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Jury Awards $1.1 Billion in Lawsuit Against Nursing Home Conglomerate

A jury in Polk County, Florida, returned a $1.1 billion verdict last month in a case involving what was described as “corporate corruption” and “misconduct” that ultimately led to the death of a nursing home resident. The jury agreed that the defendant, Trans Health Care, Inc. (THI), deserved to be punished for such severe corporate greed that it caused Ms. Arlene Townsend to suffer for years in a nursing home that was short-staffed and under-supplied. The jury awarded $110 million in compensatory damages and $1 billion in punitive damages.

The Plaintiff’s lawyers presented evidence showing how Ms. Townsend was the victim of a scheme by an enterprise that included: New York real estate investors; financiers General Electric Capital Corporation (GECC) (a private bank) and Ventas, Inc. (a real estate investment firm); and multi-billion dollar Chicago private equity fund GTCR Golder Rauner, LLC. According to trial testimony, this group conspired to run a nursing home chain into insolvency without regard to the harm the nursing home residents would experience. Ms. Townsend was said to have been one of the victims of the Auburndale facility THI managed and operated.

An expert forensic accountant testified that GTCR founded THI in 1998 with a plan to create the largest privately owned nursing home company in the country through a series of mergers and acquisitions. Their Boards of Directors were composed solely of investors and bankers and did not include a single health care official. From 1999 to 2003, GTCR and THI began acquiring nursing homes with funding from GECC, Ventas, and other lenders. THI became one of the nation’s largest health care operators with more than 220 facilities and more than a billion in revenue at that time.

THMI was the management company of the $1 billion GTCR/THI empire. When Medicare money for residents’ rent flowed into the THI account, GECC and Ventas took their share before monies were available to cover payroll, supplies, utilities, etc. for the hundreds of nursing homes, according to evidence presented at trial. Insider operators and former employees began suing GTCR/THI over poor management, as did nursing home residents and their families because of what was described as abysmal care. Eventually, to protect itself from financial loss, GTCR/THI agreed to sell THMI for a mere $100,000 to Fundamental Long Term Care, Inc. (FLTCI), a shell company that had no employees.

In the corporate quagmire of buying, selling, and merging nursing home corporations, it was the fragile nursing home residents, such as Ms. Townsend, who were overlooked and ignored and suffered greatly for it. Ms. Townsend was a single mother who became a nurse, devoting the bulk of her life to caring for others. The latter part of her career was spent tending to the needs of nursing home residents. Shortly after she retired, Ms. Townsend suffered a stroke. She needed 24-hour care, and her son, Gary Townsend, moved his mother to Auburndale Oaks in 2001.

But during the time she lived there, Ms. Townsend suffered at least 18 falls. The final fall resulted in a hip fracture that went undiagnosed and untreated for a week. She also endured severe infections, including Clostridium difficile and cellulitis, as well as chronic stomach pains with fecal impaction, skin tears, malnutrition, and dehydration while at Auburndale Oaks. She died on September 18, 2007, at 69 years old. Trial testimony showed that Auburndale Oaks did not have enough employees or supplies to properly care for all of the residents there, including Ms. Townsend.

The case is The Estate of Arlene Anne Townsend v. Briar Hill, Inc. Bennie Lazzara Jr., Joe Ficarrotta, and Isaac Ruiz-Carus with the Tampa law firm Wilkes & McHugh, P.A., represented Arlene Townsend’s son, Gary Townsend, in the case. For this trial, the jury had to determine damages only, not liability. Auburndale Oaks Healthcare Center is no longer affiliated with Trans Healthcare, Inc.

Source: Wilkes & McHugh, P.A.

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