Deal drops two who questioned nursing home hike

Watchdog reporter James Salzer broke the story of a proposed rate increase for nursing homes in Wednesday’s Atlanta Journal-Constitution. Log on to to catch up on this breaking story.

Two members of Georgia's Department of Community Health board got a call Thursday afternoon telling them they were being replaced by Gov. Nathan Deal just five hours after a $26 million rate hike for the politically powerful nursing home industry stalled at a board meeting.

The governor’s office said Friday the timing was a coincidence. It said the decision not to reappoint the two board members — one of whom voted against the hike previously and another who publicly raised questions about it — had been made well before Thursday’s decision on the nursing home rate issue.

“There is no connection between them being replaced and the nursing home vote,” said Chris Riley, the governor’s chief of staff who is temporarily working on the Deal’s re-election campaign.

But one of the board members, William “Bill” Wallace, said he was surprised to get the call from the governor’s office.

“I have always voted my conscience,” said Wallace, who opposed the increase. “I never voted because it was politically the correct thing to do. I voted because it was correct for citizens. I am proud of my service.”

Jamie Pennington, who said last month that the rate hike “doesn’t make sense,” was also not reappointed. Pennington declined comment. Wallace’s term expired July 1, 2013, and Pennington’s this July 1. Wallace was vice chairman of the board, while Pennington was its secretary. Both were originally appointed by former Gov. Sonny Perdue, but Deal reappointed Pennington in 2011.

The Atlanta Journal-Constitution confirmed Wallace’s and Pennington’s fate after the governor’s office released a list of appointments on Friday that included re-appointments for two other DCH board members, but not Wallace and Pennington.

On Thursday, the DCH board was scheduled to consider final approval of a plan to boost reimbursements for nursing home owners who bought facilities between Jan. 1, 2012 and June 30, covering about 40 facilities.

DCH Commissioner Clyde Reese pulled the increase from consideration in part because of concerns raised by board members. Reese said the agency would study changes to speed up compensating nursing home owners when they make improvements to their facilities.

The move came after the AJC reported this week that the rate increase for select nursing homes — which was backed by the General Assembly — would cost $26 million a year and hike payments to some big-money contributors who owned nursing homes. The Georgia Senate had inserted the rate hike into the budget, but several senators who work on the budget said they couldn't remember how it got there when contacted by the AJC.

Several of the nursing homes that could have received higher reimbursements under the change are owned by top political donors to Deal, Lt. Gov. Casey Cagle and leading lawmakers.

The Pruitt family, among Deal’s top donors, had at least eight nursing homes that stood to benefit. All eight were listed as changing ownership this year, including five during the 2014 session. The reimbursement change could have increased annual payments to homes owned by the family by about $4 million.

Nursing home owners have been among the biggest political donors to state leaders and the two major parties, heavily backing Democrats when they were in charge, then switching to Republicans when the GOP became the majority party at the Capitol.

The group’s lobbying arm and top companies have given more than $1 million to legislative candidates, political parties and partisan political action committees in recent years.

The industry has contributed about $900,000 to Deal’s campaigns and Real PAC, the political action committee created to support Deal. Real PAC received about 40 percent of its contributions from the nursing home industry. The nursing home lobby also hired Deal’s son-in-law just after the governor was elected in 2010.

Cagle, the Senate’s president, has received more than $100,000 in contributions from the industry since 2006, when he was elected lieutenant governor.

Both Pennington and Wallace have been Deal supporters. Campaign records show Pennington gave $1,000 to the Deal re-election campaign last fall, and Wallace has donated nearly $1,500 since mid-2013.

Wallace said he didn’t know if his opposition to the nursing home rate increase had anything to do with not getting reappointed to the DCH board.

But Deal’s political opponents called the move “shocking.”

“In Nathan Deal’s government, if you’re not working to get the governor or his cronies rich, then you’re not doing your job,” said Bryan Thomas, spokesman for Deal’s Democratic opponent, Sen. Jason Carter.

Wallace and Pennington were also critical of DCH’s decisions last year to make major changes in the State Health Benefit Plan, which covers 650,000 teachers, state employees, retirees and their dependents. Those changes have been a political headache for Deal because they angered the beneficiaries, who began a protest movement that continues today.