Rabid Bobcats, a Rural Hospital, and EB-5 Funding

By David North on April 19, 2016

This particular EB-5 conflict is between folks who want to protect us against rabid bobcats, on one hand, and the green-eyeshade types at USCIS, on the other; it is rural health providers vs. urban regulators, and my initial sympathies are with the former, but it is more complicated than that.

Those who want to protect us from rabid bobcats in rural Alabama are allied with a Manhattan lawyer, who writes from the 24th floor of a skyscraper, and a batch of rich Chinese who want to buy their way into this country via the EB-5 program. The urban regulators are feds who pay attention to financial reports and who expect them, reasonably, not to contradict each other.

The conflict is now in its third round — it is in the federal district court for the District of Columbia, and so far the first two rounds have gone to the feds. It is case 1:16-cv-00711-RMC in the PACER system of court records.

While USCIS has unwittingly permitted $50 million in EB-5 funds to be stolen by a Miami millionaire operating in northern Vermont, as we reported earlier, another part of the system is saying no to a request to invest $6 million in the struggling hospital in Crenshaw County, Ala. There were 13,665 people living in the county in 2010, and the median household income was $26,054, a hair above half the national median.

Clearly this is the kind of rural poverty that is supposed to attract EB-5 funding.

But neither the staff of the EB-5 program nor the appeals staff of the Administrative Appeals Office are moved by these considerations. The AAO decision against the investors relies, to a large extent, on contradictory financial statements provided by the Crenshaw hospital.

I worry that slick, urban proposals, even if they hide managerial misbehavior carefully, are more likely to be funded than heart-felt but clumsy ones for rural hospitals. I also wonder about for-profit hospitals, generally, and the strong possibility that we have too many small-scale rural hospitals. Funding the Crenshaw hospital, with 65 beds, may not be in the public interest.

This hospital is located an hour's drive from the many hospitals in Montgomery and is within about 25 minutes of two slightly larger hospitals in the nearby county seats of Pike and Butler Counties. It is nice to have a hospital a few minutes drive from one's home (my situation), but can we afford it as a society? None of these considerations are on the table when EB-5 decisions are made, of course, but perhaps they should be.

That 24th-floor lawyer, however, makes a heart-warming pitch in his brief: "A foundation of the community, Crenshaw Community Hospital truly serves the needs of its people. From treating rabid bobcat attacks and tragic accidents to sponsoring local fun runs, this small-town hospital alleviates the suffering of its patients and lifts up the community."

We'll see, some months or a year from now, how an urban federal court judge reacts to all this.