A federal judge has approved the sale of a chain of nursing homes in Iowa to an East Coast developer specializing in bankrupt real estate.
QHC Facilities, which owns eight specialty care facilities and two assisted living centers in Iowa, filed for bankruptcy in late December. The company’s previous owner, Jerry Voyna, died last year. His wife Nancy took over the company and filed for bankruptcy shortly thereafter. She died in January, leaving the company to her son. He is pursuing a sale of the company and all of its assets.
A federal bankruptcy court judge has approved the sale of QHC and its assets to Cedar Health Group, a holding company based in Lakewood, NJ.
According to comments Tress and Chaim Rottenberg, a former nursing home administrator, made at a public hearing last year, the two men, along with Stephen Werdiger, founded Cedar Health Group Westlake Hospital in Melrose Park, Illinois, in 2018 with plans to reopen. They also created a network of long-term acute care hospitals in Louisiana.
In 2018, Asbury Park Press reported that Tress was helping families in Lakewood, NJ involved in a controversial Medicaid fraud amnesty program. Under this state-sanctioned program, families only had to repay a portion of the money improperly raised, through loans from a pool of money donated by a few dozen people. It was Tress who helped organize fundraising for the pool, the press reported.
In a 2019 interview with the Palm Beach Post, Tress said his companies owned about 12 hospitals and healthcare facilities in multiple states at the time. Back then, Tress’ acquisition of the bankrupt Jerome Golden Center for Behavioral Health in West Palm Beach sparked controversy when mentally challenged residents were evicted over plans to either sell the property or convert it into off-the-shelf housing.
Tress, Rottenberg and Werdiger could not be reached at their New Jersey office on Tuesday.
Under the terms of the sale, QHC creditors who have claims against the Company will be barred from asserting such claims against Cedar Health Group – although they may continue to assert their claims against QHC, which will have to settle at least a portion of the cash soon to be generated from the sale the company’s debt.
Some of the claims made against QHC are made on behalf of taxpayers. For example, on February 3, the Centers of Medicare and Medicaid Services filed lawsuits against QHC for $1.2 million for Medicare overpayments, prepayments, and civil penalties. In addition, the Health Resources and Services Administration said it plans to file claims against QHC “not exceeding $5.2 million.”
QHC is also facing a wrongful death lawsuit brought by the estate of Ellen McCullough, a former resident of QHC Humboldt South who died in October 2017 from sepsis, allegedly resulting from an untreated pressure ulcer on a foot. That case, accusing QHC of causing McCullough’s death through negligence and dependent adult abuse, is expected to go to trial next month.
As part of this case, one of plaintiff’s witnesses prepared a financial analysis alleging that the Humboldt Facility alone saved $390,000 over a three-year period by understaffing the facility than federal agencies expected.
QHC is also facing wrongful death claims, including a case brought by the family of Gladys Van Sickle, who died after allegedly breaking bones in a fall in Winterset North. A trial in this case is scheduled for October 2023.
QHC’s 10 care facilities in Iowa have a combined capacity of nearly 750 residents.
According to CMS, two of QHC’s eight qualified nursing facilities — one in Mitchellville and one in Winterset — recently faced the termination of the Medicare program, which would have halted all federal funding going to these homes for inpatient care. The potential terminations, which QHC has avoided by bringing the homes back into compliance with federal standards, were based on quality-of-care issues and mold-related issues, CMS said.
The bankruptcy court receives detailed reports on patient care issues at the QHC facilities from a court-appointed ombudsman. However, all of their reports are submitted to the court sealed and are not publicly viewable.
Additionally, the Iowa Department of Inspections and Appeals, which oversees nursing homes, has informed the judge that it may also file reports with the court on patient care issues, but those too will be filed under seal.
In recent years, QHC homes have been hit with some of the largest federal penalties ever imposed on an Iowa nursing home chain, with inspectors saying the company has put residents in imminent danger due to lack of care. Inspectors claimed last year that the chain’s Mitchellville home was at times attended by just a low-ranking nurse caring for 40 or more residents.
At the time, the director of care reportedly told inspectors the home was “falling apart” with “bedridden, debilitated residents with no one to help.” One nurse told inspectors that “everything at the facility is a mess,” and a registered nurse reportedly described the situation to inspectors as “free from everyone, with no leadership from management.”
QHC’s 10 Iowa facilities are: QHC Mitchellville, QHC Winterset North, QHC Winterset South, QHC Madison Square, QHC Fort Dodge Villa, QHC Crestridge, QHC Crestview Acres in Marion, QHC Humboldt North, QHC Humboldt South and QHC Villa Cottages of Fort Dodge.