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Nursing Home Neglect Trial Follows Shell Company Sales

A 76-year-old woman who spent months languishing in a South Florida nursing home before being removed in 2003 died just weeks later. A jury later determined her to be the victim of continual neglect, having suffered numerous bed sores, malnutrition and a serious fall that resulted in a head injury. holdinghands

Her survivors were awarded $110 million against two nursing home companies, ordered to pay $55 million each. Those firms are Trans Healthcare Inc. and Trans Health Management Inc.

However, her family has found it nearly impossible to collect on that verdict. In the last four years, the family has pressed forward through a complex maze of shell corporation transactions involving the firm that appear to have been designed specifically to mitigate such liabilities. Trans Healthcare’s liabilities were all funneled into a company called Fundamental Long Term Care Inc. The problem is, that firm is a shell. It has no assets.

That has effectively created a nursing home chain that is perfectly solvent but shielded from judgments like this one. In fact, five other families have also been halted from pursuit of their wrongful death lawsuits or collection of judgment after a verdict was obtained, according to Bloomberg News. A total of more than $1 billion in nursing home wrongful death judgments remain in limbo.

Now, those families are trying to collect through bankruptcy court in the case of In re Fundamental Long Term Care, Inc. before the Florida Middle District Court. Defendants, which include private-equity firms, say they are not responsible to cover the cost of damages to nursing home negligence victims and had nothing to do with a plan to shift liability to a company that is insolvent.

Families of victims are asking the bankruptcy court judge to find the company committed breach of fiduciary duty and fraud. Ultimately, they want to receive their just compensation. In addition, they are seeking punitive damages, which are awarded in cases where a defendant’s conduct is deemed especially egregious.

Numerous defendants have been dismissed from the case, including a number of lenders.

At its core, the litigation focuses on two transactions that occurred in 2006, when the nursing home chain was facing approximately 150 civil lawsuits in 15 states – most of those by residents or survivors of residents who accused the company of negligence, abuse and neglect.

Strangely, the ultimate buyer of the shell firm is a former graphic artist who now himself is a patient in a nursing home. He says in sworn testimony he didn’t know he was putting up money to buy the shell firm, and instead had wanted to buy the nursing home chain for its computer equipment. Yet, he reportedly never explored the possibility of a simple asset purchase agreement, even though the company he reportedly thought he was buying had millions of dollars in liabilities. However, the elderly man never actually paid the purchase price or received the equipment or any lease payments.

There are a number of other companies that held portions of the same nursing home business, and unraveling all of this is likely to take an extensive amount of time and litigation.

Freeman Injury Law — 1-800-561-7777 for a free appointment to discuss your rights.

Additional Resources:

Nursing Home Neglect Trial Fights Shell Company Transfers, Sept. 22, 2014, By Margaret Cronin Fisk

More Blog Entries:

Nursing Home Chain Sued by AG for Inadequate Staffing Levels, Dec. 20, 2014, Fort Lauderdale Nursing Home Abuse Lawyer Blog

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