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Ex-administrators fault management in nursing home closure fallout
The State Journal-Register - 12/26/2017
Dec. 26--More than three months after a Springfield nursing home closed with little warning, many families and former patients of Oak Terrace Healthcare Center are waiting for refunds and wondering why they were put through such stress.
Oak Terrace's two most recent administrators blame Home Life Companies, the Delaware, Ohio-based business whose top officials made all the key decisions involving Oak Terrace, for what they say was the company's greed, ignorance and lack of vision.
"The residents -- they didn't have any interest in them except as a source of revenue," former Oak Terrace administrator Tom Mullins told The State Journal-Register.'
Mullins, 71, an Oreana resident and longtime Illinois nursing home administrator, said Oak Terrace never paid him the $6,559 he was owed for his 17 days of work in August and September.
A lawyer representing the limited liability corporation formed by Home Life in 2016 to operate Oak Terrace -- a for-profit nursing home that opened about 40 years ago at 1750 W. Washington St. -- wouldn't comment on the former employees' allegations.
But Evans Schmidt said a lack of Medicaid payments from the state of Illinois was the main reason for the 78-bed nursing home's financial problems.
"The state of Illinois did not pay what they owed the facility," said Schmidt, a New Orleans-based lawyer representing Home Life at Oak Terrace LLC.
Schmidt said the state owed Oak Terrace almost $300,000 for the care of Medicaid patients. If that money were paid, the vendors and others owed money by Oak Terrace, including Mullins, would be paid, he said.
But he acknowledged that the facility's license holder and former operator, Kelly Smith of Overland Park, Kansas, owed provider assessments -- or "bed taxes"-- to the state before Home Life at Oak Terrace took over running the facility in August 2016.
Smith also owed money to the IRS, apparently for payroll taxes on employee income, Schmidt said.
Smith couldn't be reached for comment and hasn't responded to requests for comment.
One lesson from the Oak Terrace situation may be that families should investigate a long-term care facility's finances as much as possible, and ask questions when they see evidence of problems such as empty halls, said Megan Jizmagian, the Springfield-based regional long-term care ombudsman.
But families searching for an appropriate spot for a loved one, and even advocates such as the ombudsman's office, can be fooled, she said. For example, Oak Terrace had an explanation for vacant spaces, she said.
"We were always told they were remodeling so they weren't filling those rooms up," Jizmagian said.
Documents detail mounting bills
A legal document filed by Oak Terrace in early September says legal entities associated with the nursing home owe the state bed taxes totaling more than $430,000. The facility also owed $175,485 to the Illinois Department of Revenue and $1.3 million to the IRS, according to the document.
John Hoffman, spokesman for the Illinois Department of Healthcare and Family Services, said Oak Terrace, which enrolled as a Medicaid provider in December 2015, still owes the state about $730,000 in bed taxes going back to fiscal 2012.
Bed taxes are used by the state in a complicated arrangement with the federal government to leverage more federal Medicaid funds for Illinois, but all nursing homes, even those with few or no Medicaid patients, must pay the taxes.
Healthcare and Family Services subtracted and seized $62,513 in bed taxes from Oak Terrace's Medicaid reimbursements for October 2016 through December 2016, Hoffman said.
Because of the large amount of bed taxes owed and money being clawed back by the state from Medicaid reimbursements, Oak Terrace never received any Medicaid payments, Hoffman said.
The state Department of Revenue has filed $79,570 in liens against the Oak Terrace property for unpaid debts extending to 2014, department spokesman Terry Horstman said.
Mullins said he isn't satisfied with Oak Terrace's finger-pointing and claims of poverty.
Home Life Companies, which says on its website that it manages long-term care communities in several states, mostly in the Midwest and South, could transfer money from its headquarters to pay him and vendors, Mullins said.
Mullins said he started work Aug. 22, and it was clear at that time that the facility would be closing soon.
But in emails with Mullins and others, Home Life's president and chief executive officer, Donald Rankey Jr., made it clear that he didn't want residents and staff to know about the situation, Mullins said.
Mullins said he believes one reason for the secrecy was that Rankey wanted Oak Terrace patients and families who paid privately for loved ones' care to submit their payments for the full month of September before they found out about the impending closure.
Many families of residents have complained that they haven't received refunds from Oak Terrace for the rest of September, according to Jizmagian, the ombudsman.
All of the nursing home's other employees have been paid, Mullins said, but many vendors haven't been paid.
The Illinois Department of Public Health fined Oak Terrace $1,100 for violating the Illinois law requiring facilities to give residents and state and local officials at least 60 days' notice before closing.
But the department hasn't been able to collect the fine, IDPH spokeswoman Melaney Arnold said.
David Mabry, who was administrator from January until late August, when Mullins took over, said he realized Oak Terrace wasn't properly billing Medicaid when he arrived in January. He corrected that situation, he said.
About 45 residents were receiving care at Oak Terrace in January, and that number steadily declined, Mabry said.
"There were so many things that needed to be fixed in the building, it was incredible," said Mabry, 47, a Springfield resident who is certified as a nursing home administrator and licensed practical nurse.
Home Life wasn't familiar with Illinois regulations and wouldn't free up money needed for renovations to make the home more attractive to customers in the competitive world of long-term care, Mabry said.
An entire hallway of patient rooms was empty, he said.
Mabry praised the efforts of the staff to provide good care. After many frustrating communications with Home Life over spending, he said he resigned after he was instructed to begin transferring Medicaid patients to other nursing homes and reduce staffing levels.
"That's illegal and unethical," Mabry said. "That was probably the most money-focused company I have ever encountered."
Mullins said he, too, refused to discharge Medicaid patients to cut costs. And he said he was proud of the work he did to ensure that all remaining residents were safely transferred to other facilities before staffing levels dropped to dangerous levels and the facility ran out of food.
"I have no idea why they didn't pay me," he said. "I did what I was sent there to do. ... The only one who didn't do his job was Don Rankey. ... I think I did a service for the residents and families, because it could have been a catastrophe."
Chuck Schaefer, senior credit manager for Martin Bros. Distributing, said Oak Terrace never paid the Iowa-based company $24,014 for three months' worth of food -- enough to feed patients through the closure.
Springfield resident Joni Bugett, 62, whose husband, Larry, 65, left Oak Terrace on the facility's last day for a spot at Springfield Supportive Living, 2034 E. Clear Lake Ave., said she was told by Oak Terrace staff about the remodeling in May when her husband moved in.
"How are you not going to believe them?" she asked.
-- Contact Dean Olsen: email@example.com, 788-1543, twitter.com/DeanOlsenSJR.
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