Payroll issues plague Hot Springs-based rehabilitation center

HOT SPRINGS — Quapaw House Inc. is in “a critical situation” that resulted in late and insufficient paychecks being issued in recent weeks, according to copies of emails sent to employees from its board of directors and executive director.

In an email sent Friday morning, and obtained by The Sentinel-Record later that day, Casey Bright, Quapaw House’s executive director, said he and the management team were “working diligently” to get payroll checks out that day.

Bright could not be reached for comment Monday. The email was obtained from two separate sources.

“We understand the impact of the most recent and current payroll issues and cannot apologize enough,” Bright said in the email, noting he had communicated the “dire state of our situation” to elected officials and licensing and regulatory agencies Thursday night and early Friday morning.

Quapaw House is a Hot Springs-based substance-abuse rehabilitation and behavioral health facility.

Bright said the “unprecedented action” by Quapaw House’s banking institution “to eliminate access to our line of credit” and its decision to apply all previously

deposited funds and newly received funds to the organization’s loan balance “resulted in QHI’s inability to access funds to use for current expenses, including payroll.”

Bright noted Quapaw House had received a deposit Feb. 25 “in an amount large enough to cover the reissued checks from the previous payroll” and they were given the “go ahead” by the bank to issue those checks. He said the bank did not notify them that a decision was made the day before, Feb. 24, to freeze Quapaw House’s accounts.

“The bank’s decision was made despite the fact QHI was in compliance with our banking and loan agreements and without consultation or discussion with myself or senior management,” Bright said.

“I’m not going to sugarcoat this, we are in a critical situation for the organization,” he said. “We are working with everyone possible to find a way out.”

Bright said he has contacted senators, representatives, the governor’s office “as well as friends and supporters of Quapaw House throughout the state.”

An email to employees from the Quapaw House board of directors, also obtained Friday, said it has been working with management “over the last months and weeks to resolve the problems we encountered with our merger with PFH (Preferred Family Healthcare) and especially our cash flow situation.”

On Oct. 12, 2018, Quapaw House and Preferred Family Healthcare finalized an agreement for Quapaw House to acquire the assets and property of Preferred Family Healthcare, minus its real estate holdings, and reached a deal to allow Quapaw House to use the Preferred Family Healthcare-owned properties, including all the Arkansas clinics and other facilities, according to an earlier release.

“As you can imagine, an acquisition of this size will take time to work through,” Bright said at the time.

“We are not a board in name only, we are a working board of unpaid volunteers that has the best interests of our employees and our clients as our top priority,” Friday’s email from the board said.

At the time paychecks were issued, “there were funds in the bank to cover them,” the email said, but they later encountered “a perfect storm” when two banks Quapaw House works with “changed procedures in the middle of last week without notifying QHI,” that resulted in many employees being unable to deposit their checks.

“QHI only became aware of this when employees started notifying us their checks were not being honored,” it said, prompting the board to meet immediately with the management team.

“QHI is financially sound, but we have funding problems,” the email said, noting there was no connection between the problems and previous organizational changes announced by Bright.

The changes “will ensure that QHI is able to move forward on a sound financial basis while serving our clients’ needs in an efficient and effective manner,” the email said.

“For the last 14 months now, we have been experiencing challenges in building up our clinics as well as a shift in how we provide services and are reimbursed for services,” said a Feb. 17 email from Bright to employees.

“To reduce costs further and become more stable, we find that we must reduce our workforce along with the closing and merging of some clinics,” the email said, noting Bright would “announce the details of these changes over the coming days and weeks.”

Bright told The Sentinel-Record on Feb. 24 that transfers to other clinics will be considered for employees before determining termination, but as of now he does not know how many terminations will occur.

“I appreciate your continued commitment to the clients we serve during this difficult time,” Bright said in Friday’s email. “Please be assured I am committed to finding the best possible resolution to our current situation.”