer, contacted GE Capital Corporation to seek the larger $4 million line of credit that led to the federal charges when money from the loan was diverted  to Shoemaker and Corkern for personal use.

            According to the 29-page indictment released Tuesday, Vance allegedly failed to disclose the secret agreement in which Corkern and Shoemaker would obtain the money for personal use. According to the indictment, the consulting agreement between Vance and Corkern generated over $600,000 in fees for Vance, who was killed in an automobile accident in Batesville last October.

            According to the indictment, Corkern also paid Chandler a $25,000 bribe after the hospital’s sale to transfer $400,000 from the county to PSHG.

The county had legal claim to a portion of the $400,000 sitting in a county bank account that had been used for hospital operations prior to the sale.

Other Charges

            An FBI investigation also alleges Shoemaker, Garner and Chandler colluded to reward Chandler and later Shoemaker for using Garner’s business, Guardian Angel Nursing, at Tri-Lakes Medical Center. These crimes were committed prior to the sale of the hospital to Corkern, when it remained jointly owned by the City of Batesville and Panola County.

            In the indictment Chandler, while employed as Panola County administrator, acted as a middleman and pocketed approximately $268,000 over two years from kickbacks.

            Federal investigators claim Chandler used his influence as county administrator to get Shoemaker a $50,000 raise at Tri-Lakes, then used his own bribe money from Garner to pay Shoemaker when the hospital CEO demanded $25,000 for increasing Guardian Angel’s billing hours. Shoemaker was allegedly paid approximately $12,000 toward the $25,000.

            Shoemaker also faces additional charges not directly connected to his role at Tri-Lakes Medical Center after investigators allege he diverted approximately $457,000 from a hospital in Humphreys County to an assisted living facility and real estate company he owned in Plantersville.

            The indictment states that Shoemaker had already pocketed approximately $1.7 million in “management fees” from the hospital through his company, Rural Health Developers.