SavaSeniorCare is one the biggest and most profitable nursing home chains in the U.S owned and operated by entities controlled by New York tycoons Murray Forman and Leonard Grunstein.  Last week, a jury in Colorado punished the billion dollar chain with a verdict of $3.7 million. $3.5 million in punitive damages against Belmont Lodge Health Care Center and $200,000 to be awarded to Margaret Smith for her pain and suffering.
See articles at KOAA, The Denver Channel, and KRDO.

Sava run Belmont Lodge Health Care Center in Pueblo caused the wrongful death of 88-year-old Janet Smith in May 2011.  Smith served as a nurse in World War II and the Korean War.  Denver-based attorney Jordan Levine represented Smith’s daughter, Margaret, who sued after her mother’s condition rapidly deteriorated resulting in her death shortly after entering Belmont Lodge for rehabilitation of two broken ankles in April 2011. As a result, she was outfitted with a foley catheter so that she could urinate.  Defendants’ reckless conduct and neglect related to the monitoring and care for that catheter by Belmont Lodge staff led to a severe urinary tract infection, resulting in Janet’s death.




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The Nashville Post reported that National Health Investors has paid more than $26 million for two skilled-nursing homes in the Dallas area. Murfreesboro-based NHI bought the facilities from Fundamental Long Term Care Holdings, which runs care centers in more than a dozen states around the country.  NHI funded its purchase with from borrowings from its revolving credit facility.

Combined, the two centers in Corinth and Canton, Texas, are home to 254 beds. Both are less than two years old and are now being leased for 10 years by agents of Sparks, Maryland-based Fundamental owned and operated by Murray Forman and Leonard Grunstein.  NHI will take in $2.4 million in annual lease payments.


The New York Law Journal reported recently that Fundamental Long Term Care Holdings, L.L.C. and its owner/members Murray Forman and Leonard Grunstein lost the appeal of the Court Order upholding the option giving Rubin Schron 1/3 ownership interest in Fundamental and all the nursing homes they operate.  The Order stated:

‌This lawsuit is one of several between business entities controlled by plaintiffs Leonard Grunstein and Murray Forman and defendant Rubin Schron (see also Schron v. Troutman Sanders LLP __NY3d __ [2013] [decided today]). Cammeby’s Funding LLC (Cam Funding) is a limited liability company managed by Schron, a real estate investor; Fundamental Long Term Care Holdings LLC (Fundamental) is a limited liability company whose sole members are Grunstein — formerly Schron’s attorney — and Forman — formerly Schron’s investment banker.


In 2003, SWC Property Holdings LLC (SWC), another company controlled by Schron, acquired the facilities and real estate occupied by a string of 26 nursing homes and, through subsidiaries, leased these properties to an independent operating company [THI Holdings, LLC].  In 2006, Grunstein and Forman purchased [THI of Baltimore, Inc. from THI Holdings] all of the issued and outstanding capital stock of these nursing homes, having formed Fundamental in December 2005 for the purpose of owning companies that manage healthcare facilities. Grunstein and Forman each contributed $50 in equity for a half interest in Fundamental; they paid $10 million for the stock, financed by debt. Additionally, Schron executed a covenant not to sue on any claims that SWC, the landlord, might have against the nursing homes.

On July 1, 2006, Fundamental and Cam Funding entered into an option agreement entitling Cam Funding (or its designee) to acquire one-third of Fundamental’s membership units for a strike price of $1,000, provided the option was exercised on or before June 9, 2011. This agreement was signed by Forman, as manager of Fundamental, and was accepted and agreed to by Schron, as manager of Cam Funding, and Grunstein and Forman, the sole members of Fundamental.


Sections 5 and 6 obligate Fundamental, Grunstein and Forman to facilitate, and prohibit their interference with, Cam Funding’s exercise of the option. Specifically, in section 5, Fundamental agreed not to

cause, suffer or permit any of its subsidiaries to, enter into any agreement or commitment with any unitholder, subscriber, officer, director or employee or other person that would conflict with or interfere with any of the rights of [Cam Funding] under this Agreement, including (without limitation) the exercise of the Option, and any such conflicting agreement or commitment shall be deemed void and of no force or effect.”


On December 20, 2010, Cam Funding notified Fundamental in writing that it was exercising the option, designating Quality Health Services LLC to acquire the ownership interest, specifying January 20, 2011 at its lawyers’ offices as the date and place of closing, and enclosing a certified check for $1,000. On January 18, 2011, Fundamental responded that, pursuant to its operating agreement, “no membership units in Fundamental can be issued to [Cam Funding] until… [Cam Funding] provides the required capital contribution of ‘at least the fair market value’ of its proposed interest, which is 33.33 percent.”



At the time Cam Funding exercised the option, the market value of a one-third interest in Fundamental was estimated to be more than $33 million.



Consistent with Supreme Court’s decision, Cam Funding proposed an order directing the clerk to enter judgment declaring that Fundamental was required to “close on the Option promptly following the completion of all required regulatory filings and approvals, if any.” The judge signed this order, which was entered on October 6, 2011. Fundamental then appealed; on December 13, 2011, the Appellate Division issued a stay of Supreme Court’s orders pending hearing and determination of the appeal.

In a decision issued February 7, 2012, the Appellate Division affirmed (92 AD3d 449 [1st Dept 2012]). The court concluded that “[r]egardless of which document was executed first,” the option agreement unambiguously entitled Cam Funding to acquire one-third of Fundamental’s membership units for $1,000 “without the need for any capital contribution” (id.).


On May 22, 2012, the same panel denied Fundamental’s motion for leave to appeal, and granted Cam Funding’s cross motion to vacate the stay. Fundamental then asked us for permission to appeal, and on June 5, 2012, a Judge of this Court granted an interim stay pending the motion’s resolution. On September 11, 2012, we granted Fundamental’s motions for leave to appeal and a stay (19 NY3d 1012 [2012]). We now affirm.



The New York Law Journal reported on the continuing saga regarding ownership of the national for profit chain of nursing homes known as Fundamental Long Term Care Holdings, L.L.C.  Murray Forman and Leonard Grunstein are the principals who own Fundamental and the affiliates that operate the facilities including Fundamental Administrative Services, Fundamental Clinical Consultants, Fundamental Clinical and Operational Services.  However, Reuben Schron opted to buy one third of Fundamental for $1,000—a great deal.   Schron is appropriatly concerned that funds will be diverted to the owners while the appeal is continuing.  The Order denies Schron’s request for a financial audit.



The Times News reported the closing of Sava owned and operated Brian Center of Weber City with an extensive history of compliance problems after the federal government finally took action to terminate its ability to accept Medicaid and Medicare reimbursements.  The facility is now known as Continium Care of Weber City.

“According to a nursing home license application filed with the Virginia Department of Health Office of Licensure and Certification in October 2010, the facility is managed by Continium Health Care Management LLC located at 10800 Biscayne Blvd., Suite 810, Miami, Fla. The LLC’s president/chairman is listed as Avi Klein of Miami.”  Klein’s partners include Abraham Shaulson, Murray Forman, and Leonard Grunstein.  I’m sure they bled the facility dry before closing the facility down.  In October 2010, the facility, which was then known as the Brian Center, was investigated by the Internal Revenue Service for possible violations of wire fraud, mail fraud, health care fraud and money laundering.

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The Commercial Observer had an interesting article on the recent litigation involving Sava owners and operators and how expert accountants were needed to explain the complex web of corporate shell games. Two top forensic accountants were retained in a decisive battle in a legal war for control of about 170 nursing homes.

The trial in New York Supreme Court had its origins eight years ago, when real estate investor Ruby Schron teamed up with his lawyer, Leonard Grunstein, in a labyrinthine $1.3 billion leveraged buyout that created SavaSeniorCare. At issue for the two expert witnesses: the exact whereabouts of $100 million.”  In the nursing home case, the accounting helped determine that Mr. Schron could acquire the company without any further investment by simply assuming the debt. On Mr. Schron’s side was Harvey R. Kelly. Providing expert testimony for Defendants was David S. Williams. The rival accountants’ task was to sort out transactions among some 30 people and entities involved in the buyout, as well as the movement of money through an escrow account from entities on Mr. Schon’s side of the deal to Mr. Grunstein and his companies, to establish whether, and how much of, the money was lent.  The case, which hinged on how much money from a $100 million loan by Mr. Schron actually found its way to Sava. The accountants in Schron v. Grunstein were more than $110 million apart in their estimates of how much money was lent.

“In 2004, Mr. Grunstein and investment banker Murray Forman approached Mr. Schron with a proposal to buy Mariner Health Care Inc., a public company that operated more than 250 nursing homes and owned real estate associated with about 170 of them.”  “Grunstein and Forman proposed a complex transaction employing a ‘PropCo/OpCo’ structure whereby Old Mariner’s real estate would be separated from the nursing home operations.”

A newly formed company, National Senior Care Inc., bought all of the shares of Old Mariner, then sold the real estate to one of Schron’s companies, SMV. That entity then leased the properties to another newly formed company, SavaSeniorCare, controlled by Mssrs. Grunstein and Forman. National Senior Care retained the operations of about 100 nursing homes located on properties that were leased from third parties.

While neither Mr. Grunstein nor Mr. Forman put any of his own money into the deal, Mr. Schron raised about $1.1 billion in financing, acquiring real estate valued at about $800 million. According to documents signed at closing, the financing included a $100 million loan to the owner of Sava that gave him an option to acquire the company, the judge wrote.

Mr. Kelly said a promissory note signed by both sides at the time of closing—and amended and restated in 2006 when a second, $20 million loan was made—was the best evidence that the loan existed. And he said documents showed that the nursing home company had made use of the money, including making a $65 million loan to the “New Mariner” entity on the day of the transaction.

Documents included “audited financial statements of SavaSeniorCare that an outside independent audit firm rendered the opinion that [an entity controlled by Mr. Grunstein] had contributed $100 million,” he said. “So, you’ve got years’ worth of very consistent documents demonstrating that. I find that the most credible evidence.”

The biggest problem Murray Forman and Leonard Grunstein had was their obvious lack of credibility.  “Apart from the fact that all of the documentary and non-party witness evidence contradict their testimony, their evasive answers and manner on the witness stand left the court with a firm belief that both gave testimony that was less than candid,” the judge wrote. He ordered the defendants to proceed with the transfer of control of the company “without further delay.”


Mercury News reported that Creekside Health Care and its parent corporation, Mariner Health Care in San Pablo, California is facing a lawsuit for understaffing which caused multiple problems at the facility.  Five families blame the lack of staff subjected residents to abusive and inhumane conditions.  The families allege that inadequate staffing levels at the facility caused residents to be neglected for long periods of time, often left to sit in their own feces and urine.  The staff, to compensate for the lack of staff, caused residents to be over medicated known as a chemical restraint. Nursing home workers were also unable to turn or reposition as needed so many residents developed pressure ulcers that would otherwise have been easily preventable.

The suit also explains that a lack of staff allowed a visitor to sexually assault four residents from as long as January until May 2010. The lawsuit states, “During the assaults, residents screamed for help, sometimes for more than thirty minutes, but no one came.”   It is outrageous that residents were screaming for someone to help them and no one was able or willing to intervene.

All too often national for-profit nursing home facilities controlled by corporate ownership are only motivated to generate greater profits.  This disregard of resident care is exemplified by by cutting labor costs and reducing staffing.


Speaking of shady corporate deals, Thomson Reuters News & Insight reported that a New York Court ruled against Leonard Grunstein and Murray Forman in their attempt to invalidate an agreement in a fight over ownership of Sava Senior Care, a national nursing home chain.  Grunstein and Forman argued that Rubin Schron didn’t fund a $100 million loan to the nursing home chain therefore the agreement giving him the option to buy the chain in exchange for cancelling the loan was invalid.  See Order here.

Grunstein and Forman, who co-own and operate Sava entities with Schron, were appealing several lower-court rulings. In a unanimous ruling, New York state’s Appellate Division, First Department, rejected the "tortured argument" that the two agreements were interdependent and that failure to fund the loan would void the option agreement.

"The (lower) courts correctly recognized that there was absolutely no language of condition making the funding of the loan an express condition precedent to the right to exercise the $100 million option," Associate Justice James Catterson wrote for the court.

The ruling is the latest in a tangled web of litigation between Schron, Grunstein and Forman, whose business dealings in nursing home companies have dissolved in a bitter legal battle. Their partnership appeared to go bad after they were sued in 2009 by the U.S. Department of Justice, which alleged they received kickbacks from Omnicare, a pharmacy that sells drugs to nursing home patients. In 2010 the three men — along with Sava and another nursing home chain, Mariner Health Care Inc, for which they served as principals — paid $14 million to settle the lawsuit.

The case is Schron et al v. Troutman Sanders et al, in the Supreme Court of the State of New York, Appellate Division: First Department, index nos. 650702/10 and 600736/10.


Dechert’s website had the following about their recent win in a lawsuit against Fundamental:

Dechert attorneys obtained a favorable judgment issued on Feb. 7 by the First Department of the New York Appellate Division in Fundamental Long Term Care Holdings LLC v. Cammeby’s Funding, LLC, No. 650332-2011. Dechert partner Steven A. Engel argued the case on Jan. 17 in support of a judgment recognizing the rights of defendant Cammeby Funding, LLC to a one-third interest in Fundamental Long Term Care, a national nursing-home company.. In the court’s opinion it stated: “regardless of which document was executed first, the motion court correctly found unambiguous the parties’ option agreement entitling defendant Cammeby’s to acquire units of the LLC for $1,000 without the need for any capital contribution. We note that the integration clause in the option agreement bars parol evidence of the parties’ intent and of any other agreements or understandings. Under the circumstances, we reject plaintiffs’ contention that defendants obtained an improper windfall.”

“We’re pleased that the First Department recognized, as the trial court did, that the plain language of the option agreement must govern the parties’ rights," stated Mr. Engel.

In addition to Mr. Engel, Dechert chairman Andrew J. Levander was on the team representing the defendants, Cammeby’s Funding, LLC and Quality Healthcare Services.

The Court’s decision may be found here.


 The Tampa Bay Times had a great article about the difficulty in holding nursing homes accountable and collecting judgments from oowners and operators especially when no insurance exists.  Complex corporate networks insulate owners from legal claims. Money is shifted around. Private investment firms come and go.

The article reports  "At times, even nursing home regulators cannot tell who is raking in the profits and calling the shots. The estate of Elvira Nunziata is putting that protective shell to the test."

Nunziata and her family was recently awarded $200 million by a jury after she toppled down a stairwell to her tragic death in 2004 while strapped to a wheelchair.  She was unsupervised and passed through an unsecured door without an active alarm.

The company that operated Pinellas Park Care and Rehab Center at the time no longer exists.  Another company had bought the nursing home’s income streams. Another related company inherited its liabilities. The defendant left so few traces that it was left with no lawyer at trial.

The real battle is tracking the money. Motions and countermotions are flying in state and federal courts in Florida, Maryland and Georgia.  How and why did Defendant proceed to trial without an attorney?  In this case, the sole remaining defendant was a shell.

Trans Health Management Inc. had operated 200 homes in 22 states. A Chicago private equity firm and others had created it in 2002 to take over the IHS bankrupt chain. By the time Elvira Nunziata’s estate sued in 2005, "Florida had revoked Trans Health’s corporate status for failure to file annual reports. It was unclear whether the company still ran the Pinellas Park nursing home or if it even existed."

Wilkes & McHugh proceeded with the lawsuit anyway because they hoped to collect from others who bore responsibility. The related companies fought the lawsuit.  By 2009, though, only the defunct Trans Health Management remained as defendant.  However, Wilkes & McHugh had discovered intriguing (and possibly illegal and fraudulent) movements of money.

According to expert forensic accountant Brad Rush, Trans Health’s operations were sold for only $100,000 in 2006 to companies using the same office complex as Trans Health and the same phone number. Fundamental Administrative Services LLC ended up with Trans Health’s management contracts, 35,000 employees and the cash flow, Rush testified.  Fundamental is part of the Fundamental Long Term Care Holdings L.L.C. which is owned by Murray Forman and Leonard Grunstein. Another one of their companies–Fundamental Long Term Care Inc.– inherited the liabilities including potential lawsuit claims — then failed to file corporate reports and disappeared.  

"The only purpose of the Fundamental companies … was to strip assets away,” he said. "No addresses or phone numbers or emails changed. Just the letterhead.”

"Trans Health Management also had a parent company — Trans Healthcare Inc. — that also might be targeted. It still enjoyed income from other subsidiaries, but had entered into receivership in Maryland, a legal status akin to bankruptcy."

"After a Baltimore receivership judge banned further legal action against the parent company, its lawyers stopped defending the Nunziata case. But Wilkes & McHugh saw a possible opening. The receiver had paid GE Capital $55 million to wipe out a loan. Rush testified that loan provisions gave GE tight control over Trans Health’s cash flow. If the receiver had played favorites with GE Capital, maybe Nunziata could tap into that $55 million."

"In 2010, a jury rendered a $114 million verdict against Trans Health companies for a death at an Auburndale nursing home. Same lawyers, same alleged money shuffling, same no-show at trial.  After the verdict, Wilkes & McHugh won court approval to depose executives and examine documents of GE Capital, Fundamental and a private equity fund that created Trans Health."

"Lawyers for Fundamental Administrative Services told the Polk court that the statute of limitations has passed on its acquisition of Trans Health assets."

Nursing home ownership is now split into layers of different companies ultimately owned and operated by the same company or person.  "One might own the building. Another would lease the building, hire staffers and pay the bills. Profits might flow to other corporate parents, holding companies or private equity investors, which have jumped into the field in recent years."

"Charlene Harrington, a professor emerita at the University of California at San Francisco, has studied the nursing home industry for 30 years. Last year, she examined the nation’s 10 largest for-profit chains and found up to five layers of ownership."

"You can’t tell who owns” many nursing homes, Harrington says. "It’s like tracking a problem mortgage when you don’t know who owns the bank.”

"Even the federal government can’t figure it out. Medicare and Medicaid pay most of the nation’s nursing home bills and require homes to disclose their ownership structures. But when the General Accounting Office looked at six big chains in 2010, the information those chains had provided Washington gave no indication of which affiliated companies controlled what."

Lack of transparency can contribute to bad care, said Evin Isaacson, a fellow at the National Senior Citizens Law Center. If regulators can’t decipher who ultimately makes decisions, it’s hard to levy fines and sanctions. And that removes incentive to plow money into care rather than profits.