Lawsuits drive nursing home chain out of Kentucky

by | Jul 19, 2012

A major nursing home chain said it no longer will operate in Kentucky because of increased litigation and the 2012 General Assembly’s failure to pass a law making it more difficult to file lawsuits against nursing homes.

Extendicare Health Services Inc. has entered into an agreement to lease all 21 of its skilled nursing centers in Kentucky — representing 1,762 beds — to an unidentified long-term care operator based in Texas. Extendicare is based in Ontario, Canada, with U.S. headquarters in Milwaukee.

The Kentucky facilities include two in Richmond and one each in Irvine, Stanton, Somerset and Salyersville.

Three nurse’s aides at Richmond Health and Rehabilitation, also known as Madison Manor, pleaded guilty to abuse of an adult after being caught on a hidden video camera abusing an elderly resident in 2008. By 2010, all three had initially received diverted sentences.

Extendicare spokeswoman Holly Gould on Tuesday declined to identify the Texas operator that officials described as “experienced.”

The lease is for a 10-year term, and the operator has the option of two five-year extensions. Additionally, the operator has the option to buy all of the centers, according to a statement from Extendicare.

The decision to leave Kentucky is consistent with Extendicare’s continuing strategy involving “the divestiture of operations that impede growth or create undue risk exposure,” the statement said.

The transfer of ownership and operations is subject to approval by state licensing officials and is expected by July 1.

Tim Lukenda, president and CEO of Extendicare, said the company “did not arrive at this decision easily.”

“However, the combination of a worsening litigation environment and the lack of any likelihood of tort reform in the state of Kentucky has made this the prudent decision for our company and unit-holders,” he said.

Mike Perry, Extendicare’s area vice president for Kentucky, said that in recent years, “Kentucky has become a battleground for plaintiff attorneys who focus their litigation toward centers owned by the largest for-profit companies.

“We conducted a careful search to identify potential new owners. The residents will continue to receive care and services from the same employees whom they have come to know and trust.”

Perry said Extendicare would work closely with the new operator’s personnel to ensure a smooth transition.

Ruby Jo Cummins Lubarsky, president of the Kentucky Association of Health Care Facilities, which represents skilled nursing facilities, said one way to prevent other nursing home chains from leaving the state because of the lawsuits and to protect residents rights would be to implement medical review panels.

Lubarsky’s organization advocated for House Bill 361, introduced by Rep. Melvin B. Henley, D-Murray, which would have required every potential lawsuit against a nursing home to be reviewed by a panel of medical professionals, which would make a finding. The finding would be admissible in court but would not stop a plaintiff or family member from taking the case to court.

The measure was not called for a vote before the House Health and Welfare Committee.

Lubarsky said her organization “continues to share our concerns with our public policy makers about the realities of this very serious problem and urge their support for a commonsense solution.”

Those opposing the bill said the medical review panels would discourage lawyers from taking nursing home cases. Advocates for the elderly said the measure also would create an undue burden and could delay justice.

But Gould, the Extendicare spokeswoman said the lawsuits had caused hardship for the company.

“The financial reasons are evident based on the resources being spent to address these claims and the cost of insuring against them,” she said

Bernie Vonderheide, founder of Kentuckians for Nursing Home Reform, said he did not think Extendicare’s departure was a loss to the state.

“We need nursing homes that abide by the regulations and provide good care,” he said. “Then they don’t have to worry about being sued.”

The corporation’s Web site said Extendicare has facilities in 11 other states. Gould said Extendicare does not have plans to pull out of any other states.

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