FOX 8 INVESTIGATION: Nearly $4 million of public money spent on E.R. that was never built

Nearly $4 million of public money spent on E.R. that was never built

METAIRIE, La. (WVUE) - A FOX 8 Investigation found that millions of dollars in public money was spent on a planned emergency room on Jefferson Parish that was never built. And, the abandoned project could cost the public even more.

The building at Veterans and Clearview in Metairie was supposed to house a free standing emergency department for East Jefferson General Hospital. However, it was never finished and is now at the center of a civil lawsuit.

In the lawsuit against the publicly owned East Jeff Hospital, the building’s owner said the property was left in disrepair and the project abandoned.

Government watchdog Al Morella said it’s possible the abandoned project was profitable for some of those involved.

“It was money that was wasted. My thoughts are, some people made some money off of that issue off the backs of the taxpayers,” Morella said.

The public hospital entered into a lease with the building’s owner, Cella III, LLC, in May of 2016. According to the lease -- which was obtained by FOX 8 months ago -- it was agreed upon that the property would operate as a Community Medical Center and the hospital would pay for all maintenance, repairs and renovations to the building.

Newell Normans -- a former sheriff in Jefferson Parish -- is now chairman of a committee that’s taking a look at all properties East Jefferson Hopsital owns or leases. He said the hospital is meeting its lease obligations with the building’s owner.

“[If] the landlord decides to sue East Jeff for what reason, I don’t know," Normand said. “He’s been paid the lease payments. We have every right to not ever occupy that building. Under the lease, we don’t have to occupy that building, there are any number of uses that we can have with that building. We’ve actually tested the market to sublease that building just to see what it could get.”

Normand said a free-standing E.R. for this building is now off the table. But, the hospital has already paid a pricey bill for construction. Our FOX 8 investigation uncovered public records showing nearly a million dollars in rent expenses and nearly $3 million in public money went toward capital improvements.

When asked to respond to taxpayers who might have concerns that nearly $4 million was spent in public dollars for an E.R. that was never built, Normand denied that’s what happened.

“Well it’s not public money,” he said. "This is a public hospital, we don’t get any tax revenue. This is all self generated revenue from the operations of the hospital.”

But, since the hospital is owned by the public, Morella believes it is public money.

“It is taxpayer money," Morella said. “The hospital does belong to us, it belongs to all of us.”

In their lawsuit against the hospital, the building’s owner said during the Summer of 2017 -- after more than nine months of construction -- the hospital abandoned the project, and the property has been vacant for more than a year. What’s more, the hospital has been put on notice that the liability for their breach of contract will exceed $10 million.

“As much as I hate to say this, I don’t think anything is going to be put there in quite some time,” Morella said.

That lawsuit also said an inspection of the property revealed the building now has significant environmental degradation, mold and mildew, a growing rat infestation and damage to the roof’s drainage system -- all things that the owner demands the hospital pay to fix.

“It’s not going to be used as a free standing E.R. because of some of the regulatory changes, some of the reimbursement models, it doesn’t make any sense. Our competitors have all abandoned theirs as well, so it’s not just a situation where East Jeff has decided. You don’t see them in this market,” Normand said.

Another issue that doesn’t sit well with Morella -- the hospital planned to build that stand alone emergency department only four minutes away from the hospital’s own emergency room.

“There again, somebody made some money off the backs of the taxpayers, and at the same time crying and hollering that the hospital is in dire financial straits, and at the same time wasting these resources like this,” Morella said.

FOX 8 reached out to Jefferson Parish President Mike Yenni for comment, but a spokesperson told us he could not comment because of pending litigation.

Gerald Parton is the president and CEO of East Jefferson Hospital. In a statement, Parton told FOX 8 the hospital intends to develop the property in a competitive manner best suited for the patients and community at all. He also said EJGH concluded the building’s proposed usage was “no longer feasible.”

Parton added the hospital has been in compliance with the terms of the lease from its inception and it continues to make all payments called for in the lease in a timely fashion.

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