Marin nursing homes sued for alleged understaffing

July 29--Two Marin nursing homes in San Rafael and Novato are among 15 statewide that have been hit by class action lawsuits alleging that their owner systematically understaffed them to increase his profits.

"The elderly and infirm are one of the most important and yet vulnerable segments of our society," said Stephen Garcia, one of the attorneys representing the complainants. "To knowingly understaff these facilities in violation of promised resident rights so as to unlawfully maximize profit, victimizes our important resource of elders and needs to end."

The Marin skilled nursing sites included in the suit are the 181-bed Novato Healthcare Center, the county's largest nursing home, and San Rafael Healthcare and Wellness Center, which has 54 beds.

The suits allege that the owner of the centers concealed the fact that the sites were not adequately staffed to meet the needs of its residents during the admission process in violation of the state Patients' Bill of Rights.

The suits, which were filed in Marin Superior Court and other California courts this month, name Shlomo Rechnitz and a number of other entities -- Brius Management, ASRU, Rockport Administrative Services, Novato Healthcare Center and San Rafael Wellness -- as defendants.

However, all of the entities named in the suits are effectively controlled by Rechnitz, according to the two law firms that filed the suits -- Garcia, Artigliere & Medby and the Arns Law Firm.

Jill Basinger, a spokeswoman for Rechnitz, responded to the suits in an email.

"As opposed to Mr. Garcia's serious allegations, these nursing facilities not only maintain the state required 3.2 nursing hours per patient day, they even exceed them," Basinger wrote. "There is nothing new here. All of these lawsuits are completely duplicative of an existing 4-year-old class action which Mr. Garcia is desperately concerned he will lose. It is noteworthy that none of these 'class action' lawsuits allege any harm to any resident in any facility. It is evident that Mr. Garcia is using the court system to attempt to harass, vex and annoy Mr. Rechnitz."

State audit findings

Last year, at the request of Marin's representative in the state Senate, Mike McGuire, D-Healdsburg, and state Assemblyman Jim Wood, D-Healdsburg, the California State Auditor looked into allegations that Brius Healthcare Services, which Rechnitz controls, was inflating prices to profit from Medi-Cal reimbursements.

At the time, the legislators said there was evidence that Brius nursing homes were paying inflated prices to some of their related businesses, with some prices exceeding 200 percent of the local market average.

The auditor's report, released on May 1, looked at two other nursing home companies in addition to Brius: Longwood Management Corp., and Plum Healthcare Group. The three are the largest private operators of nursing home companies in the state.

The report said, "All three companies made less than $10 million in net income in 2006, but by 2015 their net incomes had increased to between $35.2 million and $53.8 million."

The report, however, said the largest increases in the companies' revenue during this period were Medicare and managed care. The report said Medi-Cal likely did not contribute significantly to the companies' net incomes because it does not fully cover nursing facilities' costs per Medi-Cal patient.

Extra revenue

The report went on to say that the owners of all three companies were able to earn income -- separate from the revenue its nursing facilities earned from Medicare, Medi-Cal, or managed care -- when its nursing facilities obtained goods and services from related parties, or other businesses that they or their family members owned or controlled.

The report stated, however, "We found that related-party transactions are common in the industry and are legally allowable. Medi-Cal takes several measures to limit the possibility that it might pay for profits from related-party transactions."

The auditors report also found that state agencies doing too little to maintain quality of care at nursing homes. According to the report, from 2006 through 2015, the number of substandard care deficiencies that nursing facilities received increased by 31 percent, while at the same time, the number of state citations from the Department of Public Health decreased by 34 percent.

The audit found that Brius Healthcare had the most serious quality of care deficiencies out of the three audited companies -- more than twice as high as the rate of all facilities in the industry.

Medicare.gov, the government website for Medicare, ranks both Novato Healthcare Center and San Rafael Healthcareand Wellness Center below average for every category it issues rankings: health inspections, quality of care, staffing, fire safety and penalties.

In June 2015, the Sacramento Bee reported that between October 2014 and January 2015, three of Brius' facilities were decertified by the federal government, preventing them from receiving Medicare and Medi-Cal funding.

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