Shares of healthcare property owner Quality Care Properties Inc. fell to a 13-month low yesterday as investors braced for a prolonged legal battle over unpaid rent with its main tenant, No. 2 U.S. nursing home chain HCR ManorCare, Reuters reported. In a regulatory filing yesterday, Quality Care said that it would pursue all legal paths against its tenant, which owes more than $300 million in back rent. Options include its August request for a court-appointed receiver to take over ManorCare’s operations. Quality Care’s filing yesterday followed a December statement that appeared to signal progress in talks, such as a reduction in rent. Quality Care said yesterday that ManorCare missed a reduced $14 million rent payment due Jan. 25. In August, Quality Care first asked for a receiver to take over Toledo, Ohio-based ManorCare, with more than 250 skilled nursing and assisted living facilities across the U.S.
A federal judge on Friday approved a south Mississippi hospital's plan to settle a lawsuit over its financially troubled pension system, although opponents question whether the plan will work, the Associated Press reported. U.S. District Judge Louis Guirola Jr. on Friday ruled in favor of the plan for Singing River Health System to pay more than $156 million to its pension fund over 35 years.The U.S. Court of Appeals for the 5th Circuit had ordered Guirola to re-examine the issue after opponents of the settlement had appealed. The legal battle has pitted retirees against Singing River, with retirees trying to hold onto their full benefit, or at least capture as much money as possible. Singing River, which operates hospitals in Pascagoula and Ocean Springs, stopped paying into the system from 2009 to 2014 without telling employees and retirees. That decision was part of a financial crisis at the county-owned hospital system. The pension plan is paying 725 retirees now, and covers 3,200 people, including employees who have yet to retire, as well as former workers who have left. Pension plan manager Traci Christian has reported that the $123 million now in the bank won't last past 2025 without the settlement.
The board of the District of Columbia’s troubled public hospital voted Friday to hire a national business consulting firm to help rescue the facility from organizational and financial turmoil, setting the stage for new leadership at a hospital plagued by allegations of mismanagement and questions about patient safety, the Washington Post reported. Mazars USA, an accounting and financial consulting firm that is headquartered in New York and has offices in nine states, is the board’s unanimous choice to run United Medical Center in Southeast Washington. If approved by the D.C. council, Mazars would take the reins from Veritas of Washington, whose contract the council terminated in November. D.C. Chief Financial Officer Jeffrey S. DeWitt said that the hospital, in light of its grim financial state, could require further subsidies before finalizing a deal with Mazars. Although Veritas was billed as a financial turnaround firm that could stabilize UMC when it was hired two years ago, DeWitt told the board Friday that the hospital is practically — if not legally — bankrupt.
Three unsecured creditors have filed an involuntary bankruptcy petition against a New Castle, Del., nursing home that is part of a chain of 22 facilities, mostly in Pennsylvania, that were put into receivership in September by their landlord, the Philadelphia Inquirer reported. The creditors, Healthcare Services Group Inc., McKesson Medical-Surgical Minnesota Supply Inc., and Medline Industries, said in their Jan. 12 petition that New Castle Health and Rehabilitation Center owed them a total of $262,529. The owner of the New Castle nursing home is Oak Health & Rehabilitation Centers Inc., a nonprofit headed by Bala Cynwyd lawyer Howard Jaffe. Oak was formed to take over 22 former Extendicare facilities, including 20 in Pennsylvania and one in West Virginia, in additional to the New Castle facility, in 2015. The landlords of the Oak facilities, affiliates of Formation Capital, a major player nationally in nursing-home ownership, put all 22 Oak facilities in receivership, a state court alternative to bankruptcy that provides no protection for unsecured creditors, after Oak missed at least three rent payments totaling $10.5 million.
A handful of Illinois-based nursing homes sued the state’s Department of Healthcare and Family Services on Friday, saying low Medicaid rates are jeopardizing their ability to provide adequate quality of care, Reuters reported. In a lawsuit filed in the U.S. District Court for the Northern District of Illinois, five groups that jointly operate more than 100 skilled nursing facilities across the state said Illinois’ reimbursement rates and methodologies violated certain requirements under the Medicaid Act. An impasse between Illinois’ Republican governor and Democrats who control the legislature left the state without a complete budget for an unprecedented two fiscal years. Lawmakers enacted a fiscal 2018 budget in July, but the state still has a $9.1 billion backlog of unpaid bills to vendors and service providers. CC Care, a Chicago-based skilled nursing home operator, filed for chapter 11 bankruptcy in October, saying in court papers that slow, erratic and low Medicaid payments were having a “disastrous effect” on all nursing homes in the state.
Surprise Valley Health Care District, which operates 26-bed Surprise Valley Hospital in Cedarville, Calif., filed for chapter 9 bankruptcy on Jan. 4, Becker's Hospital Review reported. In court documents, the district's board said without bankruptcy protection, the financial state of the organization "jeopardizes the health, safety, and/or well-being" of local residents. The board authorized the healthcare district to partner with Denver, Colo.-based medical testing company CadiraMD. Under the agreement, CadiraMD will lend the healthcare district up to $1.5 million, subject to the achievement of certain milestones, including the sale of Surprise Valley Hospital. In the bankruptcy petition, the district listed its assets as between $500,000 and $1 million and its liabilities as between $1 million and $10 million.
Federal regulators are allowing cyber insurer Beazley Group to cover a $2.3 million HIPAA fine on behalf of its bankrupt client, 21st Century Oncology, according to Healthcare Info Security. Earlier this month, the Fort Myers, Fla.-based company agreed to pay HHS' Office for Civil Rights (OCR) a $2.3 million settlement to resolve issues related to a 2015 data breach that affected 2.2 million patient records. Separately, it reached a $26 million settlement, resolving false claims allegations and a self-disclosure that it submitted false attestations regarding the use of EHR software. However, in May, 21st Century Oncology filed for chapter 11 bankruptcy. OCR has repeatedly said that it doesn't wish to put organizations out of business when issuing these fines, but privacy attorney Adam Greene of law firm Davis Wright Tremaine, who was not involved in the case, told Healthcare Info Security that "when things might be tough financially, OCR clearly still expects the organization to put significant resources into privacy and security."
