The Arkansas Times reported the suspicious and mysterious payment from the nursing home industry to legislators considering tort reform.  The Southwest Times Record continues its excellent reporting on a mysterious payment sent by a major player in the nursing home lobby to a company owned by former state Sen. Jake Files (previous coverage on Arkansas Blog here). Files pleaded guilty in federal court earlier this year to unrelated charges of wire fraud, bank fraud and money laundering.

An $80,000 wire transfer from a nursing home executive (a business partner of nursing home magnate Michael Morton) was sent to Files’ company in 2014 just a week after an effort was filed to legislatively refer a proposed constitutional amendment to voters that would have limited damages in civil lawsuits. The situation looks smelly enough that a county prosecutor recently wrote a letter to a federal prosecutor asking whether the transfer had been made in “violation of federal law,” an FOI request by the Times Record revealed.

Previous reporting by the Times Record uncovered the $80,000 wire transfer to Files’ Fort Smith company FHH Construction from David Norsworthy, part-owner in more than a dozen nursing homes in the state with Michael Morton. The transfer took place on Nov. 24, 2014 according to documents provided to the Times Record. A week earlier, on Nov. 17, 2014, a resolution was filed by Sen. Eddie Joe Williamsone of the nursing home lobby’s most reliable soldiers, to send a proposed constitutional amendment limiting civil damages to voters.

That resolution ended up dying in committee (a follow-up attempt to get the measure on the ballot by petition was ultimately blocked by the courts). However, a similar effort in 2018, co-sponsored by Files, will be on the ballot as Issue 1 this fall, the so-called “tort reform” amendment. The measure is strongly supported by the nursing home lobby. It would impose caps on the damages that places like nursing homes would have to pay out if a jury found that abuse led to pain, suffering, or death.

Norsworthy — who in addition to co-owning nursing homes has also been a business partner of Morton’s in a health insurance company for Medicare Advantage patients, Arkansas Superior Select — is a board member of Arkansas Health Care Association, the lobbying arm of the nursing home industry (which is pushing hard for Issue 1). In 2014, when Morton’s term was up for his seat on the state commission that oversees the issuance of permits to nursing homes, Governor Hutchinson tapped Norsworthy to replace him (Morton was under federal investigation at the time). Norsworthy continues to serve on that commission; his term is up this year but he plans to re-apply, according to commission staff.

Morton funneled large amounts of money in recent years to various candidates friendly to his interests, in part via a scheme arranged by Gilbert Baker, the former state legislator and lobbyist. The defrocked judge Mike Maggio pleaded guilty in 2015 to taking a bribe to reduce a verdict by millions of dollars in a negligence case involving one of Morton’s nursing homes, around the same time that Baker had arranged multiple contributions from Morton to Maggio for a planned campaign for Court of Appeals. Baker and Morton deny any wrongdoing and have not been charged.

Baker’s partner, Linda Leigh Flanagin, was with Baker when they approached Morton about Baker’s scheme to set up multiple PACs (thus dodging campaign contribution limits) that could funnel additional Morton dollars to candidates, including Maggio. In a deposition, Flanigan also described meetings she had with Morton to discuss efforts to enact “tort reform” to limit damages for maltreatment by nursing homes.

As for Files, about six months after his company received the $80,000 from Norsworthy, he received a $30,000 loan from lobbyist Bruce Hawkins, as first reported by the Arkansas Blog.  Hawkins’ name came up at the periphery of the Maggio case.  Hawkins had used the same attorney Baker had, Chris Stewart, to set up a series of political action committees for a similar bundling scheme. Those PACs received some of the money aimed at Maggio. In a deposition, Hawkins testified that he moved to distance himself after he got tied up through news articles in the effort to aid Maggio, in part by a contribution made by Stewart from one PAC without Hawkins’ approval.

Files got into his own hot water with federal investigators in a separate matter related to misuse of General Improvement Fund money appropriated by the legislature in 2016 and pledging a forklift he did not own as collateral for a $56,700 bank loan. Files admitted to misdirecting more than $25,000 in taxpayer money for a sports complex his construction company was supposed to build and pocketing GIF funds for personal purposes. He faces sentencing in federal court this summer.

Skilled Nursing News reported that a federal bankruptcy judge approved HCR ManorCare’s prepackaged Chapter 11 plan to emerge from bankruptcy under the ownership of its landlord, Quality Care Properties (QCP).  QCP will lose its status as a real estate investment trust (REIT).  The action means ManorCare is the largest long-term care chain which operates 295 skilled nursing and assisted living facilities to go through the process over the last decade, according to Reuters.

Under the new management team, ManorCare will begin the process of selling off 74 facilities, as previously reported.   The judge’s approval also means that former CEO Paul Ormond’s sizable payout will go forward as planned, with Reuters pegging the final total at $116.7 million.

CNBC reported that Wall Street titans Goldman Sachs asked the incredible and amoral question: “Is curing patients a sustainable business model?”  Goldman Sachs addressed biotech companies, especially those involved in the pioneering “gene therapy” treatment and wondered if cures could be bad for business in the long run.

“Is curing patients a sustainable business model?” analysts ask in an April 10 report entitled “The Genome Revolution.”

The potential to deliver ‘one shot cures’ is one of the most attractive aspects of gene therapy, genetically-engineered cell therapy and gene editing. However, such treatments offer a very different outlook with regard to recurring revenue versus chronic therapies,” analyst Salveen Richter wrote in the note to clients. “While this proposition carries tremendous value for patients and society, it could represent a challenge for genome medicine developers looking for sustained cash flow.”

Richter cited Gilead Sciences’ treatments for hepatitis C, which achieved cure rates of more than 90 percent. The company’s U.S. sales for these hepatitis C treatments peaked at $12.5 billion in 2015, but have been falling ever since. Goldman estimates the U.S. sales for these treatments will be less than $4 billion this year, according to a table in the report.

“GILD is a case in point, where the success of its hepatitis C franchise has gradually exhausted the available pool of treatable patients,” the analyst wrote. “In the case of infectious diseases such as hepatitis C, curing existing patients also decreases the number of carriers able to transmit the virus to new patients, thus the incident pool also declines … Where an incident pool remains stable (eg, in cancer) the potential for a cure poses less risk to the sustainability of a franchise.”

The report suggested three potential solutions for biotech firms:

“Solution 1: Address large markets: Hemophilia is a $9-10bn WW market (hemophilia A, B), growing at ~6-7% annually.”

“Solution 2: Address disorders with high incidence: Spinal muscular atrophy (SMA) affects the cells (neurons) in the spinal cord, impacting the ability to walk, eat, or breathe.”

“Solution 3: Constant innovation and portfolio expansion: There are hundreds of inherited retinal diseases (genetics forms of blindness) … Pace of innovation will also play a role as future programs can offset the declining revenue trajectory of prior assets.”

The Kansas City Star had an interesting article about Skyline Healthcare–whose headquarters are above a pizza parlor in New Jersey.  Last month, the Kansas Department for Aging and Disability Services petitioned the courts to take control of Skyline’s 15 nursing homes across Kansas, saying Skyline was on the brink of financial collapse and 845 nursing home residents were at risk.  Nebraska officials had taken similar action about a week earlier with 21 facilities owned by a subsidiary of Skyline.

Formed in 2008, Skyline grew exponentially as its owners took over operations of 110 nursing homes in six states between 2015 and 2017. In two years, Skyline — through dozens of subsidiary LLCs — took control of dozens of homes in Massachusetts, Florida, Arkansas, Nebraska, Kansas and South Dakota.

William Murray III, an attorney who has filed malpractice and neglect suits against Skyline nursing homes in several states, said the numerous LLCs associated with Skyline — like Dorothy Healthcare Management — are gimmicks.

“Oftentimes in the change of ownership process, new operators will create companies that have no track record and no history, even though the people behind them do, in order to escape any scrutiny about whether they’re qualified to take over the facilities,” Murray said.

“Where are all the people who supposedly work on the second floor of a New Jersey pizza parlor? The people who are supposedly working for Dorothy Healthcare Management, taking care of all these frail, elderly Kansans?”

When Skyline took over the ownership and operation of the nursing homes, vendors didn’t get paid and staff paychecks would be direct deposited, taken back and then re-issued days later on paper checks.

“I really think there needs to be a more intensive financial review for them coming in,” said Cindy Luxem, the executive director of the Kansas Health Care Association. “Because I honestly don’t believe the Skyline people had a year’s worth of working capital.”  “The people that own Skyline, they’re not health care providers,” Luxem said. “They’re merely people looking for an investment. Unfortunately, there’s a lot of that in our industry right now, but I wish the state of Kansas had a little bit better checks and balances on people coming into our state.”

The company was owned by a single family, the Schwartzes (Joseph, Rosie, Michael and Louis).  Stephen Monroe, a partner at a research firm called Irving Levin Associates that specializes in the senior housing and health care investment markets, said nursing home industry watchers used to joke about their office above the pizza joint in Wood-Ridge, N.J.

“It’s a group of good ol’ boys from the East Coast buying up a whole bunch of nursing homes in the Midwest because we’re the cheaper ones,” said Carol Tsiames, a former administrator at the Kaw River Care & Rehabilitation Center in Edwardsville, who left about eight months after Skyline took over.  “They abuse the system. Encourage you to use local vendors, and then they don’t pay. … It puts an administrator in a bad position.”

The Anderson Independent Mail had an article about Orianna’s bankruptcy due to corporate mismanagement and how that affects pending lawsuits and victims.  Lawsuits incuding thos einvolving wrongful death of residents at Orianna’s nursing homes have been halted since the company’s bankruptcy filing last month in Texas.  Lawyers handling pending suits against Orianna have hired bankruptcy attorneys in Texas as part of an effort to have their clients heard in the company’s bankruptcy proceedings. Victims of abuse and neglect are classified as unsecured creditors, and may not be able to get any compensation for their injuries and wrongful death.

Orianna, which is the Upstate’s top nursing home operator, currently runs 42 nursing homes with more than 4,000 beds in seven states. It has about 5,000 employees.

The company intends to sell its Upstate nursing homes and several other facilities throughout South Carolina and Georgia under terms of a restructuring agreement with its landlord, Omega Healthcare Investors Inc. Plans call for Orianna’s 23 other nursing homes to be transferred to a new operator.

However, the U.S. government has objected to a plan by the bankrupt operator of the Orianna Health Systems nursing home chain to protect companies that would acquire facilities through its restructuring from successor liability. The nursing home operator, 4 West Holding Inc, has facilities in seven states. It is seeking a court order that would allow the transfer of assets free of any liability, which the government said is not allowed by Medicare provider agreements.

Besides seeking to halt all litigation in pending cases as a result of its bankruptcy filing, the company has stopped making payments related to some previously settled suits.

McKnight’s had an article on how Preferred Care of Plano is using bankruptcy to avoid responsibility for the abuse and neglect suffered by their residents.   Preferred filed for bankruptcy in November claiming in court that lawsuits led to its financial demise.  Consumer advocates and industry experts — including families who allege their loved ones were mistreated in facilities in Texas, Kentucky or New Mexico — say the company is trying to avoid accountability.

“If their quality of care were higher, they wouldn’t be getting sued,” said Dallas lawyer Gabriel Canto, who represents the family of a Preferred Care resident who died after falling twice in the same day.

Preferred Care was incorporated in 1992 by Thomas Scott.   Today it’s a web of corporations that includes technology services, rehabilitation services and nursing homes linked to Scott including Preferred Care Partners Management Group, Preferred Care Inc., Preferred Care Partners, Pinnacle Health Management and Pincomputing.   The company has annual revenue estimated at $750 million, it is one of the country’s largest senior care providers, with more than 100 skilled nursing, assisted and independent living centers in 12 states, including 38 locations across Texas.

A Dallas Morning News investigation published last week strung together state and federal inspection reports and dozens of lawsuits to illustrate the nursing home operator’s horrific track record and history of abuse and neglect. Allegations of neglect, injury and wrongful death included the beating death of two residents at the hands of a mentally ill roommate, a resident found dead with his wheelchair on top of his body and a state attorney general’s allegation that residents were left for hours in soiled clothes and sheets.

An unusually large share of Preferred Care facilities have poor ratings, based on federal inspection data. About a third of Preferred Care homes in Texas received 1 star overall in the Five-Star Quality Rating System, compared to a quarter of all nursing homes statewide.

State health departments, lawyers and the hundreds of families they represent say that the company is using bankruptcy as a way to escape the consequences of a long-standing pattern of substandard care.

Scott and his wife live on a 155-acre property in Celina that’s valued at $3.7 million, records show. Scott owns several other properties in Collin and Grayson counties, as well as a home in Fort Lauderdale, property records show.

St. Louis Today reported that infamous and disgraced nursing home company CEO Johnnie Mac Sells admitted stealing more than $667,000 from Medicaid and been sentenced to 41 months in federal prison.  Now , he also admits to stealing from employees’ 401(k) accounts and health benefit plans, although he may face no more time in prison.

Sells waived indictment by a grand jury and pleaded guilty in U.S. District Court to two counts: stealing from an employee benefit plan and stealing from a health care benefit program.

 Assistant U.S. Attorney Dorothy McMurtry told U.S. District Judge Henry Autrey that money for their 401(k) plans was withheld from Legacy Health Systems employees’ pay from August to October 2016, but was not added to their accounts. Employees didn’t know because Sells failed to file annual reports, she said.  She also said that there was more than $800,000 in the plan in December 2015, and nothing 15 or 16 months later.
 McMurtry said that the employee health care plan was terminated in May 2016 for nonpayment, but Sells continued to withhold a total of $20,000 from employee paychecks. Those employees only found out they didn’t have health insurance when their health claims were rejected, she said. McMurtry said there was more than $124,000 of unpaid health claims.

Legacy Health, the Sells family business, once employed 1,600 who cared for 2,000 patients in 27 facilities across Missouri, Kentucky and Tennessee.  But by 2016, there were only three nursing homes left. And patients in Benchmark Healthcare were going hungry while Sells spent Medicaid money on strippers, gambling, pet care and country club fees, prosecutors have said.

A Post-Dispatch investigation documented the company’s fall.

In 2014, when Florida officials wanted to permanently shut down the now infamous The Rehabilitation Center at Hollywood Hills, Governor Rick Scott interceded on behalf of a lobbyist and frequent campaign contributor. The role of one of the Governor’s friends lobbying state officials on behalf of Dr. Jack Michel so Michel could obtain the license for the Hollywood Hills nursing home has not been previously reported.  An attorney for Michel said the lobbyist, Bill Rubin, “performed routine lobbying efforts in connection with assisting us with the AHCA regulatory process required for licensure.”

The nursing home is now drawing intense scrutiny following the deaths of more than a dozen residents after its air conditioning system lost power during Hurricane Irma. This case reveals the nature of how business is often done in Tallahassee where political connections are the currency of the realm.

In 2014, Michel wanted to buy the nursing home, whose owner at the time, Karen Kallen-Zury, had just been convicted of Medicare fraud and was sentenced to 25 years in prison.  Unfortunately for Michel, the state’s Agency for Healthcare Administration (AHCA), was set to revoke both licenses, filing two complaints against the nursing home and hospital on February 14, 2014.

In April 2014, he hired Bill Rubin, founder of the Rubin Group. Rubin is powerful player in Tallahassee whose ties to Governor Rick Scott are well known.  Rubin had no trouble arranging a meeting between Michel and Dudek, the AHCA Secretary.  State records show that between April 2014 and September 2015, Rubin’s firm was paid between $100,000 and $160,000 by one of Michel’s companies.  And by October 2014, Dudek signed an order reversing AHCA’s decision to revoke the license thereby clearing the way for the licenses to be transferred to Michel.

Political leaders have questioned whether Michel should have been granted a license given the fact that Michel and two former business partners paid $15.4 million to the federal government to settle fraud claims.  Rubin also represents HCA, the hospital chain once owned by Scott.

For its part, given the deaths at the nursing home in September, the state is once again trying to permanently revoke the nursing home’s license. The nursing home, which is currently closed, is fighting the state. A hearing on the matter is scheduled for January.

Here is a blog from The Hill that sets forth an absolutely heartbreaking case, being handled by Public Justice Foundation member Mike Foley, that exemplifies what’s most unfair about Congress passing H.R. 1215 imposing arbitrary caps on medical malpractice damages.  The woman mentioned in the blog is Kathleen Astleford.

Her doctor performed 26 unnecessary radiation treatments on the wrong side of her tonsils.  Astleford received horrendous medical care including burning her and not addressing her cancer, and then ran out of treatments because one can only get so much radiation, and the other treatments caused her many other problems.

The pain and suffering Astleford endured was unimaginable. However, a cruel bill recently passed by the U.S. House and now making its way towards the Senate, would add insult to her injuries — and to countless other patients who have suffered at the hands of careless health care providers — by placing restrictions on how much they can recover, no matter how outrageous or invasive their mistreatment might have been.

From medical malpractice to sexual assault, damages caps prevent victims of some of the vilest and most egregious crimes from ever receiving the justice they deserve. They also tie a jury’s hands, and make their verdicts nearly irrelevant, by allowing legislators instead of jurors to decide the maximum award allowed in these cases.

“Under H.R. 1215 the misleadingly titled “Protecting Access to Care Act” Astleford would only be able to collect a maximum of $250,000 for her pain and suffering. That’s because lawmakers behind the bill think those 26 unnecessary doses of radiation and the invasive surgery that would have been unnecessary had doctors administered the correct treatment to begin with are “noneconomic damages.” In other words, those 26 treatments didn’t actually “cost” Astleford anything, other than some discomfort that couldn’t possibly have caused more than $250,000 of troubles for her.”

 

 

 

Bangor Daily News published a letter from Phillip Bennett, an administrator at Bangor Nursing and Rehabilitation Center.  See below.

As a nursing home administrator, I read with great interest the BDN report “Worn to the Sole” about the Maine woman who protects the dying and can barely make ends meet. This article accurately and empathetically portrayed the daily life of a dedicated CNA in a Bangor-area nursing home. It highlighted her sincere commitment to the residents for whom she cares and the quality of care that comes from an intimate knowledge of their likes and needs, developed over months or years of daily personal attention. And it reflected her pride and confidence in working as a professional caregiver.

But “Worn to the Sole” is aptly named, reflecting the difficulties faced by CNAs in all nursing homes, where the work is hard, the hours sometimes unexpectedly long, and wages insufficient to pay the bills and provide a satisfactory living.

Maine nursing homes face an intractable CNA shortage with no precedent, and they have been struggling for some time with how to deal with it. The CNA hourly wage, adjusted for inflation, has fallen over the last 10 years — a long time during which every dollar a CNA brings home buys less — and in any case, it has never provided much more than a subsistence wage.

Together with the stress the job entails (both because of reasonable and unreasonable supervisor and family member expectations) and risk of injury (Maine CNAs are injured as often as construction workers), there has been a disincentive for CNAs to remain in the field — and they are either leaving the field altogether or for better pay elsewhere.

 As nursing homes see CNA vacancies appear with greater frequency, they turn to temporary staffing agencies, often paying twice as much to maintain minimum staffing. The agencies fill the vacancies by paying temporary CNAs a higher hourly wage. The work the agencies offer may be less certain, and benefits may or may not be available, but CNAs need a better income. Many CNAs have moved to those agencies for the higher hourly pay they receive. Many end up working in nursing homes in the same area, which are befuddled by their lack of staff and what to do about the matter. Additionally, to reduce the extraordinary and ongoing costs of temporary CNAs, nursing homes require additional hours of work on short notice, a practice all too common in health care but unacceptable in other walks of life.

It seems to me that the answer is fairly clear: CNAs in nursing homes need to be paid more. The CNA shortage is a long-term structural change caused partly by nursing homes not paying enough to attract and retain workers — a problem compounded by requiring additional shifts or weekends to cover staff shortages.

Bangor Nursing and Rehabilitation has done both — significantly increasing CNA wages and eliminating the requirement for them to stay for additional shifts. It makes no business sense to pay exorbitant fees for CNAs from staffing agencies while waiting for MaineCare, the state’s Medicaid program, to increase reimbursement rates. It is ethical and practical to pay better wages. Nursing homes already pay more for temporary CNAs than if they paid a higher wage to recruit or retain their own staff. Not to do so flies in the face of reason, regardless of state legislative action.

Our experiment is early. We still have unexpected turnover, but we do receive more applications for vacancies and fill them faster than before, and have greater employee satisfaction by not mandating additional hours. We also hope to improve our retention by offering better wages and not requiring our employees stay beyond their scheduled shifts.

Perhaps an independent nonprofit can do this easier than a corporate for-profit entity, but this change is inevitable. The sooner CNAs make more and have reliable hours, the more likely nursing homes will be able to reduce their dependency on staffing agencies and reduce their wage expenses. In the process they will likely find satisfaction in caring for their employees as those employees care for their residents. It is the right thing to do.