East coast developer poised to take over bankrupt nursing home chain in Iowa

Dysart nursing home part of sale

Sunnycrest Nursing Center in Dysart, Iowa. NTT Photo/Allison Graham

Telegraph Note: QHC Facilities – based in Clive, Iowa – operates Sunnycrest Nursing Center located at 401 Crisman St. in Dysart. Sunnycrest is licensed to provide skilled and intermediate nursing care, according to the facility’s website.

A federal judge has approved the sale of an Iowa nursing home chain to an East Coast developer who specializes in bankrupt properties.

QHC Facilities, which owns eight skilled-nursing facilities and two assisted-living centers in Iowa, filed for bankruptcy in late December. The previous owner of the company, Jerry Voyna, died last year. His wife, Nancy, took over the company and filed for bankruptcy soon after. She died in January, leaving the company to her son. He has been 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, N.J. Cedar is part of a network of companies run by real estate developer Mark Tress, who specializes in acquiring distressed properties.

According to comments made at a public hearing last year by Tress and Chaim Rottenberg, a former nursing home administrator, the two men, along with Stephen Werdiger, formed Cedar Health Group in 2018. Last year, Cedar paid $11.4 million for the bankrupt and shuttered Westlake Hospital in Melrose Park, Ill., with plans to reopen it. They have also launched a network of long-term, acute care hospitals in Louisiana.

In 2018, the Asbury Park Press reported that Tress helped families in Lakewood, N.J., who were involved in a controversial Medicaid-fraud amnesty program. Under that state-approved program, families had to repay only a portion of the money that was wrongly collected, and they could do so by borrowing from a pool of money donated by a few dozen people. It was Tress who helped organize the fundraising for the pool, the Press reported.

In a 2019 interview with the Palm Beach Post, Tress said his companies at that time owned about 12 hospitals and health care facilities in several states. At the time, Tress’ acquisition of the bankrupt Jerome Golden Center for Behavioral Health in West Palm Beach stirred controversy when mentally disabled residents were forced out amid plans to either sell the property or convert it to market-rate apartments.

Tress, Rottenberg and Werdiger could not be reached Tuesday at their New Jersey office.

Under the terms of the sale, QHC creditors who have claims against the company will be barred from pursuing those claims against Cedar Health Group – although they can continue to pursue their claims against QHC, which will soon have cash generated by the sale to satisfy at least a portion of the company’s debts.

Some of the claims made against QHC are on behalf of taxpayers. On Feb. 3, for example, the Centers of Medicare and Medicaid Services filed claims against QHC for $1.2 million for Medicare overpayments, advanced payments, and civil monetary penalties. In addition, the Health Resources and Services Administration said it planned to file claims against QHC “in an amount no greater than $5.2 million.”

QHC is also facing a wrongful death lawsuit brought by the estate of Ellen McCullough, a former QHC Humboldt South resident who died of sepsis in October 2017, allegedly as the result of an untreated pressure sore on one foot. That case, in which QHC is accused of causing McCullough’s death through negligence and dependent adult abuse, is expected to go to trial next month.

As part of that case, one of the plaintiff’s expert witnesses has prepared a financial analysis in which she claims the Humboldt facility, on its own, saved $390,000 over a three-year period by staffing the facility at levels below the expectation of federal regulators.

QHC is also facing wrongful death claims, including a case filed by the family of Gladys Van Sickle, who died after allegedly sustaining broken bones in a fall at Winterset North. A trial in that case is scheduled for October 2023.

QHC’s 10 Iowa care facilities have a combined capacity of almost 750 residents.

According to CMS, two of QHC’s eight skilled-nursing facilities – one in Mitchellville and one in Winterset – recently faced termination from the Medicare program, which would have shut off all of the federal funding that flows into those homes for resident care. The potential terminations, which QHC avoided by bringing the homes back into compliance with federal standards, were based on quality-of-care issues and mold-related issues, CMS has said.

The bankruptcy court is receiving detailed reports on patient-care issues in the QHC facilities from a court-appointed ombudsman. However, all of her reports are filed with the court under seal and are not available for public inspection.

In addition, the Iowa Department of Inspections and Appeals, which oversees nursing homes, has informed the judge that it, too, may be filing 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 fines ever imposed against an Iowa nursing home chain, with inspectors stating the company placed residents in immediate jeopardy due to substandard care. Inspectors alleged last year that the chain’s Mitchellville home was at times staffed by only one low-level nurse aide to look after 40 or more residents.

At the time, the director of nursing allegedly told inspectors the home was “falling apart” with “bed-ridden, weakened residents with no one to help them.” A nurse aide told inspectors that “everything in the facility is a mess,” and a registered nurse reportedly described the situation for inspectors as a “free-for-all, with no leadership from management.”

QHC’s 10 Iowa facilities are: QHC Mitchellville, QHC Winterset North, QHC Sunnycrest, 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.