by Tyra Phipps, Ed.D. (tyra.phipps@gmail.com)

Mr. Scott Hillegass, CEO, Fundamental

 A Protected Source wrote on April 11, 2019, “Sleazy lawyers, corrupt judges, payoffs, insider deals, graft, fraud, and corruption run rampant.  Have I missed anything?  Unless you have superior money, connections, power, and political clout, you don't stand a chance against these criminals. To wit:

‘... After hearing nearly 100 hours of testimony, and considering over 3,000 exhibits, the Court concludes Jannotta did not breach his fiduciary duty to THI's creditors and, as a consequence, THI Holdings and GTCR could not have aided and abetted a breach.’

‘... Accordingly, the Court will enter a separate judgment in favor of Jannotta, GTCR, and THI Holdings.’

Lady Justice is blind ... except when she's paid enough.”

What is this Protected Source writing about?  Mr. Scott Hillegass was the CEO of Fundamental and Fundamental Behavioral Services LLC.  Fundamental has an interesting history.  According to Findlaw, 2019, “Trans Healthcare, Inc. (“THI”) was founded in 1998 to operate nursing homes, assisted living facilities, and long-term acute-care hospitals throughout the United States. Trans Healthcare Management, Inc. (“THMI”) was a wholly owned subsidiary of THI and provided management services to THI until March 2006. By early 2006, numerous wrongful-death and negligence actions had been filed against THI and THMI on behalf of several nursing-home patients who had died while in THI and THMI's care.

Anticipating adverse judgments, the entities designed a transaction that would shield their assets from potential creditors without affecting their profitable operations (the “2006 Transaction”). Under the direction of Leonard Grunstein, a former real-estate lawyer, and Murray Forman, an investment banker, two new entities were created: Fundamental Long Term Care, Inc. (“FLTCI”) and Fundamental Long Term Care Holdings (“FLTCH”) (together, the “Fundamental Entities”). In the first phase of the transaction, THMI sold all its assets to FLTCH for $9.9 million. In the second phase, THI sold all its stock in the stripped-down THMI to FLTCI. FLTCI therefore acquired all of THMI's liabilities but none of its assets.

THI remained an active corporation and continued operating nursing homes on a small scale following the transaction. It was ultimately placed into a receivership and wound down. THMI continued to exist as an insolvent subsidiary and the sole asset of FLTCI; both entities quickly became defunct. FLTCH, on the other hand, was left with a substantial number of productive assets and continued operating the entities' broader network of nursing homes, generating millions of dollars of income, without being saddled with the millions of dollars in liabilities attributable to those entities. To keep the network running, FLTCH rebranded the former THI/THMI facilities and created two new subsidiaries: FCC, which provided operational and clinical support; and FAS, the administrative arm of the company. Together, FLTCH, FCC, and FAS continued to operate in the same locations, and used the same employees and equipment, as did THI and THMI prior to the 2006 Transaction. At all relevant times, FLTCH was owned by Grunstein and Forman.

As noted, the Estates' complaint made allegations concerning Rubin Schron's involvement in the above-described 2006 Transaction. Schron is a wealthy New York real-estate investor whose involvement with the THI network began in 2002. That year, Grunstein and Forman—Schron's lawyer and banker, respectively—allegedly convinced Schron to fund the acquisition of 120 nursing homes from an unrelated entity that was in the process of Chapter Eleven liquidation. The acquisitions were executed by an entity called ABE Briarwood, and the facilities were subsequently leased to THI. The complaint does not allege that Schron ever held a direct ownership interest in THI, THMI, or FLTCH. Similarly, there is no allegation that Schron was involved in designing or executing the 2006 Transaction. The Estates allege only that Schron was aware of Grunstein and Forman's involvement in the 2006 Transaction and that Grunstein and Forman acquired stakes in FLTCH as Schron's agents, but as to this last allegation, the Estates articulate no basis for their conclusory assertion of an agency relationship.

II. The Wrongful-Death Judgments

In the meantime, the estates of six deceased nursing-home patients pursued wrongful-death actions against THI and THMI in state court, alleging that the decedent patients had been abused, neglected, and injured by the negligent and reckless operation of THI's nursing homes in Florida and Pennsylvania. The Estates had no knowledge at the time that the named defendants, THI and THMI, had been stripped of their assets.

To ensure that the Estates were kept in the dark, FLTCH's goal was to use the THI receivership to conceal the linked transfers long enough for the statute of limitations to run on any available fraudulent-transfer claims. In furtherance of this plan, THI directed its counsel to withdraw representation of THI and THMI at around the same time as the relevant statutes of limitations ran. The liability proceedings moved forward, and the various state courts in which these claims were pending ultimately entered “empty-chair” jury verdicts (that is, verdicts not contested by the defendants) against THI and THMI totaling more than $1 billion.”  

A short time after 2006, the representative of the six deceased nursing home residents learned about a transaction of assets from THI and THMI to FLTCH and FLTCI and filed a Chapter Seven Lawsuit.  Also, from Findlaw, “In order to fend off these simultaneous actions, FLTCH filed a declaratory-judgment action in a New York court seeking a declaration that any fraudulent-transfer or similar claims relating to the 2006 Transaction were barred by the statute of limitations. Having lost its bid for a New York declaratory judgment, FLTCH then sought an order from the bankruptcy court temporarily enjoining the Estates from pursuing their state-court judgment-enforcement actions.”  Insured, all of Fundamental Holdings were protected no matter what attorneys did on behalf of the nursing home residents who lost their lives.  This complicated case is summarized in its entirety at https://caselaw.findlaw.com/us-11th-circuit/1878003.html.

Mr. Ray Mullman on May 13, 2014, wrote a blog post that parallels the aforementioned. 

“The case involving Fundamental Long Term Care Holdings, Inc. involving $1 billion in wrongful death and other judgments can proceed, a federal court has ruled. The matter also involves private equity firm GTCR, which was helmed by current Illinois Republican gubernatorial candidate Bruce Rauner.

In 1998, the GTCR Group provided initial funding for Trans Healthcare Inc., a company operating Florida nursing homes and other post-acute and long-term care facilities. By 2006, Trans Healthcare was facing 150 lawsuits, with allegations including financial mismanagement, resident neglect and wrongful death. The judgments against the company at one point came to more than $2.3 billion.  To get out of the paying for their negligence, THI Holdings sold the facilities to Fundamental Long Term Care Holdings, LLC but then sold related entities to undercapitalized Fundamental Long Term Care Holdings, Inc. so they would left holding the bag when the judgments came due.

The plaintiffs allege that GTCR and Fundamental Long Term Care Holdings, LLC engaged in a “bust-out” scheme, or a transfer of assets to avoid paying out to creditors and parties awarded damages, prior to Trans Healthcare going out of business and entering state-court receivership.

The judge’s statement that ‘GTCR Group was also instrumental in [Trans Healthcare’s] day-to-day management and administration’.”

 Regardless of the lawsuit, state or federal courts, class actions or individual lawsuits, large corporations owning hundreds of nursing homes in many states, managed through a series of legal means to avoid payouts for alleged wrong doings.  Who is responsible, Mr. Scott Hillegass?  Dr. Travis Shipp is a Retired Professor from Indiana University in Bloomington, Indiana stated on April 1, 2019, “I read an article about Hillegass.  He is a highflyer, having all the companies and his wife in business with him is perfect for his kind of business.  Real estate companies routinely handle large amounts of money that can suddenly become fungible when moved on.  He and his wife can draw nice salaries and bonuses without attaching any unwanted attention.  They can also hide a tremendous amount of money in the form of business expenses by double charging expenses to several companies.  The IRS wouldn’t catch them unless they compared expenses in the different companies at the same time.  And that doesn’t include money hidden offshore.  It is my opinion that he is a danger to everyone he has any dealings with.  Every business item is subject to a bust-out.” 

Is there another side to this complex case?  Yes. His name is Mr. Edgar D. Jannotta, Jr., Chair Emeritus.  According to Leagle.com, “In 2006, Edgar Jannotta, as a director of Trans Healthcare, Inc. ("THI") approved the sale of Trans Health Management, Inc. ("THMI"), THI's subsidiary at the time, to the Debtor for $100,000. At the same time, THI's parent company, THI Holdings, sold THI's sister company, THI of Baltimore, Inc. ("THI-Baltimore) for approximately $10 million. Six probate estates, who were tort creditors of THI and THMI, and the Chapter 7 Trustee in this case allege that Jannotta breached his fiduciary duty by selling THMI for less than it was worth and allowing THI-Baltimore's buyer to divest THMI of its assets and that THI Holdings and the GTCR Group (which owned THI Holdings) aided and abetted that breach.

 In 2002, THI, through a new parent, THI Holdings, LLC ("THI Holdings"), decided to expand its operations by acquiring more than 120 nursing homes owned by Integrated Health Services, Inc. ("IHS"), which was proposing to sell its nursing home assets as part of a Chapter 11 case pending in Delaware. As with all bankruptcy sales, however, there was competitive bidding, and THI Holdings was outbid by a company called ABE Briarwood. Murray Forman and Leonard Grunstein were Briarwood's advisers in the IHS acquisition.

Apparently, litigation ensued about the bid results. Forman, Grunstein, and Briarwood had no experience operating nursing homes. As a result, a settlement was reached between THI Holdings and Briarwood under which a new THI Holdings subsidiary, THI of Baltimore, Inc. ("THI-Baltimore") and its affiliate, THI Nevada, would lease the 120 IHS facilities from Briarwood and operate them.

By year-end 2003, THI Holdings had 120 leased facilities operated by THI-Baltimore and THI Nevada (THI-Baltimore had 116 and THI Nevada had four) and another 73 facilities owned and operated by THI.” 

The legalese jargon may be hard to follow, but fast forward and it leads to the purchase of a 3.8-million-dollar home in Las Vegas by Mr. Scott Hillegass, CEO Fundamental and Fundamental Behavioral Services LLC.  Dr. Travis Shipp expressed his perspective on March 28, 2019, “I contacting the Secretaries of State in the most likely states for an incorporation.  Traditionally, Delaware is the best bet because they have the laxest incorporation laws.  So, I started there, no luck.  I’ve been through several other states and haven’t found a trace. I’m going to start on offshore incorporation havens.  Starting with Grand Cayman and work through the list.  If these companies are really hiding, they are probably in the islands.  Nobody hides that carefully unless they have got something to hide.”  Another truth is that Leagle.com tracked declaration of Chapter 11 by Integrated Health Services, Inc. to Delaware also naming Maryland, and Nevada.  These are known factors in this complex case, but it is obvious that a lot more is hidden.  The ugly reality is that elderly die while they are out of sight and out of mind while corporate takeovers and greed prevail.

This is how it is done.  Dr. Shipp explains, “People can make a lot of money, the answer is right here.  They have a house of cards built with shell companies in the U.S. owning shell companies in the Caymans which in turn own other shell companies in the Antilles. That is where the path runs out.  I suspect the Antilles companies own other companies until you wind up back in the states with money that is untraceable and well laundered.  There are no legitimate reasons for a company to set up that many shells in that many countries.  It is not exactly legal but it is very difficult to prosecute, and unless it is a huge operation the justice department will not bother with it.  The FBI does not investigate complicated stuff like this.  As long as the crooks do not attract any attention they are let alone.”  It appears that Fundamental engaged in all the necessary buy-outs and bust-out scams over the years to be a leading corporate owner of long-term care facilities in America. 

*** It is interesting to note by 2023, Mr. Robert McClay became the new CEO of Fundamental LTC. The corporate office is located in Sparks, Maryland. The company now owns 67 facilities in seven states, where it previously was listed as owning 90 facilities in nine states.

What really happens in nursing homes that are part of a shell company holding?  People try to survive short-term rehabilitation paid for by Medicare.  Those without personal wealth or connections are at the mercy of Medicaid.  They are known as Residents, people with compromised physical and mental states, bodies that are battling one or more diseases and hoping to find good caregivers.  They can be any age, male or female.  Most suffer in silence fearful of retaliation.  Many with dementia are too confused to help themselves even if they are physically capable. The prevalence of understaffing, untrained staff, poor facility conditions, and lack of good medical care only complicate these matters further.  More data from PBS News Hour in 2018, can be found at https://www.pbs.org/newshour/health/most-nursing-homes-are-not-adequately-staffed-new-federal-data-says?fbclid=IwAR3SlTX9k-L8AcuqBnzgmDKj5YBekNswhNUl1KEZAxETt_E75dHG_s2LVtI. What is the end result for families and their loved ones?

• Lack of care
• Lack of continuity of care with ever changing staff
• Rushed staff resulting in skin tears and wounds
• Residents not repositioned causing skin breakdowns
• Use of a lift sheets causing skin abrasions instead of bed pads
• Call bells ringing for hours unanswered 
• Lack of supplies such as briefs, linens, gloves, and even toiletries
• Mismedications, injection, wound treatment oversights
• Careless mistakes such as catheters inserted in the rectum 
• Injuries resulting from hurried transfers
• Catheters, colostomy bags, IV bags not changed on schedule 
• Care Plan meetings that are perfunctory only

• Poor quality foods served that result in lower weights 
• Only one-month rotation of foods creating lack of appetite
• Force feedings of disliked foods
• Food trays left without providing assistance for feeding

Corporate facilities, such as Fundamental, make use of the one-month or four weeks of food in a menu that rotates Spring/Summer and Fall/Winter with only a few exceptions such as turkey for a holiday meal or grilled hot dogs for summer cookouts. The foods remain the same for every meal in all ninety Fundamental facilities in nine different states. There is no substitute menu rather a list of fifteen alternate choices that range from a sloppy joe, tuna fish sandwich, vegetables such as peas or carrots, limited fresh fruit, and cottage cheese. Fundamental maintains that specialty diet such as Kosher, Vegan, or Paleo menus are available in all facilities, that does not appear to be the case. Dieticians within these facilities can make changes for reginal preferences of foods by residents. However, a random check of Fundamental owned Nursing and Rehabilitation Centers provided information contradicting the availability of any food not contained on the one-month menu. In fact, dietary managers spoke of difficulty in obtaining foods from suppliers such as Sysco. It turns out the Fundamental limits the selection of choices to the lesser quality or the least expensive option available to maximize corporate profit. When profits are the end goal everyone suffers.  

• Infections that run rampant such as flu
• Lack of attention to cleanliness and cross-contamination 
• Increased number of falls resulting in broken bones/concussions
• Increased anxiety levels from lack of care 
• Lack of activities encouraging socialization
• Lack of medical, oral, and visual care 
• Lack of transportation to appointments
• Poor communication and sharing of information during shift change 
• Inadequate bathing or showering
• Improper cleaning resulting in UTIs’ and e-coli infections 
• Overuse of psychotropic drugs to calm a resident
• No compassion for end of life care 
• Overuse of traveling or agency nurses
• Unwelcoming environments for diverse cultures  
• Weak administration causing internal breakdown
• Staff with paternalistic attitudes or listening skills 
• Formal Complaint and Grievance processes that are dismissive
• Abuse, neglect, and wrongful death incidents that go unreported. 
• Indifference displayed by CEOs, Presidents, and or Board of Directors

With these list of mistreatments and indignities, there are untold stories that shed light on the horrors of living in a long-term care facility.  These big corporate ownerships include but are not limited to Golden Living, Emeritus, Genesis, Ambassador, Consulate, Brookdale, Signature, and Fundamental.  Ms. Tara Nan wrote on March 5, 2019, “My mother and father-in-law were in independent living at Emeritus at Crossing Point in Orlando.  They had a nice apartment and all that they needed and we were all happy with the place.  After a couple months, my mom started losing weight and not looking good.  She was admitted to the hospital and kept until she was well.  From there she was sent to a rehab for 30 days.  She was well enough to go back to her home.  She was then transferred back but to a different floor.  We did not know fully why but figured they had their reasons.  My sisters-in-law visited her and things seemed ok.  She was not even there a week when I got a call that she was taken to the hospital because she had an attack.  By the time we all got to the hospital she was gone. After the viewing and funeral, we had no idea the facility messed up.  My son received a call from the newspaper, The Miami Herald, telling him her death was not natural. A story is posted with them on May 3, 2011. As time went on, we found out she was not given her heart medicine for 4 days and the medicine she was given was not for her.  No one was ever charged for the mistakes and as I remember the place did not close down right away.  We took my father-in-law out and moved him to another facility.  He did so bad after her death that he passed a year later. It was a horrible time for our family and I don’t think we will ever get over what happen.  She was a good woman and did not deserve this.  So sad, nursing homes need to be checked more and made accountable.  I hope in telling you this that no one else goes through a horrible ordeal.”

Ms. Bobbi Taylor-Moore said on March 6, 2019, “I know how hard it is to get good care. We stayed on top of the caretakers at mother's facility. They truly hated us. They do not have qualified people in these facilities and feel their just there to die anyway. SO SAD and it makes me so ANGRY.” 

Mr. Bobby Roberts added, “I just had a problem in a rehab facility, an experience I don’t want to go through again.”

On April 23, 2019, Ms. Claudia Baker provided details of her personal story involving hospital and rehab care.  “I had knee replacement surgery on February 14, 2018, at Florida South. When I woke up, I couldn't hold a spoon, I couldn't sign my name, I couldn't get out of bed, and what does that have to do with knee surgery?!?  They tore my rotator cuff and nobody listened to me.  I was in the hospital for days.  No one listened.  I filed a grievance.  I ended up going to a rehab in Apopka.  Again, the only person that listened was a therapist and could do very little.  The doctors on staff kept telling me it was arthritis in my shoulder.  I explained to them as kindly as possible then I'm on morphine and it hurts worse than my knee surgery.  The year is now 2019.  I have had two surgeries to repair my rotator cuff.  I got anesthesia brain and I am in so much pain.   By the way, I still can't wash my hair or brush it.  I can't sign my name and I shake when I try to eat.  I will be damned if I can find a lawyer that will take my case and go up against these people.”

Ms. Michelle Grillo shared this story about her father on June 12, 2019.  She responded to the Center for Medicare and Medicaid list of one-star rated facilities that is available on www.medicare.gov.   “My dad was in one of the worse ones, on the one-star facilities list.  The staff accelerated his death and made it much uglier than it should have/ could have been.  I believe that the nursing home got shut down and then just reopened under a different name so all the bad reviews were no longer available to warn other people.  I had no voice in where he went because I’m only his daughter.  Long story short, my step-mother had the only say, but she had undiagnosed dementia.  The state took over guardianship. We were three days away from going to court to fight for guardianship when he died.  The situation was agonizing.”

Are there reasons why it is so difficult to get good health care, rehabilitation, or long-term care?  Do people just care less?  Mr. Mark Davis developed questions to measure empathy for a doctoral dissertation in 1977 at Indiana University in Bloomington, Indiana.  He found that people in the late 1970s were very empathetic, almost 100%.  Later in 2010, Ms. Sara Konrath replicated the study using social platforms and found that there was a 40% reduction in the amount of empathy and/or compassion that people felt for one another.  Perhaps there is a cause effect relationship.  Do the following extreme cases demonstrate a lack of empathy, mean-spirited behavior, or criminal intent? 

1.  Will a loved one get the dignity and respect that is deserved?  Perhaps not.  Instead, they may deal with paternalistic attitudes and practices.  They may even be told that since they no longer work, they only need one shower a week.  In Florida the genitals of one resident turned gangrene, while aides marked refused instead of taking the time and care to properly shower the individual. This December 2018,  story appears at  https://www.militarytimes.com/off-duty/military-culture/2018/12/14/84-year-old-veteran-died-after-nursing-home-staff-ignored-his-infected-rotting-genitals/.       

2.  Is there a place to trust the care of a loved one?  Beware.   Dr. Gerald Thompkins called attention to this horrific indignity that was featured on NBC News on January 4, 2019.  A woman in a vegetative state for years delivered a baby while residing in a care facility owned by Hacienda HealthCare.  The case in under investigation in Arizona.  The complete story can be found at this link https://www.nbcnews.com/news/us-news/police-investigating-arizona-care-facility-after-report-patient-vegetative-state-n954761.   Police have since traced DNA to a male nurse in the facility.

 3.  Are there extreme cases of neglect?  Yes.  Mr. Dave Berry is a frequent contributor to this blog. He submitted this story about a body turning gangrene and necrotic in a Whetstone facility in Ohio.  This full CNN report can be found at https://www.cnn.com/2019/02/14/health/ohio-nursing-home-patient-neglect-accusations-bn/index.html.   Six people have been indicted in this case.

4.  Are there incredibly mean-spirited people working in long term care?  Absolutely.  Mr. David Cravey is also a long-term contributor to the blog. He submitted yet another horrible story from a Consulate owned facility in Brevard County, Florida.  This full story was covered by WFTV and can be found at https://www.wftv.com/news/9-investigates/-money-won-t-bring-her-back-families-worried-about-care-at-states-largest-nursing-home-chain/925498186?fbclid=IwAR3_7aAPmx-5vYTh7W3RHIFTMcB4FczHX8zxyAYvBubJiMP9JAR6Uq8m9GE.  An 83-year-old women yelled that she was unable to breathe and was left to hyperventilate for over an hour before 911 was called.  She died shortly thereafter.    

Mr. Barry Lopez has another perspective. In his Book Horizon, as discussed with Mr. Ian Gill on March 25, 2019, “I’ve been in some really awful places but people know how to share and work together to live the best they can. In the long run, that is what is going to get you through.  It is a kind of privilege and proud obtuseness here in the United States. Nobody here speaks a second language. Nobody is interested in what is going on in Africa. They are interested only in themselves and their childish sandbox problems with this halfwit who is the president.  I think in the Western World we have just shrugged our shoulders and said: ‘Well, we are just going to have to live with it.’ What I would say is no we don’t. What we have to make sure is that people who are larger than themselves, who can see beyond their own world, their own needs, their own aspirations get together to talk about what to do.”  Both the educational and philosophical perspectives point to an attitude of egocentrism, indifference, and disregard for others who are suffering.

August, 2023