South Carolina Nursing Home Blog : South Carolina Nursing Home Lawyer & Attorney : Poliakoff & Associates Law Firm : Elderly Care, Senior Care

Levin and Associates had an interesting article in The Senior Care Investor discussing the bankruptcy and sale of IHS to THI and eventually Fundamental long Term Care Holdings LLc, owned and operated by Murray Forman and Leonard Grunstein.  Below are excerpts from the article:

Very few people remember what happened a little more than seven years ago, but in early
2003, an unknown entity (at least to the senior care world) stepped in at the last minute and snatched the remaining assets of a bankrupt Integrated Health Services (IHS) from the presumed
buyer, literally on the steps of the court house. Trans Healthcare Inc. (THI) thought it had the deal wrapped up for $97.5 million, but an entity called Abe Briarwood, backed by Cammeby’s
International, swooped in for $114 million in cash and was willing to assume the post-petition Medicaid and Medicare billing liabilities, something that made the court very happy.

We are certain that the founder of Cammeby’s, one Rubin Schron, had no idea where this initial acquisition would take him in the rough and tumble skilled nursing industry....  And, most certainly, he never thought he would now be in court pitted against a man he trusted with everything. After Cammeby’s made the winning bid at the 11th hour, THI at first tried to fight it, but then the two sides settled their differences when Cammeby’s hired THI to run the newly acquired IHS assets.  Then, in May 2004, we caught wind of an acquisition offer that was brewing for the former Mariner Health Care from none other than Cammeby’s, but under the name National Senior Care, and separate from its Integrated Health.  The purchase price for Mariner was just under $1.0 billion, and when you capitalized the lease payments, the total transaction value increased to about $1.25 billion. This resulted in a price per bed of $38,800 and a 9.2x multiple of annualized EBITDAR.  The
deal closed at the end of 2004, but perhaps the most longlasting impact on the target entity, which some time later had a name change to Sava SeniorCare, was the role that Mr. Schron’s attorney, Leonard Grunstein, came to play.
There were really two sets of problems that began to emerge. One was what transpired with the original acquisition of the Integrated Health assets and the role of Trans Healthcare, which eventually came to be known as Fundamental Long Term Care when Fundamental purchased the assets of THI, the sale of which some claim was under duress and fraudulent.  There is a separatelawsuit filed on July 1, 2010, against Leonard Grunstein, his brother Harry, Murray
Forman alleging, among other things, fraudulent conveyance, unjust enrichment, legal malpractice, fraud, breach of fiduciary duty, breach of lease agreements, tortious interference and aiding and abetting fraud. The lawsuit was filed by Allen Bodner and DMV Funding LLC and is seeking no less than $150 million in damages and no less than $300 million in punitive damages.
According to the complaint, Bodner owned 100% of DMV which purchased Cammeby’s loan to the Abe Briarwood/IHS deal, and there are 30 more pages as to what transpired among the various parties. The long and short of the complaint was that the plaintiffs believe they got screwed, to
put it bluntly, by people who were partnering with them and advising them.
The more interesting lawsuit, but sort of related, was filed on June 22, 2010, with Rubin Schron and his various holdings as the plaintiffs against a similar cast of characters including Leonard Grunstein, Murray Forman, the law firm Troutman Sanders, and the various Sava and Mariner
affiliates. To fully appreciate how unusual this lawsuit is, one must always keep in mind that Leonard Grunstein was Rubin Schron’s attorney. ....Mr. Grunstein did much of the legal work involved in the Mariner acquisition and subsequent Opco and Propco set-ups that evolved over time.
The relationship between Mr. Schron and Mr. Grunstein dates back to the 1980s, and according to the complaint, he apparently has referred to himself as Mr. Schron’s “general counsel.” According to the complaint, Mr Schron relied on legal advice from his attorney who began to organize things to the benefit of the attorney, and on financial advisory services from Mr. Forman, who was allegedly in cahoots with Mr. Grunstein. Mr. Schron never wanted to have anything to do with operating the nursing facilities; he just wanted a steady, but increasing, rental stream from the
real estate. In the case of the Mariner acquisition, according to the complaint, Mr. Schron put all the money up and ended up owning the real estate in Propco, while Grunstein/Forman retained ownership of the operating entity created to run the facilities, and all the excess cash flow, plus they received a small share of Propco—all without investing any of their own money.  In addition, according to the complaint filed, Mr. Schron was charged $14 million for financial advice in the Mariner deal by MetCap Advisory Services, which was 25% owned by Mr. Grunstein and 25% owned by Mr. Forman.   Other allegations in the nearly 100-page complaint include loans made to Opco that were never paid back to Mr. Schron, distributions taken by the Grunstein/Forman group
totaling more than $70 million, Grunstein billing Schron for non-existent legal work, and for allegedly not giving Schron the final closing documents for the original Mariner acquisition.
One also needs to remember that all of this recent legal action is on top of several issues earlier this year, when Mr. Grunstein and Mr. Forman sued Mr. Schron for more than $100 million for allegedly misappropriating significant sums of money from various partnerships in which they all had a stake.

And don’t forget that all three of them were defendants together when the Department of Justice charged them all with accepting kickbacks from Omnicare in return for pharmacy contracts. Without admitting guilt, they settled and agreed to pay the federal government $7.8 million
and $6.1 million to certain states.

Over the past two years the owners of Sava (Mariner) have been trying to sell off various pieces of the company (or the whole thing), notably the portfolio of mostly leased assets in California, but with little success. The obvious problems were pricing and financing.  Currently, Sava is the seventh largest skilled nursing company in the country with 184 facilities and 21,279 skilled
beds, and it is larger than half of the publicly traded skilled nursing companies.   Still, we believe that selling the assets is a real outcome, especially for Mr. Schron who we assume wants to be done with his relationship with his former attorney and financial advisor, and may even want to be out of the skilled nursing real estate business altogether. The other side, however, may
still not want to give up their cash cow, but the courts and the credit markets may make the decision for them.

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According to the AmLaw Daily, another disgruntled investor has filed a civil suit against Troutman Sanders, real estate partner Leonard Grunstein, and corporate partner Lawrence Levinson.   Also named as defendants are Murray Forman, an investment banker and business partner of Grunstein's, Harry Grunstein, the lawyer's brother, along with several entities created and controlled by the defendants that operate and control nursing home and health care investments.
The action comes after the three were named as defendants in a civil suit filed in state court in Manhattan by New York real estate investor Rubin Schron.

In this latest lawsuit, filed in New York State Supreme Court, plaintiff Allen Bodner accuses the defendants of legal malpractice and breach of fiduciary duty as part of a scheme to divest Bodner and a company he controlled of an interest in a lucrative health care and real estate venture.

Bodner's 54-page complaint claims Grunstein, the former head of Troutman's real estate capitalization and investment practice groups, "accounted for a substantial portion of the revenues of Troutman's New York office, much of which was attributable to the legal representation of Rubin Schron and companies associated with him."   Grunstein served as his attorney and was the "mastermind" and "legal architect" behind a series of transactions named in the complaint. Bodner further claims that Grunstein concealed his "conflicting personal financial interests" in several of those transactions, which allowed Grunstein and the other defendants to misappropriate "the real estate and health care assets" that were under the control of Bodner and his holding company.

According to a letter filed by Coles in the Schron suit, several firms have lined up advisory roles as the litigation expands. Arent Fox, Latham & Watkins, Atlanta's Arnall Golden Gregory, and New York's Brodegaard & Simone are representing several companies named as defendants in the dueling civil suits. Grunstein's brother, Harry, who now lives in Israel, has retained New York's Davidoff Malito & Hutcher, while Troutman and Levinson have turned to New York's Friedman Kaplan Seiler & Adelman.
 

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The Ohio Supreme Court has enacted a monumental change that impacts doctors and patients, shifting malpractice judgments from doctors’ insurers to the taxpayers.  More info at WCPO.  The decision limits recovery, ignores the right to a jury trial, and promotes injustice and inadequate compensation. The ruling means your private doctor can make a serious medical mistake - take off the wrong leg, operate on the wrong side of your brain - and you can never sue him in a jury trial.   No other state has ruled the same way. 

The Theobald ruling was named after Keith Theobald. Theobald was a healthy, fit husband and father of two young children, when an elderly driver clipped his pickup truck as he was driving to work 11 years ago. The impact flipped the truck across all lanes of the highway into a field, crashing in a stand of trees. Rescue workers found Theobald hanging upside down in a tree. He was paralyzed from his chest down.

Theobald and his wife, Jacqueline, took the news in stride. “I remember pre-operatively we said, ‘You can still do basketball with Jake (his then 5-year-old son) and watch TV and share things with the kids. We’ll get a van and we’ll adapt it.’” Keith Theobald agreed. He felt he could still work and live a full life. “I could do about anything. The wheelchair doesn’t hold you back.”

Theobald could see and use his arms after the accident. He was alert and ready the next day when doctors at University Hospital suggested surgery might improve his back injury.

Instead, he woke up in a different world. Not only was he still paralyzed, but now he also was blind and had lost the use of his arms.  Medical records prove a series of mistakes during surgery led to oxygen deprivation and injuries worse than the accident had caused.

Trapped in darkness and unable to move on his own, Theobald will need round-the-clock care the rest of his life. He sued the doctors who did the surgery, only to get this devastating shock: The doctors weren't liable. They had immunity from all malpractice claims because they had students in the room with them.

In the Theobald case, the Ohio Supreme Court ruled that doctors who sign with a state university like the University of Cincinnati to let medical students learn from them, even if that just mean one student walking in the room for a second, now are considered state employees. As such, they get immunity if anything goes wrong on the job, even in their private practices.

Jacqueline Theobald says, “The state didn’t come in and take care of Keith. The university didn’t come take care of him. This doctor took care of him. We’re suing the doctor.”

But the Ohio Supreme Court said they couldn’t sue the doctor because some students were allegedly in the operating room, the doctors were teaching per their State of Ohio U.C contracts. Therefore those doctors were not liable for any mistakes. Instead, the Supreme Court ruled that the Theobalds belonged in the Court of Claims, a separate court set up in 1980 to handle suits against the state, usually against public state employees like highway workers, never before used to protect private doctors in their private practices.

The Court of Claims has no juries. Single judges, hired by the state, issue rulings for or against the state. The top award is $250,000, no matter the severity of the damages. Most importantly, the taxpayers foot the bill, not doctors’ malpractice insurers who must pay when suits are filed in county courts of common pleas.

Of course, Keith Theobald never knew to ask if a student would be watching his operation, and if so what the impact might be. But if you think doctors from now on will have to tell patients and get consent to have students in the room, you’d be wrong. The Supreme Court ruled the law doesn’t demand disclosure. No one has to inform patients they could lose their rights to sue the doctors without ever knowing it.

Keith Theobald hasn’t lost hope for a medical miracle. But in the end, he never did get a chance at even the Court of Claims the Ohio Supreme Court said he should access. That’s because the same state attorneys for U.C. who argued that’s the court where the Theobalds belonged, now argued it was too late. The statute of limitations had passed. No recovery, not even $250,000, for Keith Theobald’s lifetime injuries.

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Fewer medical malpractice payments were made on behalf of doctors in 2009 than any year on record, according to the National Practitioner Data Bank.

This finding contradicts claims that medical malpractice litigation is to blame for rising healthcare costs and that changing the liability system to the detriment of patients will not curb costs.

The value of malpractice payments was also the lowest since 1999. Adjusted for inflation, payments were at their lowest since 1992, a Public Citizen analysis of the NPDB shows.

This, once again, proves that there is no reason for more "tort reform" to protect doctors or other healthcare practioners from neglect, abuse, and negligence that causes injury and death.

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Daniel Rusu wrote the following blog entry.  Please check out his website.

Many times, when a senior goes to the hospital for an overnight surgical procedure, or some other procedure that requires them to stay for an extended period of time, they are left alone for some time. If a family member drove them, they might leave the patient alone to go back to work, or to sleep comfortably at home instead of at the hospital. If a hired caregiver drove them, the caregiver often times needs to leave to take care of other assignments. This is a dangerous mistake that can potentially bring a lot of harm to the senior. We recommend a family member or hired caregiver stay with the senior at all times for three reasons.

The first reason someone must stay with them at all time is to be an advocate for them. An advocate is someone who represents the best interest of their client. In this case, the caregiver or family member would be representing the best interest of the senior patient. Often times during surgery, the patient is sedated and is not able to communicate their wishes. Because of this, it is important to have someone there who can communicate with the doctors and other staff so everything goes to plan.

The second reason is to observe what takes place. Malpractice is a possibility for any patient. In fact, malpractice cases are on the rise and growing each year. For that reason, it is important to have someone there to observe the surgical procedure and the general care of the patient. If malpractice occurs, the observer becomes a valuable witness.

The third and final reason is to be there for them when they need help. Often times nurses and other staff at a hospital are assigned too great a number of patients to properly take care of each one’s needs. A patient can wait for hours at a time before being assisted to the restroom or brought a comforting item such as a drink or the newspaper.

There are many reasons why a senior should not be left alone at the hospital. Other reasons include moral support. Having someone there beside them when they wake up is always a comfort. To read more tips on caring for the elderly, be sure to visit my site Adult Family Home.
 

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David Leonhardt had a recent article in the NY Times discussing the need to lower medical malpractice as away to lower medical malpractice litigations. Seems like common sense to me.

The direct costs of malpractice lawsuits — jury awards, settlements and the like — are such a minuscule part of health spending that they barely merit discussion, economists say. But that doesn’t mean the malpractice system is working.

The fear of lawsuits among doctors does seem to lead to a wasteful treatment. Amitabh Chandra — a Harvard economist whose research is cited by both the American Medical Association and the AAJ — says about 3 percent of overall medical spending, is a reasonable upper-end estimate.  At the same time, though, the current system appears to treat actual malpractice too lightly. Trials may get a lot of attention, but they are the exception. Far more common are errors that never lead to any action.

After reviewing thousands of patient records, medical researchers have estimated that only 2 to 3 percent of cases of medical negligence lead to a malpractice claim.  Medical errors happen more frequently here than in other rich countries, as the Robert Wood Johnson Foundation recently found.  Only a tiny share of victims receive compensation.  Among those who do, the awards vary from the lavish to the minimal. 

All told, jury awards, settlements and administrative costs — which, by definition, are similar to the combined cost of insurance — add up to less than $10 billion a year. This equals less than one-half of a percentage point of medical spending. 

Research — into various surgical operations, for instance — has found less of evidence of defensive medicine.   The problem is that just about every incentive in our medical system is to do more. Most patients have no idea how much their care costs. Doctors are generally paid more when they do more. Similarly, you would want to see more serious efforts to reduce medical error and tougher discipline for doctors who made repeated errors — in exchange for a less confrontational, less costly process for those doctors who, like all of us, sometimes make mistakes.

The goal, remember, isn’t just to reduce malpractice lawsuits. It’s also to reduce malpractice.

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Alex Nussbaum of Bloomberg had a great article about health care spending and the lack of need for tort reform. Some highlights from the article are below:

Annual jury awards and legal settlements involving doctors amounts to “a drop in the bucket” in a country that spends $2.3 trillion annually on health care, said Amitabh Chandra, a Harvard University economist. Chandra estimated the cost at $12 per person in the U.S., or about $3.6 billion, in a 2005 study. Insurer WellPoint Inc. said last month that liability wasn’t driving premiums.

“Medical malpractice dollars are a red herring,” Chandra said in a telephone interview. “No serious economist thinks that saving money in med mal is the way to improve productivity in the system. There’s so many other sources of inefficiency.”

About 10 percent of the cost of medical services is linked to malpractice lawsuits and more intensive diagnostic testing due to defensive medicine, according to a January 2006 report prepared by PricewaterhouseCoopers LLP for the insurers’ group America’s Health Insurance Plans.  The figures were taken from a March 2003 study by the U.S. Department of Health and Human Services that estimated the direct cost of medical malpractice was 2 percent of the nation’s health-care spending and said "defensive" medical practices accounted for 5 percent to 9 percent of the overall expense.

A 2004 report by the Congressional Budget Office also pegged medical malpractice costs at 2 percent of U.S. health spending and “even significant reductions” would do little to reduce the growth of health-care expenses.

The proportion of medical malpractice verdicts among the top jury awards in the U.S. has declined during the past 20 years, according to data compiled by Bloomberg. Of the top 25 awards so far this year, only one was a malpractice case. At least 30 states cap damages in medical suits, primarily for “pain and suffering” awards.

The development of new drugs and medical procedures, and their growth in price, has been a bigger factor in costs, said Chandra, citing his research and that of other economists. Studies haven’t found a link between increasing procedures, such as Caesarian-section births, and areas with rising malpractice damages, he said.

Medical malpractice is “not a major driver” of spending trends in recent years, Indianapolis-based WellPoint, the largest U.S. insurer by enrollment, said in May 27 report. The report cited advances in medical technology, increasing regulation and rising obesity as more significant reasons for rising costs.

The U.S. Institute of Medicine found a decade ago that medical errors kill 98,000 Americans a year, said Les Weisbrod, president of the lawyers’ association. “By taking away the rights of people to hold wrongdoers accountable, the quality of health care will suffer tremendously,” he said.

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With the recent discussion on how to best reform America's health care system, insurance companies and nursing home lobbyists, are once again blaming the lawyers.   Numerous studies have debunked the need for tort "reform".   For example, Health Affairs published a study assessing the cost of malpractice premiums, litigation, and payments, in addition to potential expenditures from so-called "defensive medicine".

U.S. citizens spent $5,267 per capita for health care in 2002—53 percent more than any other country. The cost of defending U.S. malpractice claims is estimated at $6.5 billion in 2001, only 0.46 percent of total health spending. The two most important reasons for higher U.S. spending appear to be higher incomes and higher medical care prices.

•Malpractice Claims Filed in the US.   The authors compared domestic suits with those in Canada, Australia and Britain (all countries with a similar, British-based legal system), and it turns out Americans sue 50% more than Britain or Australia, and 350% more than Canada. The most likely explanation is our private system makes more mistakes.  While approximately 98,000 people die each year from negligent treatment, a mere 2 percent sue their physicians. Between 1990 and 2002, “5.2 percent of doctors were responsible for 55 percent” of all malpractice pay outs.  Of our high rate of suits, 2/3rds are dropped, dismissed, or found for the defendant. Only 1/3rd of plaintiffs make anything. In Britain, however, 60% of suits are settled, while only 36% are dropped or found for the defense. So while we have more malpractice, we have much fewer victims being compensated.

• Claim Payments Lower in the US     Our average payout is much less than Canada or the UK: we give $265,103 vs. their $309,417 and $411,171 respectively, putting us 14% below Canada and 26% behind the UK.   Media attention and conservative rhetoric focus on the large rewards, but they are rare .

• Cost of Malpractice     Legal costs are $27,000 per claim, settlements and judgments are $4.4 billion, and insurance is $700 million. The total cost of malpractice is thus 6.5 billion --.46% of health care costs, or less than one half of one percent. They're just not a significant factor in rising health prices, and those who say different are lying.

• Defensive Medicine    The Congressional Budget Office did a study and concluded that the savings from less defensive medicine post-tort reform, if there were any, would be very small.

• Claim Payments Have Not Been Growing More Rapidly in the US    Payments stateside have been growing at a steady 5% over inflation. In other countries, however, they've been growing at 10-28%. If malpractice insurance is growing rapidly in America, it is the fault of our insurance companies and system, not consumers.   British and Canadian physicians are protected from malpractice litigation risks by a single national organization with government subsidized premiums and no incentive to jack up prices on doctors. Australia has a private system more like ours, but the government subsidizes malpractice premiums and reinsures high-cost claims.

The way to protect doctors from malpractice costs is to remove the profit incentive for insurers to hike premiums on them. Canada, Britain and Australia have all done so by bringing the government in and promising protection to doctors. Under their solutions, consumers and physicians were protected, insurance companies were the ones who ended up hurt.

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Consumer Affairs had a revealing article about the dramatic decline of medical malpractice payments to victims of malpractice.  This proves once again that there is no need for tort reform or taking away consumers rights to a jury trial and adequate compensation.

The article mentions that medical malpractice payments were at or near record lows in 2008.  A study released by Public Citizen suggests the decline indicates that a lower percentage of injured patients received compensation, not that health safety has improved.

Medical malpractice is so common, and litigation over it so rare, that between three and seven Americans die from medical errors for every one who receives a payment for any malpractice claim, according to Public Citizen’s analysis of medical malpractice payment data and the best available patient safety estimates.

For the third straight year, 2008 saw the lowest number of medical malpractice payments since the federal government's National Practitioner Data Bank began tracking such data in 1990. The 11,037 payments in 2008 were 30.7 percent lower than the average number of payments recorded by the NPDB in all previous years.

Ratios of payments per capita and per physician have fallen even lower compared with historical norms. There were 13.5 payments per million physicians in 2006 (the most recent year for which the number of physicians is available), which is 29.2 percent lower than the average in previous years

The value of payments in 2008 (as distinct from the number of payments) was the lowest or second lowest on record, depending on the method used to adjust for inflation.

The cost of the medical malpractice liability system -- if measured broadly by adding all malpractice insurance premiums -- fell to less than 0.6 percent of the $2.1 trillion in total national health care costs in 2006.

The cost of actual malpractice payments fell to 0.18 percent -- one-fifth of 1 percent -- of all health care costs in 2006. Annual malpractice payments have subsequently fallen from $3.9 billion in 2006 to $3.6 billion in 2008.

"Any way you measure it, medical liability accounts for less than 1 percent of the country's health care costs, and the vast majority of victims receive no compensation whatsoever," said David Arkush, director of Public Citizen's Congress Watch division. "These are people who died or were left with serious permanent injuries -- out of work, with enormous medical costs for the rest of their lives -- and they and their families are getting nothing from the doctors and hospitals responsible."

Despite the hysteria surrounding debates over medical malpractice litigation, experts have repeatedly concluded that several times as many patients suffer avoidable injuries as those who sue.

The best known such finding was included in the Institute of Medicine's (IOM) 1999 study, "To Err Is Human," which concluded that between 44,000 and 98,000 Americans die every year because of avoidable medical errors.    Fewer than 15,000 people (including those with non-fatal outcomes) received compensation for medical malpractice that year, and in 2008, the number receiving compensation fell to just over 11,000.

The Joint Commission learned about 116 occasions in which surgeons operated on the wrong part of a patient’s body in 2008 and 71 times in which foreign objects were left inside patients’ bodies. Health experts call these "never events," meaning that they simply should not happen at all.

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