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Lawsuit challenges nursing home deal

A Tampa lawyer says the national chain's move was a ploy to get residents to sign away their rights.


© St. Petersburg Times, published November 8, 2000

NEW PORT RICHEY -- A class-action lawsuit filed against one of the nation's largest nursing home chains alleges that the company's recent sale of 12 Florida facilities was a "sham" designed to stave off lawsuits, boost profits and skirt regulatory laws.

The lawsuit, filed Friday in Pasco Pinellas Circuit Court, says National Healthcare Corp. pressured some 3,000 residents of its Florida facilities to sign new contracts waiving their right to a jury trial under the guise that the nursing homes were being sold and changing names.

Tampa attorney Jim Wilkes, whose firm has built a national reputation for successfully suing nursing homes on behalf of neglected residents, said NHC was violating the law by requiring people to sign the new contracts.

"It's a repeat of the breach of trust that the (nursing home) industry has engaged in for the past 10 years," Wilkes said. "You can't make these people sign a new contract. They can't be treated like a customer list. This is their home."

According to the lawsuit, a resident at an NHC facility in Port Charlotte was harassed and told she would be discharged from the nursing home if she didn't sign the new contract.

The lawsuit asks Circuit Judge Stanley Mills to declare the new contracts invalid and order NHC to cease what the 50-page complaint calls "fraudulent, deceptive and unfair methods."

Among the nursing homes named in the lawsuit is a Pasco facility, Bayonet Point Health and Rehabilitation Center. The facility formerly was known as the Health Center of Hudson.

The other 11 facilities are spread throughout the state, from Pensacola to Naples, and include a nursing home in Plant City.

NHC sold the facilities in late August, saying in a news release that the Delaware-based company no longer could afford the skyrocketing cost of liability insurance. Ownership of the nursing homes was transferred to Steve Strawn, NHC's former vice president of operations, and a group of company insiders.

The administrator of the Hudson facility, David Cross, acknowledged in a September interview with the Times that the sale was designed to shield the company's assets from greedy trial lawyers, including Wilkes. Since the new owners' assets would be minuscule compared to NHC's, plaintiffs' lawyers would have less incentive to sue the nursing homes, Cross said. As a result, insurance premiums at the facilities would drop.

Cross declined to discuss the lawsuit Monday, saying the company doesn't comment on pending litigation.

Wilkes, an outspoken critic of Florida's nursing homes, was eager to talk about the case, saying the ownership change was nothing but a shell game that provided the company an excuse to pressure residents to sign away their right to sue.

Residents in NHC's Florida nursing homes were sent letters that said they needed to sign new admission contracts "due to an ownership change."

In reality, Wilkes said, NHC completely financed the sale of the facilities and the company still holds the mortgages. Moreover, Wilkes said, the company went through with the sales and name changes without approval from the state, as required by law. The state still is reviewing the ownership change.

The contracts that residents were asked to sign specify that all disputes over substandard care must be handled through mediation or binding arbitration.

"They exploited all these residents by inducing them to give up their statutory rights," Wilkes said.

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