Jay Reinan v. Mariner
Below is a great old article about attorney Jay Reinan from Colorado who fought on behalf of John Gordy against the infamous Mariner chain. Reinan had been a nursing home defense lawyer until he saw the light. Here is the full article.
John Gordy's story is tragic and typical of many residents in nursing homes. He was neglected and abused by those he entrusted with his safety and care. In 2002 he was admitted to the Red Rocks facility. Right away, things started going wrong. Though Red Rocks' advertising promised excellence in wound care, Gordy felt like he had to train every new aide who walked into his room. And because of constant turnover, there were many. An ulcer on his foot was ignored to the point of needing surgery. Twice. He almost died after being given the wrong antibiotic. He was forced to lie helpless, despite his protests, as a hot towel scalded the flesh of his chest, leaving him with second-degree burns -- an attempt to warm him when the heat at the facility was broken. But nothing was as bad as the nighttime. Gordy's call light was his only defense in an emergency, but it took aides hours to answer. One night he was left near the side of his bed, with the bed rail down. As he felt himself sliding toward the edge, he yelled out for help, knowing it would only be a matter of time before he fell. He screamed all night, but no one came. At the 6 a.m. shift change, someone finally checked on him; just as the aide entered the room, Gordy crashed off the bed and landed on his face, smashing his teeth.
Jerome "Jay" Reinan is a Denver lawyer who spends his days fighting for abused and neglected clients such as John Gordy, wasn't always on the side of right. He used to work for what he calls "the dark side," defending corporate nursing homes against such claims. "I was probably one of the primary nursing-home defense lawyers in the state before I switched over," he says matter-of-factly.
Despite courtroom successes, there were early signs that defense work didn't suit Reinan. He didn't like not being able to choose cases, and he hated that clients were billed on an hourly basis. "You have to keep track of every minute," he says. "If I was on a phone call with a client, I would have to have a piece of paper or a computer program where I kept track of every second I was talking to that person, and it drove me nuts."
It wasn't until 1996 that Reinan took the case that would end his career in nursing-home defense. It started with the families of four residents of Cedars Health Care Center in Lakewood but would grow to include everyone who had lived there between 1993 and 1998, nearly 200 people. During the course of the litigation, the nursing home's owner went through a series of mergers to create Mariner Post-Acute Network. The sheer size of the case was overwhelming, and it absorbed almost all of Reinan's efforts as well as that of one of his partners and two associates. But in the midst of the massive undertaking, Mariner stopped paying its legal bills -- $250,000 worth. (The company would file for bankruptcy in 2000 and emerge as Mariner Health Care Inc. in 2002.) "The mentality you get into on the defense side is, if you have one big client, you're going to kiss that client's butt," Reinan says. "Even if they're not paying the bills on time or they're cutting your bills back, you just have to take it."
But Reinan didn't want to take it anymore. He knew if he was ever going to switch sides and represent people injured by nursing homes, the time was right. Reinan fired Mariner and demanded payment for what he was owed. His partners protested, but he told them it was his client, his decision. Mariner eventually paid, but the partners split, and Reinan started his own practice in October 1999.
Jay Reinan accepted a case against Red Rocks Healthcare Center for allowing resident Chris Tisserat to starve and dehydrate. But when he filed suit, he got an interesting call from Mariner Health Care Inc., Red Rocks' owner and the company he once represented. "I get a call from their national counsel saying Mariner's almost going bankrupt. They're running out of money and can't pay very much for this claim. 'You'd better take what I'm offering today because it may not be here tomorrow.'"
So he did. Reinan knew if he held out for more and the company filed for bankruptcy protection, his client might end up with nothing. His mistake in taking the bait didn't occur to him until months later.
In summer 2005, John Gordy's case against Red Rocks was referred to Reinan. It was exactly the type of case that Reinan prefers to take. Not only could he show what horrors Gordy had suffered, but records from the Colorado Department of Public Health and Environment showed a pattern of substandard care. Between 2002 and 2005, Red Rocks had been cited with seven deficiencies for failure to prevent or treat pressure sores, five deficiencies for failure to adequately maintain clinical records on residents, and four for failure to prevent falls. Across the state, nearly all of Mariner's thirty nursing homes were cited with serious deficiencies. Eleven were cited for pressure sores at a time when the company was promising superior wound prevention. In fact, the company had such a bad record that the U.S. Department of Health and Human Services had previously sued it for fraud because Mariner facilities hadn't provided the minimum standard of care required by Medicare and Medicaid.
In early 2002, Mariner paid $26 million in fines and entered a Corporate Integrity Agreement with the Office of the Inspector General. A 47-page document specifies every care and accountability standard that Mariner facilities must meet if the company wants to keep its Medicare and Medicaid checks coming.
As Reinan prepared to file Gordy's case, he thought about his last settlement with Mariner. He assumed the company had managed to avoid bankruptcy, as he hadn't heard any more talk of an impending filing. He ran a simple Internet search in late 2005 to check the company's status and found that Mariner hadn't been paying creditors or even its own attorneys: Gulf South Medical Supply was suing Mariner for nearly $5 million it was owed for supplies, and Brunini, Grantham, Grower and Hewes PLLC, a defense firm in Mississippi that represented Mariner, was suing the company for nearly $1 million owed in legal bills. Reinan was glad he had fired Mariner as a client when they owed him only $250,000.
He also found that a group of real-estate investors had formed a company called National Senior Care Inc. in order to purchase the publicly traded Mariner Health Care Inc. The $1 billion deal that went through in December 2004 was a leveraged buyout, as NSC sold off much of Mariner's real-estate assets -- 180 facilities -- to finance the sale. Interestingly, the owners of the companies who bought the assets have ties to NSC, including Leonard Grunstein whose brother is NSC president Harry Grunstein. That sale left the now-privately owned Mariner -- which continued to operate under its own name -- a shell of its former self, worth only $5 million to $12 million, compared to its earlier billion-dollar valuation. Separating the real-estate holdings from the actual health-care operation had an upside for the company's new owners: It reduced their exposure to liability lawsuits, because such cases can only be filed against the company holding the license to provide care, and Mariner's post-sale bottom line looked too emaciated to afford big payouts.
When Reinan took a closer look at the ownership of Red Rocks Healthcare Center, he found a tangled web of companies. But as he traced back the licensure documents, he noticed that the same names kept reappearing: real-estate moguls Harry and Leonard Grunstein and Rubin and Avi Schron. "The land is owned by a company owned by these four guys, and the building is owned by another company owned by these four guys, and the staff is managed by a company that is owned by these four guys. Then there's layers of companies that lease the staff and the building to other companies owned by these four guys, and pretty soon you have something like literally ten or twelve companies that all have their little fingers in running Red Rocks Healthcare Center," he says.
"Why do they do that? It allows them to own all the assets that used to be Mariner, but at the same time avoid liability to the people they hurt, maim and kill at their facilities."
Reinan amended the complaint in the Gordy suit, adding all the specific companies involved and their individual owners. He also included that long list of defendants in a new lawsuit on behalf of Peggy Mussehl, whom he claimed was neglected at another Mariner facility, Fort Collins Health Care Center. Reinan got a call from Mariner's local attorney, a former colleague, assuring him that adding the additional companies and individuals as defendants would only complicate and drag out the case. It wasn't necessary, he explained, because Mariner had liability insurance.
Reinan agreed to dismiss the extra parties from the complaint, with a warning: "If I hear a whiff of evidence from anyone that Mariner doesn't have money, Mariner doesn't have insurance, I'm going to refile this thing pronto."
A month later, in March, Reinan got a letter in the mail from Martin Stein in New York, the same man who had urged him to settle the Tisserat suit: There are currently approximately 300 open claims against the Mariner entities, alleging injury and/or loss. These include many high exposure cases which are scheduled for trial over the next few months. With respect to almost all of these cases, including the above-captioned matter, there is no insurance available for the first $1 million of loss (including fees and expenses). This means that any judgment in such cases up to $1 million (less fees and expenses incurred) will have to be satisfied from the Mariner assets, if any, available at the time of judgment.
Under the circumstances, I hereby offer $35,000 to settle the [John Gordy] case on behalf of Mariner and its related entities.Š Finally, please be advised that on February 8 and 9, 2005, Mariner won three defense verdicts in professional liability cases, two in Florida and one in Texas.
Two days later, Reinan received the same form letter regarding the Mussehl case. As part of Colorado's tort reform in 1986, nursing homes and other medical facilities were required to obtain insurance as a trade-off for caps being set on awards. Colorado law now requires each nursing home to have at least $3 million in insurance, so Reinan requested the licensure information from the state health department. In the affidavits, signed in 2005, company officials had sworn that each facility had the necessary insurance.
Stein maintains that he has "never said that Mariner does not have insurance" and has "never sent a letter to any attorney on behalf of Mariner saying that Mariner doesn't have any insurance." When asked to clarify the content of the letter, he refused and hung up the phone. Attempts to contact Mariner's in-house counsel and Leonard Grunstein, who is named individually in Reinan's complaints, were unsuccessful.
Reinan suspects that the new owners are hoping trial lawyers will shy away from claims against Mariner once they find that there's no money and no insurance. Most attorneys would rather take cases against financially sound companies with whom they can settle quickly. In April, Reinan again amended his complaints against Mariner to add the individual owners and associated companies, then filed a new suit in federal court.
Reinan also sent letters to the Colorado Department of Public Health and Environment, the Colorado Department of Regulatory Agencies Division of Insurance and the U.S. Office of the Inspector General detailing what he knew about Mariner's insurance situation and including copies of his letters from Stein and the affidavits submitted to the state health department. "Obviously, one of two things has happened," he wrote. "Either Mariner is employing fraudulent insurance-claims tactics by pretending it has no money in order [to] save on claims payments, or Mariner truly has no money and no insurance, and the affidavits issued by [company officials] are phony and fraudulent. In either case, the State of Colorado must investigate this matter."
