QHC Facilities – Sunnycrest owner – still owes $6 million to taxpayers

Sale of Iowa nursing home chain expected to be finalized next month

Sunnycrest Nursing Center located in Dysart pictured on Sunday, July 24. The Iowa Department of Inspections and Appeals recently approved plans to close the facility. –Photo by Soren M. Peterson

A bankrupt Iowa nursing home chain with a history of abuse-and-neglect violations owes taxpayers $6 million in unpaid fines and fees.

QHC Facilities, which owns eight nursing homes and two assisted living facilities in Iowa including Sunnycrest Nursing Center in Dysart, has been cited for at least 184 regulatory violations in the past 20 months while neglecting to pay fines for poor quality care and fees that would have boosted the pay of front-line workers.

Recently, QHC found a potential buyer in Blue Diamond Equities, and the sale of the chain is expected to be finalized next month. But there still are several unresolved issues related to the fees, fines and advance payouts owed by QHC to the state and federal governments:

-Federal fines: Court records show the chain owes the federal government a total of $2,108,910 for unpaid fines related to quality-of-care regulatory violations and COVID-19 Accelerated and Advanced Payments it collected in the midst of the pandemic.

Of the eight nursing homes that owe money, three have either closed or are in the process of being shuttered, leaving five with debts now being negotiated in conjunction with the sale of QHC. Those five homes owe $1,704,954 to the federal government, and QHC has proposed that it be allowed to pay $962,061 of that amount to cure the debt.

-State fees: State records show that QHC owes the Iowa Department of Human Services $3,930,784 in unpaid fees. With more than 300 other creditors lined up and seeking payment from QHC, the company is now asking that its debt to the state be treated as a “lower priority.” According to the Iowa attorney general’s office, negotiations on that point are continuing.

“In addition to the state’s efforts to secure payments through the bankruptcy matter, we are focused on ensuring that all involved parties are aware of their regulatory and patient care responsibilities, which should remain the first priority,” said Lynn Hicks, chief of staff for Iowa Attorney General Tom Miller.

The eight skilled-nursing facilities owned by QHC are the Crestridge Care Center in Maquoketa; Crestview Acres in Marion; Sunnycrest Nursing Center in Dysart; QHC Fort Dodge Villa; QHC Humboldt North; QHC Humboldt South; QHC Mitchellville; and QHC Winterset North. The two assisted living centers are QHC Madison Square in Winterset and QHC Villa Cottages of Fort Dodge.

Collectively, those facilities have a maximum capacity of more than 700 residents. Last year, QHC employed roughly 300 full-time and part-time workers.

QHC self-reported $4 million owed to state

QHC’s path to bankruptcy dates back to last year when company owner Jerry Voyna died. His widow, Nancy, took over the company and began looking for a buyer.

In court filings, she stated that after her husband’s death it was discovered the company had not been paying a series of quarterly fees owed to the state, leaving an accumulated debt of almost $4 million.

She reported that debt to the Iowa Department of Human Services in November of last year, and then, a few weeks later, filed for bankruptcy.

The quarterly fees, called “quality assurance assessment fees,” are to be paid to the state and are designed to increase a facility’s cost of doing business.

The increased expense enables the facilities to draw down more in Medicaid reimbursement from the federal government for resident care, offsetting the cost of the fees they’ve paid to the state.

By law, the care facilities are supposed to use any additional revenue collected through that process to increase the pay of direct care workers and other staffers – which is why the fees are labeled “quality assurance assessment fees.”

It’s a circular method of increasing the revenue collected by nursing homes and has been approved by the federal government in Iowa and other states.

Three QHC facilities are closing

In January, shortly after QHC filed for bankruptcy, Nancy Voyna died, leaving the QHC chain to her son, who has continued to pursue a sale of the company and all of its assets.

In March, QHC notified the court it had found a buyer called Cedar Healthgroup, which had agreed to pay $12.1 million for the chain.

The sale was approved by the court with the understanding that as part of any sale QHC would have to pay all the fines and penalties for each home that had its Medicare certification transferred to Cedar.

Within a few weeks, the sale to Cedar fell apart, with a lawyer for the company raising questions about some of the facilities being “in imminent danger” of losing Medicare funding due to quality-of-care issues.

QHC then asked the court to recognize Blue Diamond as the new, prevailing bidder. The court agreed, but then, several weeks ago, QHC notified the court it intended to close the Sunnycrest, Humboldt South and Mitchellville homes.

In seeking the court’s emergency authorization to shutter the three facilities, QHC’s management company said “a flooring issue” existed at Humboldt South that could put the home’s eight residents at risk.

As for the Mitchellville facility, which had 20 residents, and Sunnycrest, which had 25 residents, QHC told the court the two homes were each operating at “a seriously diminished census level making it uneconomic to continue operations.”

Fate of remaining homes is uncertain

Attorneys for the federal government intervened, notifying the court that the homes were required to have provided 60 days’ written notice of closure to state inspectors, the Iowa Long Term Care Ombudsman’s Office and the residents of each facility.

In addition, the lawyers argued, a facility must have a written, state-approved plan for the transfer and relocation of all residents before they can close.

“Protecting the life, health, and safety of the approximately 53 residents still living at the three facilities is the United States’ utmost concern,” Department of Justice lawyers argued to the court.

They noted that Sunnycrest is in a remote area of Iowa and that due to the lack of other nursing homes nearby, some families “may have to drive multiple hours to visit a loved one.”

The court then ordered QHC to comply with “any applicable regulations and rules” that govern the process of closing a Medicare-certified nursing home.

The Mitchellville and Sunnycrest homes are currently in the process of closing and Humboldt South now appears to have closed.

Lawyers for Blue Diamond have informed the Department of Justice that if it decides to move forward with the purchase, it will only accept the transfer of the Medicare certification agreements for Humboldt North, Crestridge and possibly the Mitchellville home, and that it would reject any transfer of Medicare certification for the homes in Fort Dodge and Winterset – the two homes that, by far, owe the most in unpaid fines.

Here’s a look at several of the QHC nursing homes’ history of violations, and the amount of money still owed to state and federal taxpayers, according to court records:

-Sunnycrest Nursing Center, Dysart

Violations: Five federal regulatory violations since January 2021. $46,186 in fines paid since January 2018.

Debt: $3,250 owed to the federal government, plus $309,942 owed to the state.

-QHC Mitchellville, Mitchellville

Violations: 31 state and federal regulatory violations since January 2001. $105,666 in fines paid since January 2018.

Debt: $385,708 owed to the federal government, plus $496,754 owed to the state.

-QHC Humboldt South, Humboldt

Violations: Closed. Regulatory history no longer published online.

Debt: $67,226 owed to the federal government, plus $44,690 owed to the state.