The Gainesville Sun reported another verdict against Trans Health Management–this one for $900 million.  Collecting the judgment is the difficult part.  A jury’s civil judgment is the third since 2010 worth more than $100 million that law firm Wilkes & McHugh has won against Delaware corporations that owned or operated 220 nursing homes nationwide — Trans Health Management and its parent Trans Healthcare.   Trans Health Management Inc., meanwhile, has since folded, and its parent, Trans Healthcare Inc., is in receivership in Maryland. Trans Healthcare’s receivership stopped defending Webb’s case in 2010 after years of delay and obstruction.  Because the defense refused to appear, the jury heard unrebutted testimony about what Webb suffered between 2001 and 2005 — the last part of his 10-year stay at University Place.

"The 25-page complaint against the company details how, after entering the nursing home following a stroke, Webb was paralyzed and needed 24-hour care. As the company charged with taking care of him doubled in size, he suffered multiple pressure sores to his right foot, right calf, right heel, coccyx and left buttock, the complaint stated. He suffered multiple infections, septicemia and unexplained weight loss, the complaint said. All the while, the corporations were draining money out of the nursing homes, instead of providing decent care, the complaint said."

"Defendants … acted and failed to act in … their duties to Joseph Webb … for their own gain, to increase their net worth and consolidated revenues, in direct and substantial breach of their duties," the complaint reads   "As a result of these companies’ care, the Rev. Joseph Webb suffered pressure sores and infections that required surgeries, including an above-the-knee amputation of his right leg, attorney Bennie Lazzara Jr. told the jury."

"The family was grateful to have a chance to have the story told for Rev. Webb," Lazzara said. "The main reason the family brought the suit was so that this wouldn’t happen to anyone else."

"Wilkes & McHugh, the law firm for Webb’s family, has yet to collect on either the $114 million judgment a Polk County jury awarded in 2010 in the death of a nursing home patient or a $200 million verdict a Pinellas County jury returned last month after a woman in a wheelchair toppled to her death. Both were cases against this same set of corporations, which at their peak generated $1 billion in revenues, according to Wilkes & McHugh."

"We believe that the assets of these companies have been transferred to other companies," he said. "It’s our intention to follow this company until we find out where the assets are and then we’re going to collect them."


The Tampa Bay Times reported that for the third time in two years, the law firm of Wilkes & McHugh has won a nursing home verdict against THI entities, the predecessor of Fundamental Long Term Care Holdings.  In 2010, a Polk County jury awarded $114 million in a nursing home resident’s death. Then, a Pinellas County jury awarded $200 million after a woman in a wheelchair toppled to her death in a stairwell. Now, a Gainesville jury handed down a $900 million verdict, including $700 million in punitive damages — half again more than Wilkes & McHugh had even asked for.

"What is drawing so much outrage from juries is unrebutted testimony that the controlling interests behind these companies were hedge funds and banks that allegedly siphoned money out of nursing home operations by cutting staff, loading up on debt, letting care decline and shuffling funds between corporations to buffer them from lawsuits."

"We are showing the sums of money being looted,” James Wilkes said. "We think total profits were about $2 billion that was sucked out of the system.”

"The Trans Health companies do not appear to have much in the way of assets. But Wilkes & McHugh is trying to collect from a few hedge funds and financial institutions such as GE Capital Corp., saying they colluded to pull money out of nursing home operations and should now be forced to return it."


 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.




The Tampa Bay Times reported the $200 million jury verdict in a case where the Defendant was in default.  The case stemmed from the 2004 death of Elvira Nunziata, a resident with dementia at Pinellas Park Care and Rehab Center. Her bloody body was found at the bottom of a stairwell after she toppled one story while strapped to a wheelchair. Former aides at the home testified that the door to the stairwell was supposed to be locked, but that staffers often disabled the alarm so they could go smoke.  The home had a history of deficiency citations and abuse complaints and the aides said it was frequently understaffed.

The defendant was Trans Health Management Inc., who had sole authority to operate the home at the time, but has since gone defunct. Its parent company, Trans Health, Inc., is in receivership in Maryland.  The Tampa law firm of Wilkes & McHugh, which represented Nunziata’s estate, alleged that the true owners were private equity investors who shuffled the assets of Trans Health Management into affiliated entities to avoid liability and then chose not to mount a defense.



Diane Derby at WSPA did a 7 On Your Side Investigation called State of Care that reported the problems that families like the Sextons have with Magnolia Manor-Inman.   Dorothy Sexton was a resident at Magnolia Manor-Inman, a nursing home owned and operated by Sparks, Maryland based Fundamental Long Term Care Holdings, L.L.C.

Sexton’s family who visited often complained about the neglect but the administrator, Dale Lyles, ignored their pleas for help.  "All Dale will ever tell you is he’s looking into it," said Sexton. Some of the issues include giving the resident the wrong medication, not responding to call bells, and allowing her to sit in a dirty diaper for hours without help.

Pam Dukes is DHEC’s Deputy Commissioner of Health Regulation and admitted that due to numerous complaints DHEC has inspected Magnolia Manor in Inman three times this year.  Dukes claimed DHEC would be making at least four mandatory unannounced visits each year, instead of once every two years to more than 480 facilities statewide.  DHEC will limit the focus of inspections to issues involving quality of care.  Dukes told WSAP there still is a way to check out many facilities online. (Click here to check out a facility)   The ratings are based on health inspections for topics like proper management of medications or protecting residents from abuse, staffing, and quality measures like how well the nursing home prevents and treats skin ulcers.

Magnolia Manor in Inman received 1 out of 5 stars on it’s overall rating from Medicare. The Medicare website says the total number of health deficiencies for this facility is 15. In South Carolina the average is six.

Click here to make a FOIA request.   To file a complaint against a nursing home or assisted living facility contact your local Long Term Care Ombudsman’s office. Click here to locate one in your area. You can also file a complaint with SC DHEC by clicking here.


The Reno Gazette Journal reported an interesting story about a nursing home chain suing the family after settlement of a wrongful death case.  Fundamental Long Term Care facility Hearthstone of Northern Nevada is suing the family for some alleged breach of confidentiality. 

Hearthstone of Northern Nevada filed a lawsuit in federal court alleging Audrey Noriega of Las Vegas and Laura Stotts of Fernley violated the agreement. The agreement pertained to the sisters’ settlement of a lawsuit against Hearthstone after the death of their mother, Dorothy Schweitzer, 87, in March 2008.

An investigation by Nevada’s Bureau of Health Care Quality and Compliance found no evidence that Schweitzer received nursing care at the facility between March 23, 2008 and March 27, 2008, the day she was rushed to Northern Nevada Medical Center and later died of severe dehydration and infection.  See prior story here.

Hearthstone later "found" notes on Schweitzer’s care, but according to the notes, she was entertaining guests at the nursing home at the time she actually was dying at the hospital. The notes also stated Schweitzer was being turned in her bed every two hours at the Sparks nursing home the day after she had died at the hospital.

The Reno Gazette-Journal published stories about the case Dec. 15, quoting both sisters. On Dec. 30, Hearthstone filed suit against the women, claiming they breached a confidentiality provision by talking to the newspaper and that the nursing home "has suffered damages in excess of $75,000" as a result. Both sisters repeatedly said that they had agreed to make only the amount of the settlement confidential, not the details of their mother’s death.


The Wall Street Journal had a recent article on the litigation between Reuben Schron and Murray Forman and Leonard Grunstein, the owner/operator of hundreds of nursing homes under SavaSeniorCare and Fundamental.  Lakewood Voice’s and MultiFamilyInvestor had articles based on the Wall Street Journal article.

Real-estate mogul Rubin Schron is fighting his former lawyer for control of a national nursing-home company in a battle that pits one of the city’s largest and most secretive landlords against an attorney who was a trusted adviser and business partner for years.  The fight involves SavaSeniorCare, an Atlanta-based nursing-home chain with 18,000 patients and 20,000 employees that Mr. Schron says he has the right to buy for $100 million—far less than what it’s worth—from his former lawyer, Leonard Grunstein, and banker, Murray Forman.

But the rift between Messrs. Schron and Grunstein runs deeper. Mr. Grunstein first represented Mr. Schron in the 1980s. Today the two sides can’t even seem to agree on whether they used to be friends.  Mr. Schron in court filings has said that their relationship ruptured after he realized that Mr. Grunstein’s interests in their real-estate deals were running counter to his own. Mr. Grunstein says he arranged some of Mr. Schron’s most lucrative acquisitions and that his former client is now trying to take a bigger piece of the pie than he’s entitled to.

The deal for the nursing-home chain was funded by Mr. Schron and devised by Messrs. Grunstein and Forman, according to court filings by both sides. Like other buyouts of big nursing home companies in the mid-2000s, the deal essentially split the chain, a publicly traded company called Mariner Health Care, into two pieces: one operated the facilities and paid rent to the other, which owned the real estate.

Mr. Schron owned the real estate company; Messrs. Grunstein and Forman eventually took control of the operating company, Sava, which paid rent to Mr. Schron for the right to operate those homes.  Mr. Schron claims in his complaint that the deal gave him the option to buy the operating company for $100 million.   Mr. Grunstein later told him the option was worthless and that he could use it “as toilet paper.”

Complicating the case is the tangled relationship between Mr. Schron and Mr. Grunstein, a partner in the New York office of Troutman Sanders LLP who has been on leave from the Atlanta-based law firm since last year. Troutman has filed claims in court for $1.5 million in attorneys’ fees it says are owed to the firm by Mr. Schron. Mr. Schron, in his complaint, said that many of the Troutman invoices are bogus.

Mr. Grunstein’s side says that the nursing-home deal, which the lawyer helped devise, enriched Mr. Schron to the tune of hundreds of millions of dollars, mostly from taxpayers via Medicare and Medicaid.

The spokesman also said that Mr. Schron demanded a rent increase that Messrs. Grunstein and Forman rejected because it would have affected patient care.  The money siphoned away from the nursing homes already affect patient care in short staffing and poor supplies.



Levin and Associates had an interesting article in The Senior Care Investor discussing the bankruptcy and sale of IHS to THI and eventually Fundamental long Term Care Holdings LLc, owned and operated by Murray Forman and Leonard Grunstein.  Below are excerpts from the article:

Very few people remember what happened a little more than seven years ago, but in early
2003, an unknown entity (at least to the senior care world) stepped in at the last minute and snatched the remaining assets of a bankrupt Integrated Health Services (IHS) from the presumed
buyer, literally on the steps of the court house. Trans Healthcare Inc. (THI) thought it had the deal wrapped up for $97.5 million, but an entity called Abe Briarwood, backed by Cammeby’s
International, swooped in for $114 million in cash and was willing to assume the post-petition Medicaid and Medicare billing liabilities, something that made the court very happy.

We are certain that the founder of Cammeby’s, one Rubin Schron, had no idea where this initial acquisition would take him in the rough and tumble skilled nursing industry….  And, most certainly, he never thought he would now be in court pitted against a man he trusted with everything. After Cammeby’s made the winning bid at the 11th hour, THI at first tried to fight it, but then the two sides settled their differences when Cammeby’s hired THI to run the newly acquired IHS assets.  Then, in May 2004, we caught wind of an acquisition offer that was brewing for the former Mariner Health Care from none other than Cammeby’s, but under the name National Senior Care, and separate from its Integrated Health.  The purchase price for Mariner was just under $1.0 billion, and when you capitalized the lease payments, the total transaction value increased to about $1.25 billion. This resulted in a price per bed of $38,800 and a 9.2x multiple of annualized EBITDAR.  The
deal closed at the end of 2004, but perhaps the most longlasting impact on the target entity, which some time later had a name change to Sava SeniorCare, was the role that Mr. Schron’s attorney, Leonard Grunstein, came to play.
There were really two sets of problems that began to emerge. One was what transpired with the original acquisition of the Integrated Health assets and the role of Trans Healthcare, which eventually came to be known as Fundamental Long Term Care when Fundamental purchased the assets of THI, the sale of which some claim was under duress and fraudulent.  There is a separatelawsuit filed on July 1, 2010, against Leonard Grunstein, his brother Harry, Murray
Forman alleging, among other things, fraudulent conveyance, unjust enrichment, legal malpractice, fraud, breach of fiduciary duty, breach of lease agreements, tortious interference and aiding and abetting fraud. The lawsuit was filed by Allen Bodner and DMV Funding LLC and is seeking no less than $150 million in damages and no less than $300 million in punitive damages.
According to the complaint, Bodner owned 100% of DMV which purchased Cammeby’s loan to the Abe Briarwood/IHS deal, and there are 30 more pages as to what transpired among the various parties. The long and short of the complaint was that the plaintiffs believe they got screwed, to
put it bluntly, by people who were partnering with them and advising them
The more interesting lawsuit, but sort of related, was filed on June 22, 2010, with Rubin Schron and his various holdings as the plaintiffs against a similar cast of characters including Leonard Grunstein, Murray Forman, the law firm Troutman Sanders, and the various Sava and Mariner
affiliates. To fully appreciate how unusual this lawsuit is, one must always keep in mind that Leonard Grunstein was Rubin Schron’s attorney. ….Mr. Grunstein did much of the legal work involved in the Mariner acquisition and subsequent Opco and Propco set-ups that evolved over time.
The relationship between Mr. Schron and Mr. Grunstein dates back to the 1980s, and according to the complaint, he apparently has referred to himself as Mr. Schron’s “general counsel.” According to the complaint, Mr Schron relied on legal advice from his attorney who began to organize things to the benefit of the attorney, and on financial advisory services from Mr. Forman, who was allegedly in cahoots with Mr. Grunstein. Mr. Schron never wanted to have anything to do with operating the nursing facilities; he just wanted a steady, but increasing, rental stream from the
real estate. In the case of the Mariner acquisition, according to the complaint, Mr. Schron put all the money up and ended up owning the real estate in Propco, while Grunstein/Forman retained ownership of the operating entity created to run the facilities, and all the excess cash flow, plus they received a small share of Propco—all without investing any of their own money.  In addition, according to the complaint filed, Mr. Schron was charged $14 million for financial advice in the Mariner deal by MetCap Advisory Services, which was 25% owned by Mr. Grunstein and 25% owned by Mr. Forman.   Other allegations in the nearly 100-page complaint include loans made to Opco that were never paid back to Mr. Schron, distributions taken by the Grunstein/Forman group
totaling more than $70 million, Grunstein billing Schron for non-existent legal work, and for allegedly not giving Schron the final closing documents for the original Mariner acquisition.
One also needs to remember that all of this recent legal action is on top of several issues earlier this year, when Mr. Grunstein and Mr. Forman sued Mr. Schron for more than $100 million for allegedly misappropriating significant sums of money from various partnerships in which they all had a stake.

And don’t forget that all three of them were defendants together when the Department of Justice charged them all with accepting kickbacks from Omnicare in return for pharmacy contracts. Without admitting guilt, they settled and agreed to pay the federal government $7.8 million
and $6.1 million to certain states.

Over the past two years the owners of Sava (Mariner) have been trying to sell off various pieces of the company (or the whole thing), notably the portfolio of mostly leased assets in California, but with little success. The obvious problems were pricing and financing.  Currently, Sava is the seventh largest skilled nursing company in the country with 184 facilities and 21,279 skilled
beds, and it is larger than half of the publicly traded skilled nursing companies.   Still, we believe that selling the assets is a real outcome, especially for Mr. Schron who we assume wants to be done with his relationship with his former attorney and financial advisor, and may even want to be out of the skilled nursing real estate business altogether. The other side, however, may
still not want to give up their cash cow, but the courts and the credit markets may make the decision for them.

According to the AmLaw Daily, another disgruntled investor has filed a civil suit against Troutman Sanders, real estate partner Leonard Grunstein, and corporate partner Lawrence Levinson.   Also named as defendants are Murray Forman, an investment banker and business partner of Grunstein’s, Harry Grunstein, the lawyer’s brother, along with several entities created and controlled by the defendants that operate and control nursing home and health care investments.
The action comes after the three were named as defendants in a civil suit filed in state court in Manhattan by New York real estate investor Rubin Schron.

In this latest lawsuit, filed in New York State Supreme Court, plaintiff Allen Bodner accuses the defendants of legal malpractice and breach of fiduciary duty as part of a scheme to divest Bodner and a company he controlled of an interest in a lucrative health care and real estate venture.

Bodner’s 54-page complaint claims Grunstein, the former head of Troutman’s real estate capitalization and investment practice groups, "accounted for a substantial portion of the revenues of Troutman’s New York office, much of which was attributable to the legal representation of Rubin Schron and companies associated with him."   Grunstein served as his attorney and was the "mastermind" and "legal architect" behind a series of transactions named in the complaint. Bodner further claims that Grunstein concealed his "conflicting personal financial interests" in several of those transactions, which allowed Grunstein and the other defendants to misappropriate "the real estate and health care assets" that were under the control of Bodner and his holding company.

According to a letter filed by Coles in the Schron suit, several firms have lined up advisory roles as the litigation expands. Arent Fox, Latham & Watkins, Atlanta’s Arnall Golden Gregory, and New York’s Brodegaard & Simone are representing several companies named as defendants in the dueling civil suits. Grunstein’s brother, Harry, who now lives in Israel, has retained New York’s Davidoff Malito & Hutcher, while Troutman and Levinson have turned to New York’s Friedman Kaplan Seiler & Adelman.

Nursing home partners in the ownership and operation of hundreds of nursing homes are fighting and suing each other for the fraud they have perpetuated for the last decade.   New York real estate investor and nursing home owner/operator Rubin Schron is suing his partners (in fraud) Troutman Sanders, Leonard Grunstein, and Murray Forman.  See Complaint here.

Schron accuses Troutman, Grunstein, and Murray Forman of breaching their fiduciary duties to benefit themselves at Schron’s expense, according to this report by Bloomberg.  The Am Law Daily reported on federal charges against Schron, Grunstein, and Forman over their involvement in a $50 million kickback scheme with nursing homes and pharmaceutical providers. In February all three reached a $14 million civil settlement with federal prosecutors in Boston. 

"This case is about the systemic exploitation by self-interested attorneys and bankers of clients who entrusted them to devise and implement the terms of complex business deals that these defendants arranged and advocated for their clients," states Schron in his 97-page complaint.  Grunstein served as principal outside legal adviser to the real estate investor and his companies from the 1980s until late last year. The suit accuses Grunstein of causing "hundreds of millions in dollars of damages" to Schron.  Also named as defendants are Grunstein’s brother and business associate, Harry Grunstein, and Troutman M&A and project finance partner Lawrence Levinson. 

"Grunstein facilitated his tortious conduct by his association with these firms," states Schron’s complaint. "Grunstein frequently used their letterhead for his schemes, and he was assisted by the active complicity of several partners, including defendant Levinson. In reward for facilitating Grunstein’s misdeeds, these law firms received tens of millions of dollars in legal fees from Schron and the Schron Entities."

The complaint further claims that Grunstein and Forman brought investment opportunities to Schron that they themselves took stakes in without contributing cash or assuming risk. Schron claims that he alone bore the risk from these transactions, with Grunstein and Forman later becoming involved in a series of deals in the nursing home business that drew the attention of federal prosecutors.

The trio have been caught up in a tangle of litigation. Grunstein and Forman filed suit against Schron in March, claiming he misappropriated funds from entities created by the two business partners and failed to keep and maintain audited financial statements.  "Underlying all of the claims in this action is Schron’s pattern of betraying the trust placed in him," state Grunstein and Forman in their 38-page complaint,. Grunstein and Forman are seeking $100 million in damages from Schron, several of his relatives, and their affiliated holding companies.