Bankruptcies stall care suit as Santa Fe nursing homes get new management

November 26, 2018

It’s been four years since the state Attorney General’s Office filed a lawsuit alleging inadequate care of residents at nursing homes in Santa Fe and 10 other New Mexico communities.

Today, it’s unclear when, or if, the much-publicized lawsuit will ever go to trial.

The operators of the nursing homes — all affiliated with Preferred Care Inc. of Plano, Texas — filed for bankruptcy last year. Preferred Care, whose affiliated companies operated nursing homes in 12 states, also declared bankruptcy.

While the bankruptcies are pending, the Attorney General’s Office is barred from proceeding with its case against the New Mexico nursing home operators and Preferred Care. The lawsuit alleges the operators received hundreds of millions of dollars from Medicare, Medicaid and private-pay residents without providing basic care.

Preferred Care has blamed the bankruptcies on a flood of personal injury cases filed against the company for alleged mistreatment of residents. It has said the bankruptcy proceedings will give it time to negotiate settlements.

Attorney General Hector Balderas said he is frustrated that the lawsuit against Preferred Care and its affiliated nursing home operators has been “disrupted and delayed by companies that have attempted to escape without paying their fair share to New Mexicans and prevented swift trials in New Mexico.”

“Vulnerable populations should never be reliant on providers that cannot immediately pay damages for the harms they have caused,” Balderas said in written statement.

While the lawsuit by the Attorney General’s Office has stalled, the Preferred Care operators are moving to close or transfer the New Mexico homes to new management.

The Preferred Care operator of Española Valley Nursing and Rehabilitation has said it couldn’t find new management and will close the facility at the end of the year.

Meanwhile, a company called 1650 Galisteo Street Operations, a subsidiary of Genesis HealthCare, on Nov. 1 took over the long-troubled Casa Real nursing home in Santa Fe. Genesis is one of the nation’s largest nursing home chains.

Diamond Care Santa Fe, which is affiliated with Diamond Health Care Network, is set to assume control of Santa Fe Care Center on Dec. 1. Diamond Health Care Network also operates a nursing home in Las Vegas, N.M., and two more in Arizona.

Casa Real and Santa Fe Care Center, located in the city’s medical district off St. Michael’s Drive, are the only nursing homes in Santa Fe that accept Medicare and Medicaid payment.

The new operators of the homes said they will continue to accept payment from the government-run health care programs. They also agreed to retain at least 70 percent of the homes’ employees at the time of the takeovers.

Officials of Diamond Health Care Network said prospective residents of Santa Fe Care Center will be required to sign arbitration agreements as a condition of admission. Genesis HealthCare said arbitration agreements won’t be required for admission to Casa Real.

By signing such agreements, nursing home residents or their representatives give up their rights to bring lawsuits and agree to submit disputes over quality of care and other issues to arbitrators.

Shortly after taking office last year, the Trump administration moved to repeal an Obama-era rule that prohibited nursing homes that accept Medicare and Medicaid payment from requiring arbitration agreements as a condition of admission.

Balderas has said families shouldn’t be forced to choose between care for their loves ones and giving up their legal rights. He also has said arbitration agreements “allow bad actors to hide from the public and avoid the accountability ensured by our justice system.”

Joseph Martin, chief financial officer for Diamond Health Care Network, defended the requirement for arbitration agreements for residents of Santa Fe Care Center.

“I think it’s almost best for both parties because the cost of litigation is so high. And not only the cost, but it can take several years before it works its way through court,” Martin said.

New care guidelines

Genesis HealthCare, whose subsidiary took over Casa Real, is a Pennsylvania holding company with more than $5 billion in annual revenues. Its subsidiaries operate more than 400 skilled-nursing facilities and assisted/senior living communities in 30 states.

Genesis early this year restructured its finances to avoid a possible bankruptcy filing.

At the end of 2017, 53 percent of Genesis nursing homes were rated average or better by the U.S. Centers for Medicare and Medicaid Services, according to the company’s annual report. Ratings are based in part on health inspections and clinical data for residents.

Prior to taking over Casa Real and Preferred Care homes in four other New Mexico communities, Genesis operated 19 nursing homes across the state. Fifteen of those homes were rated as average or better.

Genesis has been sued in New Mexico at least 33 times for wrongful death of nursing home residents since 2013, according to court records. Thirteen of those cases are pending; the others were settled, resolved or dismissed for other reasons prior to trial.

Asked about the company’s quality of care, Genesis spokeswoman Lori Mayer said the average overall rating for its homes in New Mexico is higher than the average for all nursing homes in the state.

Casa Real, with 118 beds, currently is rated as much below average by the Centers for Medicare and Medicaid Services.

Last year, Casa Real was temporarily barred from billing Medicare and Medicaid for new admissions because of its long-running quality-of-care problems. The nursing home also was subjected to more frequent inspections by regulators.

Mayer said in an email that Genesis plans to introduce new clinical and operational policies and procedures at Casa Real.

The nursing home also will have access to Genesis regional support and additional experts to assist in the implementation of changes related to care guidelines, medication administration, dementia care, regulatory compliance and more, she said.

“We look forward to benefiting from the expertise and support of Genesis while providing the same high-quality healthcare services Genesis affiliates offer patients and residents across the country,” Casa Real administrator Kristina Mares said in a Genesis news release announcing the takeover of the nursing home.

Renovations planned

Diamond Health Care Network, which is set to assume control of Santa Fe Care Center, operates the Vida Encantada Nursing and Rehabilitation Center in Las Vegas, N.M.

The Phoenix company also runs the Rim Country Health nursing home and rehabilitation center in Payson, Ariz., and Oasis Pavilion Nursing and Rehabilitation Center in Casa Grande, Ariz.

Vida Encantada has an overall rating of below average from the Centers for Medicare and Medicaid Services. Diamond Health Care Network has been sued at least twice for wrongful death of residents at the home. Both cases are still pending.

Oasis Pavilion also has a below-average overall rating, while Rim Country is rated as above average.

“We try very hard to take really good care of patients,” said Matthew Meyer, CEO of Diamond Health Care Network. He said nursing home ratings change quarterly and that ratings sometimes fail to accurately reflect quality of care.

Santa Fe Care Center, with 120 beds, has an above-average rating, and Meyer said no changes in key personnel are planned. About $500,000 in renovations are planned for the home, including new beds and flooring.

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