Resident-care issues scuttle sale of Iowa nursing homes to East Coast developer – Iowa Capital Dispatch

The deliberate sale of a troubled Iowa nursing dwelling chain to an East Coast developer has been scuttled partly attributable to quality-of-care points.

QHC Services, which owns eight skilled-nursing amenities and two assisted-living facilities in Iowa, filed for chapter in late December. The earlier proprietor of the corporate, Jerry Voyna, died final 12 months. His spouse, Nancy, took over the corporate and filed for chapter quickly after. She died in January, leaving the corporate to her son, who started pursuing a sale of the corporate and all of its belongings.

In early March, a federal chapter courtroom choose accepted the sale of QHC to Cedar Well being Group, a holding firm based mostly in Lakewood, N.J. Cedar is a part of a community of corporations run by actual property developer Mark Tress, who focuses on buying distressed properties.

The sale, nonetheless, ran aground when Cedar Well being started elevating questions on quality-of-care points that would influence the licenses for QHC’s care amenities.

In newly filed courtroom information, Cedar Well being says it inquired about the potential of buying some or the entire belongings of QHC, however backed out when it realized the sale can be carried out by public sale.

QHC claims that “nearly actually inside one or two hours” of the March 4 public sale, a QHC dealer urged Cedar Well being to bid on the chain, though Cedar Well being had not accomplished the entire pre-bid necessities. Cedar Well being says it agreed to take part within the public sale, which resulted in the one competing bidder, Blue Diamond, objecting as a result of pre-bidding necessities not being met.

In keeping with Cedar Well being, QHC waived the pre-bidding necessities for Cedar Well being as a result of it was “eager on having a couple of bidder.” Cedar Well being then emerged because the excessive bidder at $12.1 million, and it shortly turned over a deposit of $605,000.

By March 22, nonetheless, the sale seemed to be in danger. Courtroom information present that authorized counsel for Cedar Well being wrote to QHC’s representatives, explaining that Cedar Well being was making an attempt to “decide whether or not any of the amenities are in imminent hazard of decertification” attributable to quality-of-care points. The legal professional additionally famous that two of the QHC properties had been designated Particular Focus Services by the federal authorities, indicating an extended, uncorrected sample of great violations.

As well as, the authorized counsel mentioned, Cedar Well being had but to find out whether or not quality-of-care citations issued by regulators had been going to “endanger the licensure of the amenities.”

QHC’s representatives wrote again, declaring the time to carry out that type of due diligence was earlier than the public sale, not after, and that certified bidders had agreed that in the event that they submitted the successful bid, they’d take over administration of the nursing dwelling chain no later than March 18.

“We at the moment are previous that deadline nonetheless with no signed administration settlement or agency dedication,” QHC’s lawyer instructed Cedar Well being. “We wish to see this transaction go ahead nonetheless and wish to work with you … Nevertheless, we now have the well being, security, and welfare of residents and sufferers to consider. As such, if signed administration agreements and a dedication to wire $500,000 right now will not be obtained by midday CST right now, we now have no alternative however to file an emergency movement with the courtroom to request a listening to on this matter, which can embody approval to maneuver ahead with the backup bidder.”

Cedar Well being then supplied QHC $250,000 and requested for extra time in order that it may collect data on the regulatory points. QHC refused, after which went to courtroom to safe an emergency order permitting the chain to be bought to Blue Diamond, the backup bidder.

The courtroom agreed to QHC’s request, and on March 24, Choose Anita L. Shodeen dominated that attributable to “the present monetary instability” of the QHC nursing properties and the shortage of a accomplished administration settlement, she was authorizing the sale of the chain to Blue Diamond.

The “unknown standing of the transaction” with Cedar Well being, she dominated, “endangers the well being, security and welfare of the residents” of the QHC amenities. Cedar Well being is now looking for the return of its deposit, and QHC is resisting.

Nonetheless to be decided is the destiny of a wrongful loss of life declare made by the household of Gladys Van Sickle, who died after allegedly sustaining damaged bones in a fall at QHC’s Winterset North facility in Madison County. A trial in that case is scheduled for October 2023, however the chapter courtroom might first must take care of the standing of QHC’s insurance coverage as soon as the sale to Blue Diamond is accomplished.

QHC’s 10 Iowa care amenities have a mixed capability of virtually 750 residents. The amenities are: QHC Mitchellville, QHC Winterset North, QHC Winterset South, QHC Madison Sq., QHC Fort Dodge Villa, QHC Crestridge, QHC Crestview Acres in Marion, QHC Humboldt North, QHC Humboldt South and QHC Villa Cottages of Fort Dodge.