A health management company bilked two dozen investors out of a million dollars, a new suit filed by Dr. Arvind Mehta and eleven others claim. Dr. Mehta and others are suing Meridian Fontana Group, Meridian Health Services Holding Inc., and Meridian principal James Preimesberger of LA for various claims of fraud, securities fraud, and conversion.

Preimesberger never even bought the land for the nursing home and reneged on promises made to the investors. When investors found out about Preimesberger’s failure to build the home and sell shares, they asked for refunds, but received only some of their funds back. Where the money went is unclear, but Dr. Mehta and others believe he used others’ accounts in an attempt to hide the remaining investor funds.  See full article at Courthouse News Service.

The Des Moines Register reported that two Iowa nursing homes run by a former gubernatorial candidate Jerry Rhoads have filed for bankruptcy protection.  All-American Restorative Care of Washington, Ia., and Regency Rehab and Skilled Nursing Center of Council Bluffs are on the federal government’s newly updated list of the nation’s most troubled care facilities. Both have been on the list for 22 months. Throughout 2013, the home was cited for numerous infractions, including failure to meet professional standards, insufficient staffing, unsanitary food service and inadequate infection control.

Under federal regulations, a facility that has been on the list for 18 months can be barred from the Medicaid program, effectively shutting off its primary source of public funding. Both of the Iowa homes, however, continue to collect Medicaid.

Rhoads and both of his Iowa care facilities recently filed for bankruptcy protection. He’s claiming $7.2 million in debt and $889,000 in assets. Among his potential liabilities are five of the six wrongful-death claims filed by the estates of former residents of a third care facility Rhoads once operated, All-American Care of Little Rock, Ark.

Court records indicate some of those wrongful-death claims were dismissed last year after Rhoads wrote to the plaintiffs’ attorneys, stating he had “no insurance for All-American Care” and had “no resources” to pay for any settlements or legal fees. He wrote that the company was “out of business with no assets, no insurance (and) owners who lost money on the venture.”

Six months later, in September 2013, Rhoads announced he was running for governor of Iowa as an independent candidate, vowing to fight what he called the state’s “punitive and negative” enforcement of minimum-care standards.

A week later, state inspectors began investigating a June death at the Washington facility. As a result of that investigation, the federal government temporarily banned the home from accepting any new Medicaid-dependent residents and began imposing daily fines against the home until it was able to show compliance with all regulations. Those federal fines eventually totaled $70,750.

In 2012, video recorders at the home captured a resident falling and then lying on the floor for 48 minutes as nearby workers participated in a Christmas party. The resident was subsequently taken to a hospital and treated for a serious head injury.

The home also was cited for failing to perform CPR on a resident who was found in bed with no vital signs. Minutes before, an aide saw the resident breathing heavily and gasping for air and told a co-worker the resident “did not look right.”

 

 Aviv REIT, Inc. announced it has acquired eight post-acute and long-term care skilled nursing facilities ("SNFs") in California and Texas, in three separate transactions for $70.7 million. These acquisitions are follow-on investments with existing operator relationships and the opportunities were brought exclusively to Aviv by the operators. These triple-net leases have a blended initial cash yield of 9.7%, annual escalators and lease terms of ten years.

Four of the SNFs, located in Texas, were purchased for $53.7 million and are triple-net leased to existing Aviv operator Fundamental Long Term Care ("Fundamental"), an operator of 76 SNFs in 9 states, at an initial cash yield of 9.5%. Three of the SNFs, located in California, were purchased for $13.4 million and are triple-net leased to existing Aviv operator Providence Group ("Providence"), an operator of 12 SNFs in Kentucky and California, at an initial cash yield of 10.25%. The remaining SNF, located in Texas, was purchased for $3.6 million and is triple-net leased to existing Aviv operator Trinity Healthcare, LLC ("Trinity"), an operator of five SNFs in Texas, at an initial cash yield of 10.75%.

"We have already completed $181 million of accretive acquisitions in 2014 and these acquisitions have further enhanced our operator and geographic diversification, consistent with our overall strategy," said Craig M. Bernfield, Chairman and Chief Executive Officer of Aviv. "Fundamental, Providence and Trinity have successful track records with us and we expect to continue to build our relationships with them. We have a strong pipeline of identified acquisitions and we are confident about our growth prospects for the balance of 2014."

About Aviv Aviv REIT, Inc., based in Chicago, is a real estate investment trust that specializes in owning post-acute and long-term care skilled nursing facilities and other healthcare properties. Aviv is one of the largest owners of SNFs in the United States and has been in the business for over 30 years. The Company currently owns 303 properties that are triple-net leased to 39 operators in 29 states.

The IndyStar had a follow up report on Republican politician Eric Turner who allegedly used his power and influence to help his nursing home business.  He and his wife have an interest in a company that is invested in Mainstreet Property Group, which build nursing homes, and his son is CEO of that company.  Turner, the second highest-ranking Republican House leader, successfully pressured fellow lawmakers in private Republican caucus meetings to drop a measure that would have temporarily halted new nursing home construction.

Turner and his family members own various companies that develop and invest in nursing homes.  After spending more than a month under an ethics investigation, the House Republican leader is facing a GOP opponent tomorrow in the primary.  His Republican opponent is also disgusted by Turner’s behind-the-scenes actions to kill legislation bad for his family’s nursing home business interests.

“If somebody is elected as a public servant, we trust this person to act in the (public’s) best interest and not do anything that is self-serving,” said Parvin Gillim, 52, of Sheridan in Hamilton County.  Most  members of his own caucus said privately that his actions stepped over the line.

“If somebody has a financial interest, in some way, in an organization and there is legislation that may impact that business, recusing yourself from voting is one thing, but you should completely step away from the issue,” Gillim said.  “Personally, I think Rep. Turner had no business being in that caucus when that issue was being discussed,” he said.

House ethics rules prohibit lawmakers from sponsoring or voting on legislation in which they have a direct and substantial financial interest.  The six-member ethics panel of legislators said his “actions have not achieved the highest level of transparency.”

 

Bloomberg published an interesting powerpoint on how Americans die.  33% of all deaths are people 85 years old or older.  Car collisions, drugs, suicide, and firearms which are mostly preventable seem to be growing the fastest.

John O’Connor is the Editorial Director of McKnight’s.  He wrote an article on how and why national for profit chains hide behind corporate shells to avoid responsibility for neglect and negligence.

“For years, some nursing home operators have relied on an unusual tactic for avoiding lawsuits and other trouble: a catch-me-if-you-can corporate structure. But the future is looking less bright for this dubious if effective business model.

It’s hardly a secret to the feds, consumers or plaintiff attorneys that some operators have put elaborately layered ownership structures in place. Some critics describe the practice less tactfully: They call it a corporate shell game.

By cutting themselves into tinier and tinier pieces, such operators try to make sure that outsiders seeking restitution are likely to find there’s no there there. Certainly, such slicing and dicing may also happen to unlock tax advantages and other bottom-line sweeteners. But let’s not kid ourselves about its core purpose: disguise and cover.

However, recent developments at the federal and state levels may force such operators to reconsider this way of doing business.

One is the new federal health law. Specifically, coming Obamacare rules are expected to require extensive reporting of nursing home ownership, management and financial connections.

At the state level, a pending bill in Connecticut might soon emerge as a national model for ensuring ownership transparency. This measure would require nursing homes to reveal the financial status of any “related party” businesses that contract with the facilities — including associated companies that own the facility properties, or spinoff businesses that provide rehabilitation or management services. Further, the bill would require nursing homes to report profits for any side businesses exceeding $10,000 a year.

To be fair, groups representing nursing homes are saying they already report on related businesses in detailed cost reports filed with the Department of Social Services, and that the new measure is simply a favor for unions. They add that no other state-funded health care entities are forced to reveal losses or profits from side businesses. Those are certainly legitimate provider concerns.

Unfortunately, the actions of relatively few operators have harmed the field’s reputation — and continue to do so. As the sector has taken no action to police such behavior, it can hardly be surprising that regulators and lawmakers are now beginning to take matters into their own hands.”

Crain’s Detroit Business had an interesting article about the difficulty in providing quality nursing home care when profits are the major concern.  Nursing homes complain about the amounts Medicaid pays nursing homes for services.

David LaLumia, CEO of the Health Care Association of Michigan, said Medicaid payment rates often do not cover nursing home costs. “It is a challenge with the low Medicaid rates,” LaLumia said. “Financing Medicaid and Medicare in Michigan will change to more managed care” administered by health plans and accountable care organizations in the next several years, he said.

Over the past several years, the state has been increasing payments for home health services to keep as many patients out of higher-cost nursing homes, LaLumia said.

“We are supportive of that,” he said. “Not everybody needs to be in a nursing home.”

Chris Berry, Witzke Berry Carter & Wander PLLC Chris Berry, an elder care attorney with Witzke Berry Carter & Wander PLLC, in Bloomfield Hills, said he represents families on Medicaid who sometimes have a difficult time placing relatives in high-quality nursing homes.

“When a nursing home is needed, we want our clients to get into the best one possible,” Berry said. “Some nursing homes play a little game. We accept Medicaid, they say, but we don’t have any Medicaid beds available. But if it is private pay or Medicare, they have beds.”

Kelly Gasior, vice president of strategy and housing operations with Livonia-based CHE Trinity Senior Living Communities, acknowledged there often is a waiting list for Medicaid patients, especially those converting from Medicare after their 100-day annual benefits run out.

 

 

Arkansas Business reported that nursing home profits in Arkansas are up.  “About 70 percent of the nursing homes in Arkansas made a profit in the year that ended June 30, 2013, according to cost reports audited by the Arkansas Department of Human Services.”

Net incomes ranged from just over $1.4 million at both the Nursing & Rehabilitation Center at Good Shepherd and Briarwood Nursing & Rehab Center, both in Little Rock and both with 120 beds, to a loss of almost $1.5 million at 140-bed Northridge Healthcare & Rehabilitation in North Little Rock.  The total net income for the profitable facilities was a hair under $56 million, up from $49 million in 2012. The remainder had losses that totaled just under $14 million, including that of Northridge. That’s up from about $9 million.

 

 

MLive reported that Consulate Health Care and two nursing homes it owns and operates are being sued for allegedly refusing to turn over documents during an investigation into the death of one resident and violations that placed three others at risk for serious harm. The Michigan Protection Advocacy Service, during investigations into the incidents, sent requests for records related to the patients which were accepted by the facilities, then ignored.

Consulate Health Care denies that they were aware of the lawsuit against two of their facilities, and declined to comment on any accusations. Consulate was not initially named as a party to the lawsuit, which the complaint states will be fixed as soon as the Michigan Protection Advocacy Service can prove that Consulate is, in fact, the owner of both nursing homes.

You might wonder how the parent company might publicly comment on their facilities, yet the MPAS has struggled to prove that they are indeed the owners of the facilities. Consulate Health Care is a member of The Alliance for Quality Nursing Home Care Inc., which sounds like a warm and fuzzy non-profit, but is actually a powerful lobbying group composed of some of the biggest for-profit nursing home corporations in America. The Alliance gives money to political campaigns and other lucrative avenues of influence in order to push their agenda, which includes damage caps and “tort reform” which ensure that even the most shocking and terrible cases of abuse and neglect can only result in an award that amounts to pocket change for nursing home parent companies raking in millions.

Members of The Alliance for Quality Nursing Home Care are known to be highly creative in their structure in order to shield themselves further from liability. The Alliance was one of the many groups indicted during the exposure of illegal campaign funds which led to the end of former house majority leader Tom DeLay’s political career. To read more, check out our in depth summary of their involvement.

Rep. Eric Turner, a House Republican secretly lobbied colleagues to kill a measure that would have been disastrous for his family’s nursing home business. Multiple fellow Republicans with direct knowledge of the discussions told The Associated Press that Turner lobbied to kill legislation that would have temporarily halted construction of new nursing homes and elderly care facilities.

Last year, The Associated Press reported that Turner had pushed a measure to benefit a client of his daughter, who is a Statehouse lobbyist. In light of that, House Speaker Brian Bosma, R-Indianapolis, said last year he’d review how the House handles conflicts of interests. Turner’s private lobbying marked an about-face from his public actions during the session, during which he regularly excused himself from votes on the measure and stayed quiet through public hearings.

House ethics rules bar lawmakers from voting directly to benefit themselves. Turner’s children and others launched a last-minute campaign at the end of the session, bringing in top-tier Republican  lobbyists to sway lawmakers.  But it was his father’s decision to swoop inas the session raced to a close that became deciding factor in defeating the nursing home measure.