Category Archives: Tort Reform

The Department of Housing and Urban Development is selling a group of nursing homes it took over 18 months ago after the biggest default in the history of a government mortgage insurance program that provides support to the nursing home industry. The housing agency has managed the chain, Rosewood Care Centers, with the help of a court-appointed receiver since the previous owners defaulted on $146 million in government-guaranteed mortgages.  The agreement involves Greystone, a New York real estate finance firm, for the chain of Chicago-area elder care facilities. Greystone is a major lender to the nursing home industry, and was servicing Rosewood’s mortgages when the former owners defaulted.

Greystone was identified as the incoming owner of the Rosewood chain in a licensing application filed in December with the Illinois Department of Public Health. The application documents indicate that Greystone will own and operate the facilities through a series of shell and sham limited liability companies. The firm also intends to rename each of the facilities, according to the application.

The default raised questions about the department’s oversight of a decades-old mortgage insurance program that backs 15 percent of the nation’s nursing homes.  It is not clear how Greystone is paying for the facilities, or if the firm is getting any credit from HUD for the losses it may have incurred in the default.

HUD solicited bids for the Rosewood facilities — a dozen nursing homes and one assisted living center — until the end of May, but it has repeatedly and suspiciously declined to disclose the name of the prospective buyer or the purchase price. According to court filings, there were four bids for the properties, which the department had valued at $95 million. The department has spent nearly $30 million since August 2018 to make up for shortfalls in funding at the Rosewood facilities and to pay for repairs.

Court records also show that federal securities regulators are close to reaching a financial settlement with a former owner of the Rosewood facilities. The Securities and Exchange Commission in September charged a Chicago-area rabbi, Zvi Feiner, with defrauding a group of Orthodox Jewish investors who had put money into the Rosewood properties and other elder care facilities. HUD said in court documents that the owners had improperly diverted millions of dollars in federally insured funds to another nursing home that was not part of the program. Mr. Feiner paid a $1 million penalty to HUD this summer for failing to file several years of audited financial reports required by the mortgage insurance program.

Arkansas has done something that more states need to do–question the transfer of ownership of nursing homes to shady characters.  Christopher Brogdon is well-known in the long term care industry.  Brogdon’s past had also previously been the subject of scrutiny in the Democrat-Gazette, which in April reported that the state approved his assumption of other licenses in Arkansas despite an $83.1 million Securities and Exchange Commission judgment against him in a separate bond fraud case.  He has owned and operated hundreds of nursing homes.  Unfortunately for the residents of those nursing homes, he has not done a very good job.  Now Arkansas has done something about it.

Brogdon’s request to take over a pair of facilities was denied but he has struck back with a lawsuit, claiming that the authorities didn’t provide “sufficient justification” for their decision.  Brogdon claims that Arkansas health officials made an “arbitrary and capricious” decision when they blocked his attempted takeover of properties.

The facilities in question were previously run by the New Jersey-based Skyline Healthcare, whose stunning financial collapse across several states led to calls for increased scrutiny on nursing home owners and operators — particularly those without a historic presence in a given state.

After another operator took over from Skyline in 2018, a firm run by Brogdon assumed control of the properties on an interim basis, the Democrat-Gazette reported, investing about $700,000 in their operations — with the assumption that his affiliates would eventually receive approval to take over on a full-time basis.

But the state’s Human Services Department denied the applications, according to the publication, after officials determined that Brogdon failed to provide sufficient information about 11 other properties he owned in Georgia, Arkansas, and Oklahoma.

Though that rule — which requires applicants to prove that their other properties met state and federal regulations for the previous one-year period — had been in effect for nearly three decades, a spokesperson told the Democrat-Gazette that the Brogdon case was the first time it had been used to deny a transfer.

Ownership and operational transfers could be a key area of nursing home enforcement on both the state and federal levels over the next decade, as officials look to prevent providers with checkered pasts from setting up shop elsewhere. Kansas, which saw 15 Skyline properties fall into receivership, rolled out more stringent application rules for prospective nursing home operators last April, while also making it easier for officials to blacklist providers and owners deemed unfit.

Ohio followed suit in October, with lawmakers enshrining tighter transfer rules as part of its 2020-2021 operating budget; Pennsylvania was also in the process of developing new regulations around skilled nursing ownership changes, Skilled Nursing News reported at the time.

McKnight’s reported that a bankruptcy court has approved a reorganization plan for Dallas-based skilled nursing and senior living provider Senior Care Centers LLC which owns more than 100 SNFs and senior living communities in Texas and Louisiana. The U.S. Bankruptcy Court for the Northern District of Texas is allowing the company to be restructured into a new company owned by unsecured creditors, the Wall Street Journal reported.  The company stated the restructuring allows it to continue caring for patients and residents without interruption.

Senior Care Centers executives announced the bankruptcy filing last December after numerous fiscal challenges. The company described the move as the best way to “address the company’s debt and costly leases” and improve financial resources.

 

Every year, hundreds of news reports surface about nursing home staff physically or sexually assaulting patients. Physical and cognitive vulnerabilities may make it difficult for residents to report abuse or to have their reports taken seriously.  Web-enabled digital cameras offer a fantastic solution.  as a nursing home abuse and neglect lawyer, I wish we had video in every case.

Evidence suggests that even more people are putting cameras in a relative’s room to detect and deter abuse.  Seven states have passed laws expressly allowing families to monitor the care of aging relatives this way. Many states like South Carolina have no laws prohibiting the use of cameras.

While state laws regulating camera use require consent from the patient or a family member. Many residents are unlikely to be consulted about camera installation, because they lack, or are perceived to lack, capacity for consent. In these cases, children often act as parents’ legal proxy to give consent on their behalf.

Since nursing home rooms are usually shared, the consent and privacy of roommates presents an ethical problem, too. Inevitably, roommates’ conversations will be recorded, and they will be filmed when passing through a camera’s field of vision. All of the states that allow in-room cameras require that roommates or their legal representative be informed of surveillance and allowed to require that the camera be pointed away from their bed.

Webcams are a consumer response to the United States’ inadequate long-term care system. Long-term care in the United States is poorly funded, primarily by Medicaid. Medicare covers acute but not ongoing services and supports.

As a result, the nursing home staff trusted to do this demanding and fraught work receive low pay and no benefits. Turnover is particularly high among caregivers who provide the most hands-on, intimate care in American nursing homes.  With better pay and working conditions, nursing homes could attract more direct-care staff who would stay in their jobs longer and be more invested in their workplace. Nursing assistants could get to know residents, and keep a better eye on them. Enhanced training on recognizing and reporting abuse would also promote accountability.

 

McKnight’s reported that the Medicare system is spending “significantly” more money on post-acute care for patients when compared to those who have commercial insurance, despite it not being clinically more beneficial, a new study has found. The study was published in the September issue of Health Affairs and funded by the National Institute on Aging.

Researchers discovered that despite the difference in spending there were no significant differences in hospital readmission rates between the groups.

“When we looked at just the length of stay of SNFs (skilled nursing facilities) while comparing patients, (we found) longer average length of stay for Medicare patients,” Scott Regenbogen, an associate professor of surgery at the University of Michigan, told McKnight’s. “There may be clinically unwarranted longer lengths of stay among Medicare beneficiaries.”

Researchers used data from more than 25,000 patients throughout the state for the study. They then used a regression discontinuity design to compare post-acute care use and costs between seniors in their 60s who have traditional Medicare coverage or private insurance. They also focused on post-acute care received at skilled nursing facilities, at home and at inpatient and outpatient rehabilitation facilities.

Based on the findings, Regenbogen suggested post-acute care providers may want to be “really judicious with the volume of services they provide and conclusive of which of the post-acute care services are translating to better post-hospital outcomes.”

 

The operator of South Star Ambulance Service alleges that Pruitthealth—Augusta Hills facility repeatedly tapped the ambulance company for inappropriate, non-emergency services over a two-year period, and is asking for more than $150,000 back for those trips. SSAS first filed suit against Pruitthealth—Augusta Hills on April 8 for repeatedly ignoring warnings to more judiciously use its services.

Regional Services, which operates the ambulance company, alleges that since the SNF is a Medicare-eligible provider, it should apply for reimbursement for non-emergency ambulance transport. The alleged inappropriate trips were made between August 2016 and September 2018, according to the lawsuit.

Parent company Pruitthealth is based in Norcross, GA, and operates about 180 facilities in Georgia, Florida, and North and South Carolina.

In 1959, the Department of Housing and Urban Development (HUD) created a program that provides loans to start up new nursing homes and assisted living facilities across the US.  This program was meant to keep care for the elderly viable and affordable in rural or lower-income communities which would otherwise be unable to sustain such a facility. Since the program began, however, it’s become an easy way for some business owners to get loans backed on for-profit nursing homes that are practically doomed at the start.

Back in late 2013, Zvi Feiner and a group of investors bought the Rosewood Care Centers, a chain of 13 nursing homes and assisted living facilities in Illinois. The Department of Housing and Urban Development insured the loans for the centers’ creation, so they were automatically implicated when the Rosewood Care Centers went on a downward spiral. Feiner started losing money on the facilities soon after he bought them, with a team of investors, and began diverting Rosewood’s government-backed funds to other businesses. The HUD program eventually had to come to Rosewood’s rescue when their operation ran out of money and the agency had to take it over.

This HUD program is increasingly known for its lack of oversight and its loss of money on these nursing homes and assisted living facilities. Yes, owners like Feiner are at fault for moving those funds and allowing negligence in those facilities, but HUD backed those for-profit facilities and paid little attention to their nefarious activities before it was too late. Not only is the program poorly run and bad for the government financially, it’s also bad for the residents. Some studies are finding these facilities which take government backing, especially the for-profit ones, are more likely to receive bad quality ratings and ultimately endanger their residents.

The families of many Rosewood patients have filed lawsuits due to the facilities’ negligence. Other facilities backed by the HUD program face similar widespread issues. If the program continues the way it is, it might only further the danger surrounding the businesses it backs.

Medicaid is the program that covers medical care for the poor. It provides free care in many cases. But nothing is free.  The money has to be paid back when you die.  This is what’s known as Medicaid estate lien and recovery.  The law allows the state to collect what Medicaid spent on long term care during their entire lifetime after they die.

Unlike many government benefit programs, it’s not a grant or a gift. It’s a loan and the loan is paid back after death.  This surprises many families who will lose their home.

Attorney Tim Takacs explained that’s how estate recovery works.

“The government basically says we’ll let you keep your house during your life, but after you’re gone, you don’t need it anymore,” Takacs stated.

There are certain circumstances when family can remain in the house, like when there’s a surviving spouse, a child under 21 or a disabled child. And, adult children are allowed to stay in the house if they lived with the parent and helped care for them for at least two years before the parent moved into the nursing home.

So how do you protect your house from estate recovery? Experts say the best way is through estate planning and it really needs to be done well before you or your loved one has to go into a nursing home, usually at least five years. And, when you are making plans, make sure you talk with an attorney who specializes in elder care law.

A federal jury convicted Philip Esformes, the infamous owner of assisted living facilities and skilled nursing facilities in Florida, of a billion dollar healthcare fraud.  Esformes is guilty of making $1.3 billion in fraudulent claims to Medicare and Medicaid for services that were not provided, weren’t medically necessary or were received through kickbacks. Evidence showed he bribed physicians to admit patients into his facilities and paid off a Florida state regulator for notification of planned inspections.

Esformes was convicted of 20 counts — one of conspiracy to defraud the United States, two of receipt of kickbacks in connection with a federal health care program, four of payment of kickbacks in connection with a federal healthcare program, one of conspiracy to commit money laundering, nine of money laundering, two of conspiracy to commit federal program bribery and one of obstruction of justice.

“Even beyond the vital dollars lost … Esformes exploited and victimized patients by providing inadequate medical care and poor conditions in his nursing homes,” Shimon Richmond, special agent in charge of the U.S. Department of Health and Human Services Office of Inspector General’s Miami Regional Office, said in a statement. “We will continue the fight against such parasites.”

He personally benefited from the fraud and received in excess of $37 million. Esformes’ conspiracy involved a network of 16 assisted living facilities and skilled nursing facilities that he owned in Miami-Dade County.

Prosecutors said for 18 years–from January 1998 through July 2016– he cycled patients through his facilities in poor condition, where they received inadequate or unnecessary treatment, then improperly billed Medicare and Medicaid.

Extravagant purchases included luxury automobiles and a $360,000 watch, the Justice Department said. Prosecutors said he bribed the basketball coach at the University of Pennsylvania in exchange for his assistance in gaining admission for his son into the university. That coach, Jerome Allen, testified Esformes paid him about $300,000 in cash bribes and wire transfers.

A 12-person jury deliberated for four days before agreeing that the 50-year-old entrepreneur was guilty on 20 out of 26 charges. Those include paying and receiving kickbacks, money laundering and conspiracy to commit federal program bribery. Jurors did not, however, reach a verdict on the main count — that Esformes conspired to defraud Medicare.  Prosecutors blasted Esformes following the conclusion of the eight-week trial for the $1.3 billion scheme to defraud both Medicare and Medicaid, calling him a “despicable,” “vampire” who was fueled by “unbounded greed.”

Meanwhile, the government alleged, Esformes provided access to assisted living residents “for any healthcare provider willing to pay a kickback” — including pharmacies, home health agencies, physician groups, therapy companies, partial hospitalization programs, laboratories and diagnostic companies — even though many of the services for which they were paid were not medically necessary or were never provided.

Esformes plans to appeal according to defense attorney Roy Black, said the Associated Press, which also reported that Black suggested that prosecutors may have overstated the amount of money involved in the case.  Esformes, 50, originally faced 26 charges. He was convicted of:

  • nine counts of money laundering,
  • one count of conspiracy to commit money laundering,
  • four counts of payment of kickbacks in connection with a federal healthcare program,
  • two counts of receipt of kickbacks in connection with a federal healthcare program,
  • two counts of conspiracy to commit federal program bribery,
  • one count of conspiracy to defraud the United States and
  • one count of obstruction of justice.

At the Esformes trial, some witnesses testified that conditions in the facilities were poor and care inadequate but that the businessman was able to conceal this information from authorities by bribing Bertha Blanco, a 30-year employee of the Agency for Health Care Administration, which oversees the licensure of assisted living and skilled nursing facilities in Florida, to provide advance notice of surprise inspections.

 

 

 

Herminigilda Manuel, the infamous owner of three California assisted living facilities pleaded guilty in federal court last month to willfully failing to account for and pay $512,000 in federal employment taxes.  Manuel, according to the Justice Department, admitted to not paying federal income, Social Security and Medicare taxes that were owed by the assisted living facilities and also to concealing the fraud by keeping two sets of payroll accounting records, from 2010 to 2013.

“One set of records consisted of wages paid to employees and taxes withheld from those wages that were reported to the IRS,” the department said. “The second set of accounting records consisted of additional wages paid to employees that were not reported to the IRS.”

Manuel was charged Feb. 8 with 12 counts of willful failure to account for and pay over employment taxes. The maximum statutory penalty for each count is five years in prison and a $250,000 fine, although additional periods of supervised release, fines and restitution also may be imposed.

Under a plea agreement, Manuel pleaded guilty to one count. If she complies with the plea agreement, the remaining counts will be dismissed at sentencing. A sentencing hearing is scheduled for June 11.