Jordan Rau, KFF Health News
A chapter decide blocked an try by a nursing residence chain’s main investor to defend himself from settlement funds and legal responsibility in lawsuits alleging tons of of affected person accidents and deaths, encouraging these pursuing hundreds of thousands in damages.
Genesis HealthCare, as soon as the nation’s largest nursing residence chain, filed for Chapter 11 reorganization chapter in July with a proposal to guard its controlling investor, Joel Landau, from authorized legal responsibility. In court docket papers, Genesis had initially estimated all its settled and pending instances — which it stated numbered almost a thousand — would price $259 million to resolve.
KFF Health News reported this month that within the years earlier than submitting for chapter, Genesis had settled at the very least 155 affected person damage and loss of life lawsuits with provisions that allowed it to delay paying, generally for greater than a 12 months. As a outcome, when Genesis filed for chapter in July, it nonetheless owed $41 million out of the $58 million promised in these settlements with households of present or former residents, based on the chapter and case data KFF Health News reviewed.
In hearings Wednesday and final week in U.S. Bankruptcy Court in Dallas, Judge Stacey G.C. Jernigan stated she wouldn’t approve a sale of the corporate’s belongings that included authorized releases from legal responsibility for Landau and a non-public fairness affiliate, David Gefner. Landau, who was searching for to buy the belongings via one other firm he managed, didn’t attend the chapter hearings or reply to a subpoena, legal professionals stated in court docket.
“I’m very encouraged that someone is watching and paying attention to this,” stated Erin Pearson, whose father, James Sanderson, died in 2018 after spending lower than a month in a Genesis facility in Albuquerque. “And the guy who owns the most shares, not only did he not show up but doesn’t just get to move things around and rebuy” the nursing houses.
According to Pearson’s lawsuit, filed in 2019, Sanderson developed a bowel obstruction and sepsis whereas on the facility however was not despatched to the hospital for greater than every week.
Genesis didn’t pay Pearson the $500,000 it agreed to in a settlement, based on Pearson’s declare filed in chapter court docket. “I don’t know if I’ll ever see that settlement, but I would like to be hopeful,” Pearson stated in an interview Dec. 17.
Genesis, Landau, Gefner, and their attorneys didn’t instantly reply to requests for remark. In a public assertion final week, David Harrington, the chief chairman of Genesis’ board of administrators, praised Landau and his firm’s funding in Genesis for serving to it keep away from chapter in 2021. That “lifeline,” he stated, enabled Genesis to rework right into a “nimble, market-based model dedicated to prioritizing resident and patient care.”
Ian Norris, who represents 19 purchasers with lawsuits in opposition to Genesis — together with 4 who haven’t been paid their settlements — stated the decide’s ruling was “a huge win for all those who were confronting the possibility that they would not be able to recover the settlements that were promised to them by Genesis prior to the bankruptcy.”
According to Genesis’ chapter filings, the corporate owes greater than $1.6 billion in unpaid claims that aren’t secured by liens, together with claims not solely from former residents and their households but in addition from a pension fund; contractors that offered well being companies and tools; and Pennsylvania, New Mexico, and West Virginia, that are owed supplier taxes. Daniel Simon, a lawyer representing Genesis’ house owners, stated in court docket on Dec. 17 that $155 million can be accessible from the proceeds of the sale for these collectors beneath a bid for the nursing residence belongings from a brand new firm managed by Landau and Gefner.
Genesis final month held an public sale for its belongings and introduced that Landau’s bid was the very best, however the U.S. Trustee’s Office and collectors objected, saying Genesis had unfairly excluded one group from bidding and downplayed the worth of one other group’s bid that may have offered extra money to collectors. Jernigan stated there have been too many irregularities within the public sale for her to approve it and ordered or not it’s redone beneath the watch of the U.S. Trustee’s Office.
“I am aware that there is huge concern about Mr. Landau, and he is not here,” Jernigan stated final week. “There is no way I can approve these releases without him on the witness stand and me being convinced of his good faith.”
Sen. Elizabeth Warren (D-Mass.), who together with two Senate colleagues filed an amicus transient questioning the equity of the public sale, stated in a media assertion: “A private equity company tried to abuse the bankruptcy system to slither out of paying what they owe to neglected seniors in its nursing homes. This is a textbook case of why we need to get private equity out of health care altogether, and this decision is a good step forward in the fight to deliver relief for the victims of Genesis.”
In the Dec. 17 listening to, representatives of the corporate managed by Landau and Gefner stated they’d bid once more for the stays of Genesis with out the promise of legal responsibility releases. The public sale is anticipated to happen in January. Simon, the lawyer for Genesis, stated on the listening to that the decide’s ruling “has humbled us.”
Lawyers for former and present Genesis residents stated they hope to sue Landau and different events that managed the corporate and led it out of business. John Anthony, a Tampa legal professional who represents 341 claimants, stated, “The victims believe that Mr. Landau richly deserves his day in court, so he can explain to a jury of his peers how he has apparently gotten so rich running all these supposedly insolvent facilities into the ground.”