Nursing Home Chain Avoids Accountability Through Bankruptcy Maneuvers

Allegations of negligence against nursing home chain Genesis HealthCare have surfaced as it seeks bankruptcy protection, allowing it to circumvent financial accountability for numerous settlements tied to resident injuries and deaths. In a notable case, Nancy Hunt arrived at a Pennsylvania emergency room in severe condition, with her foot infested with maggots. She died shortly thereafter, and her son secured a $3.5 million settlement in August 2024. Despite this, Genesis has reportedly failed to pay most of the amount owed.

The nursing home industry has faced scrutiny, particularly as Genesis, once the largest nursing home chain in the United States, reported spending $8 million monthly on litigation related to resident care. The company filed for bankruptcy protection in July 2023, estimating liabilities of $259 million from nearly one thousand lawsuits. A review by KFF Health News revealed that Genesis included provisions in settlement agreements allowing it to defer payments, often for a year or longer, resulting in no payments in 85 cases and partial payments in another 70.

Vanessa Betancourt, whose mother suffered a fractured hip in a Genesis facility, expressed her frustration, stating, “It just feels like they killed my mom and got away with it.” Genesis settled her family’s case for $650,000, but the company deferred the first payment for a year.

In response to the allegations, Genesis has consistently denied wrongdoing, maintaining its focus on delivering high-quality care. However, numerous lawsuits reveal troubling patterns, such as one case where a male resident reportedly assaulted a female Alzheimer’s patient, and another where delays in medical attention led to a resident’s death from a bowel obstruction.

The bankruptcy proceedings, set to unfold in the U.S. Bankruptcy Court for the Northern District of Texas, have drawn attention from creditors and advocacy groups. Many families of deceased residents fear they will only recover a fraction of what they are owed, if anything at all. Genesis has debts totaling $709 million owed to secured creditors, while unsecured debts, including claims from families and service providers, amount to $1.6 billion.

In particular, the case of Sandia Ridge Center in Albuquerque has raised alarms. The facility faced multiple citations for failing to protect residents from sexual abuse, with reports indicating that management was aware of a male resident’s troubling behavior prior to incidents. In one case, a female resident was assaulted, and despite settling for $925,000, Genesis has not yet made any payment.

Genesis’ financial difficulties can be traced back to a leveraged buyout in 2007, which burdened the company with significant debt. The chain expanded rapidly but struggled to manage its operations effectively. Recent years saw an increase in lawsuits and regulatory fines, including $10 million in penalties from the Centers for Medicare & Medicaid Services for health standard violations.

As part of its bankruptcy strategy, Genesis has sought to sell its assets to a private equity firm controlled by Joel Landau. This has prompted concern among patient advocates and lawmakers, including Senator Elizabeth Warren, who have urged the U.S. Trustee’s Office to investigate potential conflicts of interest in the sale.

Families of former residents express alarm over the implications of Genesis’ bankruptcy strategy. They argue that this practice allows nursing home operators to evade responsibility for poor care and injuries sustained by residents. As the industry faces increasing scrutiny and legal challenges, many anticipate that such bankruptcies may become more common.

The situation surrounding Genesis HealthCare underscores a growing crisis in the nursing home sector, where financial maneuvering often overshadows the care and safety of vulnerable populations. As the bankruptcy process continues, the future of numerous settlements and the accountability of nursing home operators remain uncertain.