KDKA Investigates Closure Of Ellwood Medical Center, With Ties To Joe Biden's Brother
PITTSBURGH (KDKA) -- Ellwood City Medical Center is an empty shell -- 450 employees have been laid off -- and officials in the town now without a hospital blame a man named Grant White -- the CEO of Americore -- a company which promised long-term quality care.
"None of the that. None of that played out. Hate to say it but I think we were swindled," said Mayor Anthony Court.
Ellwood City and two other Americore hospitals are bankrupt.
An appointed trustee minces no words:
"Grant White has grossly mismanaged the debtors; has not operated the hospitals in a manner consistent with public safety and welfare; has not been truthful with this court...and has improperly siphoned money from the debtors for his personal benefit."
White is now the focus of a federal criminal investigation, but our two-month investigation -- involving a deep dive into years of court and financial records -- found the issue of blame may be a complicated one.
White has pointed his finger at a hedge fund operator named Michael Lewitt. In his bankruptcy filings, White says Lewitt -- undermined his efforts to operate Ellwood City Medical - among others -- and failed to supply the needed cash to keep them running.
In the filing, White said Lewitt provided the operating cash in a loan from a fund he managed called "Third Friday Total Return Fund," but White alleges on Christmas Eve, Third Friday "wrongfully called the...loan agreements in default." and on that same day, Lewitt sent him this email:
"If I have to file this company or shut down the hospitals so be it. I am not going to let this continue. Do not pay anything else until you get my written permission."
"There's a lot of finger-pointing going on at this point," said Court. "They're going after each other at this point but it doesn't do us any good. We're stuck in the middle of this."
White and Lewitt are now at war but that wasn't always the case. As far back as three years ago, they teamed up with James Biden -- the brother of former vice president and presidential candidate Joe Biden -- with the aim of building a rural healthcare empire across the country.
This past summer they hit a roadblock. A company which had developed an operating model for rural hospitals accused them of fraud, saying the three men, in effect, forced them out of business, stole that model and marketed it as their own.
Now in a twist, that company, Diverse Medical Management of Tennessee, filed papers this week dropping its claim against White -- saying White has supplied them evidence about James Biden and Lewitt, "indicating that millions of dollars in funds may have been taken by these defendants outside of the ordinary course of business."
We reached out to Biden and Lewitt for comment but neither responded to our calls and emails. In court papers, they deny being part of a takeover scheme and say diverse medical was a struggling business in need of cash that couldn't meet its own payroll.
James Biden further denies that he was ever a principal in Americore -- though this business card introduced as an exhibit identifies himself as such. And Mayor Court says Grant White would often drop Biden's name in pitching the sale of Ellwood City Medical to Americore.
"I think he would throw the name out there to make everything more legitimate," Court said.
Now the F-B-I is investigating. Agents recently raided Ellwood City Medical, confiscating computers and records. Those same raids played out in other Americore hospitals in Virginia, Kentucky and Missouri. The feds also paid a visit to Grant White's home in Florida.
SHEEHAN: Here's another broken promise -- emergency care.
COURT: Yes, it was supposed to be in operation for a minimum of ten years. As you can see that never transpired.
SHEEHAN: Now it's shuttered
COURT: Completely shut down.
Americore consistently fail to pay suppliers and make payroll. The state Health Department ordered the hospital closed in December when emergency equipment failed and the ER could no longer administer anesthesia. Emergency Room Director Dr. Robert Solomon says Americore milked the medical center dry.
"Operators like Grant White are really not white knights but rather come into a community with a struggling hospital, promising to turn them around and they move on," he said.
Townspeople like Tom Mondell who are now left without a hospital don't know the behind the scene players but believe profit and greed cheated them out of local healthcare.
"It's just a shame that money had to play the end role in why this place had to shut down. It's disgusting," he said.
