The Carlyle Group & Bush's White House

Two weeks before Hurricane Katrina made landfall on the Gulf Coast, The Carlyle Group purchased LifeCare Hospitals, a long term acute care hospital company. After Katrina struck, LifeCare's New Orleans facility had the highest patient death toll. Patients suffered in horrific conditions for up to five days waiting for rescue.

In front of cameras President Bush asked FEMA Chief Mike Brown about hospital patients the day Katrina struck. The nation watched in horror as words turned into inaction. After the federal government's botched response the President commissioned Frances Townsend to investigate with the intention of performing "an honest" assessment and doing better next time.

The White House Lessons Learned report released in early 2006 had several glaring omissions. First it failed to mention the hospital organizations with the highest patient death toll. Carlyle's LifeCare and Tenet's Memorial Hospital shared the same facility. Second, it made no mention of the trade group that coordinated hospital patient evacuations while FEMA stumbled. The Louisiana Hospital Association worked frantically to mobilize resources to evacuate patients suffering in dead facilities. However, the White House report's most glaring error is it never said whose responsibility it was to evacuate patients in the first place, much less evaluate how they performed their duties. Without this critical information, how can we do better next time?

Fast forward to 2007 as Carlyle's LifeCare tries to defend itself in wrongful death civil lawsuits. How does the federal silence help their case? This comes from LifeCare's annual report to shareholders:

"The company is currently defending itself against a variety of Katrina related lawsuits... We intend to vigorously defend ourselves in these lawsuits"

The same LifeCare annual report says this about their services. "A long term acute care hospital serves patients with serious and complicated illnesses or injuries requiring extended hospitalization. Long term acute care hospitals are specifically designed to accommodate such patients and provide them with a higher level of care than a skilled nursing facility or inpatient rehabilitation facility, each of which is often incapable of treating and delivering the same outcome as a long term acute care hospital."

So what is LifeCare's defense? They contend that as soon as FEMA and the Coast Guard began evacuating people from New Orleans their patients became wards of the federal government. If the evacuation began in earnest on Tuesday, then LifeCare had no obligation to their patients for how many hours or days? Who was responsible for providing that higher level of care LifeCare's patients needed?

This defense is laughable as the feds didn't make evacuating patients from dead hospitals and nursing homes a high priority. The Louisiana Hospital Association and HCA are proof of that. HCA hired medical helicopters to transfer patients from its dead facilities. Why couldn't The Carlyle Group? One might expect a private equity firm with over $50 billion under management to pull off such a feat while the Charity Hospitals of the region have to wait.

Why did the White House Lessons Learned report omit the information needed to paint a clear picture of the evacuation of hospital patients post Katrina? Did they do so as a favor to their private equity friends just down Pennsylvania Avenue? How does the blank slate of the White House Lessons Learned report help them defend their "variety of Katrina related lawsuits."

Just as the little folks suffered after the Exxon Valdez oil spill, the little person will take it on the chin courtesy of the government's incompetence and hand holding of major corporate interests. There's a plan here somewhere. What does it portend for Bush's widespread privitization strategies? The Carlyle Group just announced it intends to gobble up Manor Care, a nursing home chain. Will they do any better with those patients post disaster, man made or natural? Want to bet the Bush Justice Department doesn't even ask the question?

A Conspiracy Theorist Couldn't Make This Up

Hospital patients suffered mightily for 5 days in Memorial Hospital's LifeCare Unit after Hurricane Katrina's landfall. As a separate hospital organization LifeCare employed doctors and nurses to care for patients while contracting with Tenet's Memorial for other services. Doctors were credentialed and given specific privileges to provide care for LifeCare's long term acute care patients. Nurses had to meet basic competencies for hire and needed to show on an ongoing basis their ability to perform their duties. None of this went away after Hurricane Katrina struck as both LifeCare and Memorial implemented their disaster plans.

Yet, somehow in the aftermath LifeCare administrators couldn't keep Memorial clinicians away from their patients. A number of patients were reported euthanized and both a doctor and nurses have been criminally charged.

The company would have us believe their legal duty to patients evaporated upon the disaster decree of President Bush and the arrival of FEMA reps in New Orleans. However this unusual defense follows other strange happenings in this case. The most notable is the White House Lessons Learned report's failure to mention the hospital with the highest number of patient deaths post Katrina. Such an obvious omission raised questions in my mind over a year ago, including what benefit might Carlyle get in those wrongful death civil lawsuits from federal silence?

The public heard nothing from crackerjack White House "investigators"on hospital patient evacuations other than a few hero stories. This lack of information grew when a court sealed a settled civil suit between the two hospital companies, LifeCare and Tenet. The two firms divided up responsibility for the aftermath, but the public remains in the dark.

Now Carlyle's ace legal team is trying to move the case to federal court away from any sympathetic jurors. If approved, appeals would lead to the newly business friendly Supreme Court. Are patients like class action shareholders or taxpayers?

If the White House and Carlyle are in cahoots over this case how might it run? First, the feds don't weigh in at all on the Carlyle sub's actions. Check, done that. Second, blame it on the federal government thus increasing the chances of going through friendlier federal courts. Check, done that. Third, have the feds blame state and local authorities for not evacuating patients as required by FEMA. Ditto, completed. Fourth, the federal court throws out the cases or rules against plaintiffs because the federal government is not liable. Fifth, let the process run long enough that all statutes of limitations run.

Three down, two to go. I'm sure a more astute legal mind could add or detract from this scenario. As a hospital administrator who endured for days in a river flooded 725 bed hospital in Virginia and evacuated a Texas Gulf Coast 150 bed facility before then record Hurricane Gilbert, I may empathize with patients and staff enduring in such horrific conditions. I find it hard to round up any compassion for the bureaucrats writing drivel in the Lessons Learned report or for Carlyle's attorneys making up patently ridiculous defenses.

For those watching today's business news, do you want The Carlyle Group owning one of the largest long term care chains in the U.S.? They just signed a deal to acquire Manor Care. Will they do any better post disaster with Manor Care patients than they did with LifeCare's? We already know they claim no liability for the later. Someone should challenge the acquisition on this basis alone...

Carlyle Says Hospitals Don't Need Disaster Plans

In a stunningly bizarre legal defense, Carlyle Group affiliate LifeCare Hospitals blames the federal government for patient deaths after Hurricane Katrina. This follows the similarly stunning White House Lessons Learned report omitting any mention of the hospital with the largest number of patient deaths post hurricane, the LifeCare Unit within Memorial Hospital.

LifeCare argues that once the Federal Emergency Management Agency and the U.S. Coast Guard assumed control of evacuations and other emergency procedures in New Orleans during the flood, it was no longer responsible for the patients at Memorial. The patients essentially became wards of the federal government, not LifeCare, the company's attorneys argue.

To bolster their chances of using their political influence and avoiding sympathetic juries LifeCare wants the cases heard in federal court. LifeCare's attorneys filed motions to transfer the proceedings to federal court, and the case is frozen while the parties await a ruling on that matter.

If LifeCare prevails with this argument then no hospital or nursing home needs a disaster plan, it's all the federal government's responsibility. This sounds the kind of corporate coddling that leads to underperformance. But then we're used to that, recall Exxon's foot dragging after the Exxon Valdez...

Bush Reads Investigative Report

"Damn I didn't do shit after Hurricane Katrina, did I? You'd think the hospital with the largest number of patient deaths would be mentioned in this Lessons Learned report. Huh? That's right LifeCare had just been bought by the Carlyle Group! You got to cover for your friends and Fran did a bang up job. But did she curse as she created this whitewash? That woman can almost keep up with me in profanity!"

Bush to Investigate Another "Wrongdoing"?

Considering his failing grade on his last two investigations, how might the President fare on his examination of Attorney General Alberto Gonzales' behavior in the firing of eight state AG's? History would suggest poorly.

After the CIA agent name leak, the President promised an internal investigation which was never conducted. Bush never completed the promised task. His other failed investigation was the White House Lessons Learned Report after Hurricane Katrina. It left out critical information about hospital patients. Completely absent from his post mortem included:

1. The hospital with the highest death toll. (LifeCare Hospitals purchased by the Carlyle Group just weeks before landfall)
2. The trade group that coordinated the evacuations from dead facilities. (the Lousiana Hospital Association)
3. The flipping of evacuation triage priorities. (which resulted in the stranding of two patients, left to die in sweltering cesspool surrounded facilities)

So why would Bush do better this time with the hazy memoried Al Gonzales. Will his memory improve enabling the zoned out AG to actually answer a question? But most of all, why is the Attorney General's failure to answer questions about his managerial decisions not considered wrongdoing? After all,

"It's management's job to know!"-Dr. W. Edwards Deming

Might the investigation be dragged out by Alberto's shaky memory more so than political theater? It's a sad day when a leader cannot state the specific performance reasons for firing someone...

Stilted Age of Neo-Puritan Robber Barons

Exactly when America crossed the line, I can't precisely determine. But two thematic nightmares currently haunt our country. The first involves "goodness" with punishment for those failing to live up to high standards. Guantanamo Bay is the modern day stockade complete with dunking pole.

Did I mention those setting the rules get a free pass? Yes, widespread corruption and illegal behavior by business or governmental leaders results in little more than a hand slap. The Hewlett Packard spying case went from major felonies to misdemeanors, even no charges whatsoever for the Board President. Will an investigation occur for the politically connected firm that sold defective pumps to the Army Corps of Engineers to save New Orleans from a future drowning? The Carlyle Group's LifeCare Hospitals got a free pass in the White House Lessons Learned report despite having the highest patient death total post Katrina.

This leads to the second major specter, the pursuit of rewards at any cost. America worships free markets and profit, well, the more the better. Wall Street investment firms continue to rake in record earnings, big oil not far behind. Money from the modern day robber barons flows to elected officials who in turn, enact policy or legislation favorable to their donors. One only need watch the timing of the AIPAC policy meeting and Congress' dropping any constraints to President Bush's unleashing the dogs of war on Iran.

Of course the two nightmares haunt America simulataneously...