iStock
Orlando trial lawyer Zander Clem, a partner in the personal injury megafirm Morgan & Morgan, spent much of the first two months of 2023 waging a last-ditch campaign to talk state legislators out of voting for a sweeping tort reform bill he calls “a senseless, once in a century” effort “to destroy Floridians’ rights to pursue a claim when they’ve been injured through no fault of their own.” Given the high likelihood they’d vote for it anyway, he was also scrambling to file thousands of cases before the law went into effect.
Then at the end of February, Clem and his peers were hit with a shocker: a new tort reform bill apparently concocted by the state’s powerful for-profit nursing home industry, this one somehow even more draconian than what he’d been battling.
Ostensibly sponsored by an obscure third-term state rep named Randy Maggard, the 30-page bill was “really long and full of all this confusing language,” says another elder abuse attorney. Its most alarming provision appeared on page 22: Individuals would be prohibited from filing wrongful death claims against a nursing home if they were not either surviving spouses of the deceased, or surviving children under the age of 25. Virtually all wrongful death lawsuits filed against nursing homes are filed by surviving children who are well into middle age, given that most seniors beneath the Donald Trump/Mick Jagger tax bracket don’t have teenage kids. At least 90 percent of nursing home plaintiffs, the attorney estimated, would have no case under the law.
“What they’re seeking is a free kill law,” Clem says. “We are talking about just a total eradication of nursing home negligence claims, which by the way are a far greater deterrent to said negligence than overwhelmed government agencies.”
Mercifully, many Republican legislators seemed to find Maggard’s bill, in Clem’s characterization, “a bridge too far.” Noting that health department findings of severe neglect or patient harm in nursing homes had doubled since 2019, the Tampa Bay Times tracked down the public-health professor who had testified in favor of Florida’s original nursing home tort reforms, who told the newspaper the new law “swings the pendulum way back towards the nursing homes in a way that I’m not sure is fair to everybody.” And while neither Maggard nor Colleen Burton, who sponsored the bill’s companion legislation in the Florida Senate, responded to phone messages on the bill’s status, multiple attorneys told the Prospect the Kill Bill had been put on the back burner, though HB 837, the original tort reform bill, was signed into law on March 24.
Still, something about the episode exemplifies the alluring chaos of the current political moment for a certain class of opportunistic predators. Ron DeSantis makes daily headlines revoking the liquor licenses of drag-friendly hotels and waging such bitter jihad against “corporate wokeness” that Bob Iger called him “anti-business.” But his lower-profile War on Lawsuits—which no less than Donald Trump recently termed “the biggest insurance company BAILOUT to Globalist Insurance Companies, IN HISTORY”—demonstrates how tirelessly DeSantis has labored to ingratiate himself to just about every corporation not named Disney.
He has big shoes to fill. Florida passed 62 tort reform measures between 2001 and 2013, according to a 2017 memo produced by the Florida Justice Association. The cutoff meant that it didn’t even include a 2014 law immunizing so-called “passive” investors from liability in nursing home negligence cases. “It’s kind of hard to believe there’s any tort left to reform,” remarks former Republican state Sen. Nancy Argenziano, who famously sent a 25-pound box of horse manure to a nursing home lobbyist during a particularly vicious nursing home tort reform battle and spent much of her 12 years in office fighting (vainly) for more stringent regulation.
In their zeal and determination to “check the tort reform box for the Chamber of Commerce,” as Clem puts it, DeSantis and allies like state Rep. Bob Rommel have been forced to maintain an almost implausible degree of ignorance about the way Florida’s insurance companies operate, as a recent Washington Post story on systemic insurance fraud in the aftermath of Hurricane Ian depicts. Nearly two dozen insurance company whistleblowers have emerged since the storm to allege a systemic industry-wide conspiracy to fraudulently slash payouts to homeowners by 90 percent or more from the estimates of their own insurance adjusters. But even after three of them testified under oath before the committee Rommel chairs and furnished evidence in emails and multiple flash drives, the legislator continued to claim he had seen no evidence of said fraud.
Against this backdrop, Clem says, a relatively new and aggressive collection of nursing home interests in Florida sprang into action. “I think they just saw the tort reform buffet, and just bellied up to try and get some too.”
ONE OF THE REASONS THE KILL BILL caught nursing home abuse attorneys by surprise was an informal agreement the state nursing home lobby made around 2018 to observe a ten-year moratorium on new tort reform efforts. This may explain why tort reform was conspicuously absent from the agenda when the Florida Health Care Association released its official list of its top priorities for the spring legislative session in February, two days before Maggard introduced the bill.
Nursing home tort reforms had traditionally been packaged as “compromise” gestures, carrots the industry would demand in exchange for agreeing to raise staffing ratios or tighten regulations. But the nursing home landscape has shifted dramatically in recent years. Some 3,700 senior housing facilities changed hands in 2021 and 2022 alone.
Somewhat depressingly, the Biden administration and well-intentioned progressive groups have fixated on the notion that “private equity” is the problem with nursing homes, and that requiring “Wall Street investors” to submit to enhanced disclosure requirements is a potential solution. But the big Wall Street–raided nursing home chains today are under the control of a syndicate of experienced nursing home investors headquartered in anonymous industrial buildings and strip centers in Brooklyn and New Jersey. Some of these investors identify themselves as “private equity” in press releases, and many of the methods by which they extract cash from health care assets at the expense of patients and workers are similar, but they rarely if ever file as investment advisers with the Securities and Exchange Commission, they do not raise capital from conventional private equity channels, and perhaps most importantly, they are shrewder. Navigating their inscrutable thickets of straw owners, shell companies, and pass-through entities is far more difficult than parsing a structure drawn up by a 20-something private equity associate at 3 a.m.
They are also more ruthless; allegations against the nursing home owners who have been plowing money into Florida politics venture well beyond the typical private equity formula of understaffing and overbilling.
When COVID-19 raged through facilities and exterminated hundreds of thousands of their patients, nursing home owners won temporary immunities from litigation in a majority of states, even as the federal government was raining tens of billions of dollars in CARES Act relief upon the industry. Donald Trump came under fire for presiding over the multibillion-dollar bailouts of one major nursing home boss and big-ticket donor even as residents in his homes perished amid nonexistent infection controls and skeleton staffing, then pardoned another serving a 20-year prison sentence for defrauding the government out of a reported billion dollars.
DeSantis has worked hard to demonstrate to this powerful constituency why he deserves their campaign donations even more than Trump. Last spring, he signed a bill lowering minimum staffing hours by 20 percent. Perhaps he signaled to the industry that he was ready to go even further, by permanently codifying their impunity from consequence for wrongful deaths. And should he become president, he could take the industry’s wishes to a national level.
ONE LAWYER SUGGESTED I LOOK into Joel Leifer from Excelsior Care, currently listed as a owner of 57 nursing homes in seven states, a decided upgrade from his self-described status in a 2020 deposition of a mere “small potato.” Last August, Leifer’s regional director of operations Anita Faulmann was voted president of the Florida Health Care Association, the powerful industry trade association. Faulmann came from private equity; her last two jobs were at Consulate Health Care and Genesis HealthCare, two nursing home chains owned by Formation Capital, a specialized investor whose influence on the nursing home industry we explored in 2020.
Consulate’s ownership has been the subject of some mystery since Formation pushed the company’s Florida homes into a sham bankruptcy that dramatically reduced a judge’s reinstatement of a $258 million whistleblower award. Last December, Faulmann showed up on the official documents of about a dozen former Consulate homes; Leifer’s Excelsior manages another four former Consulate homes associated with an LLC called Lidenskab, which is one of just two nursing home operators listed as having officially lobbied on the Kill Bill.
Leifer hasn’t shown up as a personal donor to Florida politics since he began expanding into the state. But in January, four entities listed at the same Richmond, Kentucky, address as a portfolio of nursing homes Leifer co-owns made four of the first six contributions, totaling around $14,000, to a newly formed PAC incorporated by a Florida Health Care Association lobbyist called the Florida Health Care Executive PAC.
Hundreds of thousands of dollars soon began flowing into the new PAC from other donors, the majority of them listed at out-of-state addresses. About $32,000 came from a subsidiary of New Jersey’s Portopiccolo Group, whose rampant debt-financed buying sprees of troubled nursing homes during the pandemic have been investigated by multiple national news outlets. Just under $8,000 came in from various Flatbush Avenue entities controlled by the nursing home investor Leo Friedman, who was recently accused in a whistleblower lawsuit of fraudulently obtaining $35 million in CARES Act loans.
Most generous of all were a group of entities listed at a single Montebello, New York, address that contributed a collective $57,679 in 14 donations. The address belongs to Eliezer Scheiner, a prolific nursing home investor and Republican donor; he personally donated $750,000 to Trump super PAC America First Action in November 2019, and entities listed at that Montebello address have plowed the same amount of cash into Florida elections since 2021. (Scheiner also co-owns two New York nursing homes with an old business partner of Leifer and his mother, though it’s not clear if Scheiner and Leifer are tied.)
The PAC raised about $270,000 during the first three months of the year and only spent about half, most of that on three big donations made on February 20: $50,000 to the PAC of state Rep. Danny Perez, and $25,000 apiece to PACs led by state Rep. Sam Garrison and Sen. Ben Albritton, the sponsor of a controversial 2022 bill that slashed the state’s nursing home staffing minimums. Two days later, Maggard introduced the Kill Bill.
TWO ELDER ABUSE ATTORNEYS TOLD ME they viewed the Kill Bill as part of a low-key invasion of the Florida nursing home industry by out-of-state investors who were getting pushed out of their home states by bad COVID-19 press and enhanced regulatory enforcement. That is surely part of the story here: In December, New York Attorney General Letitia James sued Leifer and Excelsior, along with a lengthy roster of nursing home partners, straw owners, and shell companies, for conspiring to fraudulently extract more than $22.6 million in “upfront profit” from a drastically understaffed Long Island nursing home, where 168 residents died during a three-month period at the beginning of the pandemic. And there is some evidence New Jersey state officials are probing Excelsior over a series of articles in the Newark Star-Ledger about a business partner of Leifer’s who appears to habitually exploit guardianship laws to empty the bank accounts and liquidate the assets of nursing home patients. A former Excelsior patient is currently suing Leifer among others for allegedly drugging her into signing over power of attorney, then stealing her money and selling virtually all her possessions.
It would be nice to think that authorities were cracking down on such atrocities. But while a New Jersey health inspector largely corroborated the patient’s claims, the department has yet to sanction Leifer or Excelsior or even that specific facility in any way. And while James’s lawsuit was devastating and thorough, it was only focused on one facility in Long Island, even though the parties named in the lawsuit are investors in hundreds more facilities, dozens of them inside the state of New York.
The southward migration also predates the pandemic, and the legal cases. Scheiner and his partner Teddy Lichtschein first incorporated their nursing home empire in Florida in 2012 (at the same Flatbush Avenue mailbox where Leo Friedman’s companies are now listed). And Bent Philipson, a prolific nursing home boss James’s lawsuit accuses of improperly siphoning more than $24 million out of the Long Island nursing home, began investing in Florida in the aftermath of the 2016 indictment of Philip Esformes, the Miami-tanned, Chicago-based nursing home boss accused of masterminding what prosecutors called “the largest single criminal health care fraud case ever.” (He also used $700,000 of his ill-gotten gains to bribe the “Varsity Blues” conspirators to get his son into Wharton.)
Philipson, who allegedly invoked his Fifth Amendment rights “approximately 685 times” during his deposition with the New York attorney general’s office, bought stakes in multiple Esformes homes between 2018 and 2020, along with a $9 million Bal Harbour home of his own. Donald Trump famously pardoned Esformes under heavy lobbying from the Aleph Institute, a justice reform nonprofit for which Alan Dershowitz works pro bono, though his conviction was upheld earlier this year and he will now—in an unusual development conservatives say constitutes a violation of the “double jeopardy” clause—face a retrial. (Dershowitz may also be working for Scheiner; he recently joined an astroturf group believed to be bankrolled by Scheiner that is attempting a boardroom coup of a Brooklyn hospital.)
Mark Pynes/The Patriot-News via AP
Florida Gov. Ron DeSantis speaks at the 2023 Pennsylvania Leadership Conference in East Pennsboro Township, Pennsylvania, April 1, 2023.
Florida Republicans began to attract big campaign donations from the broader nursing home boss community last year. Two companies controlled by Leopold Friedman, Citadel Care Centers and Alston Healthcare, gave $60,000 to a pro-DeSantis PAC last spring. And a mysterious entity linked to Friedman’s business partners called Perigrove, Inc., which purports to be a private equity firm but is located in a Suffern auto parts store, donated $50,000 to the Florida Republican Party in March. In November, Perigrove made headlines when the health care real estate investment trust Welltower announced that it had brokered a deal to offload the management of 147 troubled former ManorCare nursing homes it owned to something called Integra Healthcare, founded by Perigrove’s 29-year-old “founder and CEO” David Gefner.
Far lesser-known Yisroel Herzka, a Lakewood, New Jersey-based owner of a home where Florida health inspectors last year found a resident whose legs had been tied together to prevent him from moving, gave $50,000 to DeSantis last August. And just a month earlier, his fellow Lakewood nursing home boss Michael Netzer, whose known nursing home chains have no apparent interests in Florida, donated $25,000. DeSantis was fortunate to get the check cashed. Netzer’s company Vita Healthcare—which also trades under the names “Innovative Healthcare Management,” “Medical Facilities of America,” and “Heritage Consulting”—still owes more than a million dollars to a tiny North Carolina temp agency called Focus Staffing, whose founder Michael (pronounced like “Michelle”) Watson supplied 1,400 nursing assistants to more than a dozen Vita nursing homes in the state only to get completely stiffed after the first few months of payments. Focus is not alone; a COVID-19 testing service provider called GTI sued Vita/Innovative last year alleging it is owed $3 million by the nursing home chain, which has also mushroomed in size since the pandemic.
“I’ve never experienced anything like this in my entire career,” says Lewis Merrifield, a Texas-based small-business lender who provided a line of credit to Focus secured by its accounts receivable with Vita. “They just flat out refused to pay and said, ‘Sue us.’ It blows my mind that this company receives funding from CMS [the Centers for Medicare & Medicaid Services].” Watson says other notorious nursing home operators, like Portopiccolo—which donated $100,000 to DeSantis in June—are far more reliable about paying their bills.
BRAZEN THEFT FROM PATIENTS AND WORKERS probably sounds like an isolated practice, but the list of examples keeps getting longer. (While I was reporting this story, a neighbor asked me for advice on a friend in a Maryland-based Autumn Lake nursing home whose Social Security payments were getting deducted from a company she’d never heard of that turned out to be owned by Leifer’s partner, Sam Stern.) From Vita to Excelsior to Integra to Autumn Lake, most nursing home operators are insolvent fronts for the more powerful tycoons and institutions that own the underlying real estate of their nursing homes. They win the contracts by “agreeing” to pay outrageous, inflated rents to landlords who in turn have mortgaged their crumbling buildings to the hilt, and when the cash runs out they stop paying the bills and tell their vendors to see them in court.
Evidence continues to mount that the new boss may be even worse than the old one. Health inspectors cited at least ten former Consulate homes, many of them repeatedly, for causing immediate jeopardy to the lives of residents. One of them in Destin was finally shuttered after a drawn-out legal battle; a visiting family member had called the police after finding a resident lying in feces from the day before. There was just one certified nursing assistant in the facility charged with caring for 60 patients. (Five Eliezer Scheiner facilities were also among the 61 nursing homes that received a combined 83 IJ citations last year.)
It’s not just Florida: Nursing home residents in New Jersey filed nearly twice as many complaints about abuse in 2022 as they had the year earlier, and Wisconsin health officials in 2022 reported a 25 percent increase in complaints from the year earlier. It’s more difficult than ever to determine who the worst offenders are, because so few of the post–private equity operators even bother coming up with a unified “brand” anymore, and hide the true beneficiary inside shell companies and other maneuvers.
And yet time and again, the worst outcomes for residents happen under the most profit-minded ownership, and the most profit-minded owners typically control large empires of facilities. A better regime than the Biden administration’s proposed ownership disclosure for nursing homes would require every nursing home to disclose what human names, not LLCs, owned its underlying real estate, how much rent they were paying to their landlords, when and how often those landlords had refinanced the property (and what happened to the cash when they did), and how many operators and shell companies those landlords had been associated with over the years.
At the end of the day, however, if we know one thing about CMS-mandated disclosure regimes, it’s that no one fucking complies with them.
Despite the Kill Bill not passing—at least this time—plaintiff’s attorneys in Florida do seem to have started paying attention to nursing homes again. One of the greatest tragedies of COVID-19 was that while the pandemic turned our systems of industrial-scale elder abuse into a national story, the dozens of laws hastily passed in its wake to immunize health care institutions from liability created a massive information vacuum about how bad it actually got—how low the staffing ratios plunged, how many months helpless humans were forced to go without a shower—and how much money was stolen from our most vulnerable citizens.
Clem, for his part, made his name suing Florida nursing homes, but a combination of “bust-out” business models and earlier waves of tort reform led him to shift to mostly personal injury cases. Perhaps in light of the DeSantis crackdown, his focus will shift back again. Of the emerging crop of Florida elder care bosses, he marvels, “These are some bad guys.”
