A new investigation from KFF Health News finds a nursing home chain with a large footprint in New Hampshire used bankruptcy and delays to avoid paying out settlements following injuries and deaths in their custody. Genesis HealthCare has over a dozen locations in New Hampshire.
KFF Health News reporter Jordan Rau led the investigation and he spoke with NHPR’s All Things Considered host Julia Furukawa about his reporting.
Transcript
Let's establish what care generally looks like in Genesis Homes. The centers for Medicare and Medicaid Services rated 58% of the homes affiliated with Genesis as either ‘below average’ or ‘much below average.’ Can you explain what that looks like and how it compares to other homes?
So, Medicare rates nursing homes on a five-star scale, with one and two being the lowest, 'below average,' or 'much below average.' Generally, the homes that are rated that low have two issues going on: one is that their staffing levels are lower than most nursing homes, and that'll generally be the aides who are on the floor, who are changing your sheets and helping you get to the bathroom without falling. And then the nurses that are there to make sure that you get your medication or change your your bandages or whatever you need. The second issue that gets you lower stars is inspection reports. Every state, and Medicare, send in inspectors every year to investigate complaints. If they find a lot of problems that will drive your star rating down.
So how does Genesis utilize bankruptcy to delay or avoid these settlement payouts?
What Genesis' original plan was, was they went into bankruptcy. That automatically stops the collection of any of these settlements amounts, and they wanted to basically sell the company back to their primary investor and owner, but in a way where those claims, all those lawsuits would no longer be collectible. That's basically one of the whole points of bankruptcies in general is that you owe money and you can't pay them. And so this was a reorganization. So, that was their original idea. That's been complicated somewhat because there's been so much attention to this case and media coverage that the judge said, 'No, I don't like this plan at all,' last week. And so she's reorganizing the sale, telling them to do it again. And she's not going to give them that liability release. But even then, in the best case scenario, the owners, even if they're pursued for this money, the people who had these lawsuits and had settlements are just going to be getting a little bit of what they were owed.
In your reporting, you detail many disturbing cases of treatment in Genesis homes, some of which ended in the death of patients. Then, families did not receive the payout they were entitled to. To be clear, none of these were in New Hampshire. But can you highlight one that speaks to how Genesis has handled many of these situations?
There was a case out of Arizona where it was a dementia care unit and there was a woman in it who had pretty severe dementia. And she had been sexually assaulted in the dining room by one of the other residents of the home. The Genesis home had multiple prior instances where they knew that this guy was a problem. He had assaulted one of the workers and also some other residents. The police had been called and police had been called at least two other times for other sexual incidences. So, there's a real fact pattern there. And that case was settled for close to $1 million. But when Genesis went into bankruptcy, they didn't pay it because that's what happens in bankruptcy. All those claims are frozen.
How do private equity firms play a role in all of this?
A private equity has been a participant in a lot of nursing home bankruptcies. And what tends to happen is that a private equity firm will come in to buy a nursing home, and they will borrow against it, and they'll take a lot of the money back for themselves. And then they will typically exit and sell it in a couple of years. But the place is really burdened down with debt. And so it has to pay money on the debt and the money that's getting in through Medicare or Medicaid [and] private payers is just not enough to keep it solvent.
If Genesis has been able to find all of these ways to avoid paying out settlements, are there ways that families can get justice in a sense, or that Genesis can be held accountable? And how might that work?
Well, in the Genesis case, there's been a lot of twists and turns in the case. And they actually did hire I think one or two lawyers were working for them, and they've convinced the judge to... give immunity to the primary owners of Genesis through this bankruptcy. So the idea is if this goes forward, they would pursue those people. But that's very difficult to do because owners generally try and insulate themselves as much as possible from liability. But even with that I think most of these families are going to get a fifth of the money that that the company agreed to pay. And what was particularly egregious about what Genesis did from the family's perspective was that they settled these cases. A bunch of the cases were settled just a couple months before they declared bankruptcy. They knew they were going to declare bankruptcy, but they settled them. And then some of them were settled years ago... even before the pandemic for a couple of them. But Genesis said... We agree to to settle this claim, we'll pay you $500,000 or whatever. But we're not going to pay it right now. We're going to wait a year, and then we're going to sort of dribble it out, parcel it out over another year in monthly payments. And so what happened to a lot of these families was they started to get their payments, but because it had been delayed and stretched out so much, the company went into bankruptcy and then they stopped getting the payments.
