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Government lawyer provides insight into tackling abuse allegations in nursing home bankruptcy



  • Plan approval hearing scheduled for April
  • Government questions handling of complaints of potential abuse

(Reuters) – A lawyer with the U.S. Justice Department’s bankruptcy watchdog signaled on Friday that the government would oppose a Florida-based retirement home operator’s approach to deal with potential claims of abuse and negligence in its plan to reduce its operations.

Joseph McMahon, representing the U.S. Trustee’s Office, told a hearing before U.S. Bankruptcy Judge Karen Owens in Wilmington, Delaware, that her office would challenge what he described as non-consensual releases from certain legal claims filed by residents and their families against Gulf Coast Healthcare and related persons and entities.

Gulf Coast, which operates 28 nursing homes in Florida, Georgia and Mississippi, filed for bankruptcy in October with more than $200 million in debt, including $49 million in rent owed to its main landlord, Omega Healthcare. investors. Gulf Coast is in the process of transferring its facilities to new operators including Consulate Health Care, Ventura Services – Florida, Citadel Care Centers and Bedrock Care.

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The company, which operated more than 50 facilities at its peak, blamed the COVID-19 pandemic for falling occupancy levels, staff shortages and rising labor and equipment costs. individual protection equipment. It was one of many nursing home systems to seek bankruptcy relief as the pandemic led to nursing shortages and higher death rates among the elderly. One of the new operators to take over the Gulf Coast facilities, Consulate Health Care, experienced its own bankruptcy last year.

Owens, who gave Gulf Coast the go-ahead to seek creditor votes for her plan on Friday, said she was “not surprised” to hear McMahon’s concern.

“It also caught my attention,” she said.

In October, the company was facing 167 claims or notices of claim for wrongful death or bodily injury, according to court documents.

The US Department of Health and Human Services has a claim related to money it distributed to the company during the pandemic. About $2.3 million was paid out to some Gulf Coast entities after they ceased to operate nursing facilities, according to HHS. HHS attorney Augustus Curtis told Owens during Friday’s hearing that the money should be returned.

General unsecured creditors are expected to see between 17% and 21% recoveries under the plan.

Gulf Coast filed for bankruptcy with a restructuring support agreement backed by pre-bankruptcy lenders Omega, certain service providers and company owners, including Barrow Street Capital LLC.

Gulf Coast attorneys will seek approval of the plan at an April 19 hearing before Owens.

The case is In re Gulf Coast Health Care, LLC, US Bankruptcy Court, District of Delaware, No. 21-11336.

For the Gulf Coast: David Hurst, Daniel Simon and Emily Keil of McDermott Will & Emery

For the U.S. Administrator: Joseph McMahon and Joseph Cudia

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