Nancy Hunt arrived at an emergency room from a Genesis HealthCare
nursing home in Pennsylvania in such dreadful shape, including maggots
infesting her gangrened foot, that the hospital called an elder abuse
hotline and then the police, her son alleged in a lawsuit.
Hunt died five days later. Her death certificate said the foot injury
was a "significant" factor. Genesis denied wrongdoing but agreed to pay
$3.5 million in a settlement Hunt's son signed in August 2024.
Yet Genesis hasn't paid most of that debt, court records show. It may never have to.
Once the nation's largest nursing home chain, Genesis says it was
spending $8 million a month defending and settling lawsuits over
resident injuries and deaths in recent years. But the company is now
poised to wipe the liability slate clean by seeking refuge in the most
protective corner of the legal system for the nursing home industry:
bankruptcy court.
The Genesis case, one of 11 large senior care bankruptcies this year,
illustrates how health care companies can dodge public and financial
accountability for alleged negligence through delays, confidentiality
clauses, and bankruptcy maneuvers, a KFF Health News investigation
found.
When it filed for bankruptcy in Dallas in July, Genesis estimated its
total liability for nearly a thousand settled and pending lawsuits at
$259 million. A KFF Health News review of the terms of 155 settlement
agreements and corporate financial statements shows Genesis officials
knew insolvency was possible yet included provisions in its settlement
agreements allowing it to defer payment, often for a year or more.
As a result, Genesis paid nothing in 85 cases and only a portion in
the other 70, according to civil court records and bankruptcy claims
made available through people with access to them. It still owes $41
million of the $58 million it had agreed to pay in those cases, the
records show.
"It just feels like they killed my mom and got away with it," said
Vanessa Betancourt, whose mother, Nellie Betancourt, a retired nurse,
fractured her hip at a Genesis home in Albuquerque, New Mexico -- an
injury the medical examiner's report said led to her death. Genesis
agreed to a $650,000 settlement with Betancourt's family in April under
the condition it would not need to pay the first of seven installments
for another year, according to the settlement document.
Genesis denied wrongdoing in all lawsuits and settlements. In a
written statement, the company did not answer questions about individual
personal injury cases. The statement said Genesis remained "focused on
delivering high-quality, compassionate care to our patients and
residents without disruption" during bankruptcy.
One lawsuit Genesis settled for nearly $1 million alleged nursing
home managers ignored repeated warnings about a male resident's behavior
before he sexually assaulted a female Alzheimer's patient, according to
court records. In a case the company resolved for $500,000, a Genesis
nursing home was accused of delaying the hospitalization of a resident
who had vomited brown mucus. He died of a bowel obstruction. Genesis has
paid nothing for either settlement, according to bankruptcy claims.
Creditors, including families of the deceased, are expected to
salvage a fraction of what they were promised, if anything. On Dec. 10,
the company's owners were scheduled to seek approval by the U.S.
Bankruptcy Court for the Northern District of Texas to sell its nursing
homes and other assets to its largest investor, a private equity firm.
In court papers, lawyers for residents and other creditors say the
complex plan will prevent them from pursuing Genesis' new ownership and
other companies they blame for the company's collapse.
John Anthony, a bankruptcy attorney representing 340 personal injury
claims against Genesis, said, "They never had any intention to honor
these deals."
LOW RATINGS AND FINES
During years of financial turmoil, Genesis has frequently struggled
to provide top-notch care, federal records show. Using its five-star
system, the Centers for Medicare & Medicaid Services rated 58% of
homes affiliated with Genesis as below average or much below average.
CMS has fined Genesis homes $10 million for violating federal health
standards over the past three years.
In 2022, Connecticut health regulators shuttered a Genesis home after
two deaths and multiple violations. The company closed another
Connecticut nursing home this year after residents twice were evacuated
over safety concerns.
In its Chapter 11 filing, Genesis said it cared for about 15,000
residents in 165 nursing homes and 10 assisted living facilities in 18
states. They are centered in Pennsylvania, West Virginia, New Mexico,
New Hampshire, New Jersey, Maine, Alabama, Maryland, and North Carolina,
according to the bankruptcy filing.
and the IRS. Under bankruptcy rules, those debts, backed by Genesis
collateral, take precedence over the $1.6 billion in unsecured debt
Genesis said it owes. Unsecured creditors include a pension fund;
contractors that provided health services and equipment; Pennsylvania,
New Mexico, and West Virginia for unpaid provider taxes; and former
residents and their families who sued.
DANGERS IN MEMORY CARE
Sandia Ridge Center, a Genesis home in Albuquerque, was repeatedly
faulted by health regulators for not preventing sexual misbehavior in
its memory care unit. In November 2021, CMS cited the home for lacking
enough nurses to prevent sexual abuse among residents. An inspection
report the following August identified more inappropriate sexual
contact. Police were called to investigate sexual assault allegations in
February and March of 2023, police reports show; neither resulted in
criminal charges.
Then in April 2023, a 61-year-old male resident with alcohol-related
dementia sexually assaulted a female resident with Alzheimer's in the
dining room, according to a police report and an inspection report. When
the resident screamed for him to stop and that he was hurting her, he
responded "shut up bitch I know you like this," according to a lawsuit
brought on behalf of the woman, identified in court papers as R.S.
Sandia Ridge management had been aware of the male resident's
behavioral issues for months, according to employee depositions in the
case. Police had investigated a prior sexual assault allegation against
him the previous year without bringing charges. In one deposition, a
former activities assistant testified he hit her and twice pushed her
into a bathroom while announcing, "I want to have sex with you." When
she reported him to a senior Genesis manager, she said in the
deposition, the manager put his finger over his lips and said, "Shhh."
The activities worker testified that R.S. used to happily sing along
with Elvis Presley songs. After the assault, the worker said, R.S.
"don't sing anymore."
Inspectors cited the home for failing to protect R.S. The same report
said the home didn't provide a therapist for another female resident
who was being sexually harassed. Medicare fined Sandia Ridge Center
$91,247. Genesis denied liability but settled R.S.' lawsuit for $925,000
in May, according to the bankruptcy claim.
"We just felt we have to hold them accountable," R.S.' daughter said
in an interview, speaking on the condition that she and her mother not
be identified, because of the nature of the assault. "Maybe I'm wrong,
maybe I'm naive, but the only way to do that is to sue someone, right?"
Genesis has not paid any of the settlement, according to the family's claim filing.
GROWTH AND DEBT
Genesis' downfall can be traced to 2007, when affiliates of two
private equity firms acquired the company in a $1.5 billion leveraged
buyout, taking on substantial debt, according to its bankruptcy filing.
Private equity also has been involved in other health care bankruptcies,
including those of the HCR ManorCare nursing home chain, the prison
health care contractor Corizon Health, and two for-profit hospital
systems, Steward Health Care and Prospect Medical Holdings.
In 2011, Genesis raised $2.4 billion by transferring substantially
all its nursing home buildings and other real estate to Welltower, a
publicly traded real estate investment trust, according to Genesis'
bankruptcy filing. Genesis then rented the buildings back from
Welltower, which made leasing costs a significant expense.
Genesis went on a nationwide buying spree. At its peak in 2016, it
had grown to more than 500 nursing homes. In a court declaration, Louis
Robichaux IV, a consultant overseeing Genesis' bankruptcy restructuring,
wrote that as the company expanded, it became harder to manage and
"mired in corporate inefficiencies." Robichaux wrote that Genesis'
financial woes were exacerbated by rapidly increasing labor costs and
lawsuits, including some predating the covid pandemic.
Starting in 2021, Genesis avoided bankruptcy after receiving $100
million in loans from a private equity firm founded by Joel Landau, the
owner of a Brooklyn-based nursing home chain, according to Robichaux's
filing.
But Genesis continued to teeter on the edge of insolvency. In audited
financial statements for 2022 and 2023 submitted to a California
oversight agency, management and auditors said rent and debt obligations
raised "substantial doubt about the company's ability to continue as a
going concern."
In a court filing, a committee appointed by the U.S. Trustee's Office
to represent the unsecured creditors in the bankruptcy accused Landau
and Welltower of orchestrating a covert plan that allowed Welltower to
keep getting its rents while Landau could run the company and "siphon
value to himself." The committee alleged their efforts forced the
company into insolvency while "staffing levels and patient care declined
precipitously." Landau and Welltower did not respond to requests for
comment.
DRAWN-OUT LAWSUITS
Erin Pearson sued Genesis over the death of her father, James
Sanderson, a retired mining company executive who died in 2018 after
spending less than a month at Bear Canyon Rehabilitation Center in
Albuquerque. In the memory care unit, Sanderson fell repeatedly,
suffered medication errors made by nursing home staff, and developed a
bowel obstruction and sepsis, according to the lawsuit, filed in 2019.
Pearson's lawyers said he was not hospitalized until eight days after
nurses noticed he was vomiting brown mucus.
After the judge rejected Genesis' request to force Pearson into
arbitration, Genesis appealed. It took 2½ years before an appeals court
affirmed the original decision to let the case go forward in court,
records show.
This past May, more than five years after suing, Pearson reached a
$500,000 settlement, with the first payment required by November,
according to a copy of the agreement. Nothing was paid, according to the
bankruptcy claim.
"It was so drawn out and for so long," Pearson said in an interview, calling Genesis' bankruptcy "despicable."
PAYOUTS POSTPONED
Jennifer Foote, an Albuquerque attorney who represents clients in
multiple lawsuits against Genesis, including Pearson's, said the company
frequently filed appeals. "They did not usually win them on these
issues," she said, "and our sense was that they were doing it as a delay
tactic."
Genesis started using installment payments around 2018, said Dusti
Harvey, Foote's law partner. "The payments wouldn't start for several
months out," Harvey said. Foote said Genesis' lawyers often wanted to
time the payments to start the month the trial in the case was scheduled
to occur.
Families had to wait even when comparatively small amounts of money
were involved, settlement agreements show. Genesis' settlement
agreements also included a confidentiality clause prohibiting discussion
of the incidents.
Genesis agreed to pay $42,000 in a November 2024 settlement, but the
first payment was not due until nine months later. It was not paid,
according to the bankruptcy claim.
A $250,000 settlement signed in October 2023 did not start paying out
until the following September. When Genesis declared bankruptcy -- 21
months after the case was resolved -- it still owed $100,000, according
to the family's claim.
'WE NEVER FOUND OUT THE TRUTH'
Settling cases allowed Genesis to avoid the expense and publicity of a
trial, at which details of how its nursing homes functioned might have
been revealed. In October 2020, Margarett Johnson, a retired school bus
driver, fell out of her wheelchair at a Genesis nursing home in Waldorf,
Maryland, fracturing her jawbone, nose, and neck, according to a
lawsuit brought by her family. Johnson was sent to a trauma center and
placed on a ventilator. She died three months later, at age 76, from
ventilator-associated pneumonia, the lawsuit said.
"It looked like she was hit by a truck," Angelina Harley, one of her
daughters, said in an interview. "I knew my mom was not going to come
home. I knew the Lord was not going to punish her more."
The company denied negligence and blamed the accident on Johnson's
jacket getting tangled in the wheel of her wheelchair, according to the
lawsuit. Harley and her sister Angela Swann were dubious.
"We never found out the truth," Harley said. "They wanted to settle out of court."
The company denied liability but agreed to a $950,000 settlement in
October 2024. It never paid the final $112,500 installment, according to
a letter Johnson's five children sent to the bankruptcy judge.
"If you settle out of court, you know doggone well you did something wrong," Harley said.
MADDENING JUDGES
By summer 2025, judges in some civil cases had run out of patience.
Alma
Brown, a retired day care manager and accordion teacher living in a
Genesis nursing home in Clovis, New Mexico, suffered falls, infections,
bedsores, and other neglect that hastened her death in 2023, according
to her estate's lawsuit. In Santa Fe District Court, Judge Kathleen
McGarry Ellenwood castigated Genesis after it failed to pay $2 million
of the $3 million settlement to Brown's estate or explain the delay.
Genesis "obviously benefited by not having to go to trial," McGarry
Ellenwood said in one hearing, according to a court transcript. "They
assure me that they're not trying to renege on their contract, but it
certainly seems like they haven't lived up to what the bargain was."
Genesis declared bankruptcy the day McGarry Ellenwood announced she
would impose more than $100,000 in fines, plus $10,000 more each day
until the settlement was paid.
In Pennsylvania, Greg Hunt petitioned a judge to punish Genesis after
it stopped payments of the $3.5 million settlement after the death of
his mother, Nancy, the resident with the gangrenous foot. She had spent
eight months in 2019 at Brandywine Hall, a Genesis facility in West
Chester that was later sold and renamed.
In a filing with the Common Pleas Court of Montgomery County, Genesis
admitted it was in arrears but asked the judge for more time, citing
"unforeseen and exigent financial challenges." Genesis said care for
patients at its nursing homes would suffer if it had to pay immediately.
Unswayed, Judge Richard Haaz in June ordered Genesis to pay up, along
with punitive interest. But the bankruptcy court stayed that order.
Genesis still owes $1.4 million of the $2 million it was supposed to
pay, according to Hunt's claim. (The rest of the $3.5 million settlement
is supposed to be paid by an insurer in January 2026.) Ian Norris,
Hunt's lawyer, declined to comment, citing confidentiality provisions in
the settlement.
Court records indicate Genesis lawyers never disclosed in either case that it was preparing to declare bankruptcy.
'BANKRUPTCY AS A TOOL'
In the first nine months of 2025, 10 other senior living companies
with liabilities over $10 million entered Chapter 11 bankruptcy,
according to Gibbins Advisors, a consulting firm.
Hamid Rafatjoo, a bankruptcy lawyer representing nursing homes who is
not involved in the Genesis bankruptcy case, said filings may increase
as the industry has become costlier to run and class action lawsuits
have become a fixture.
"Nursing homes get sued all the time for everything," Rafatjoo said.
"A lot of operators wait too long to use bankruptcy as a tool."
On Dec. 1, Genesis announced the results of its auction, saying it
had elected to sell its assets to a private equity firm controlled by
Landau. In a court filing, Anthony, the attorney for the personal injury
claimants, alleged the auction was stacked in Landau's favor despite an
"objectively better and higher competing bid" from another private
equity investor that would have provided more money to creditors.
Genesis said in its statement that Landau's group had increased its bid
during the auction.
Sen. Elizabeth Warren, D-Mass., and two other senators last month
asked the U.S. Trustee's Office to intervene in the case, out of concern
that "individuals who already own or control Genesis are trying to sell
it to themselves, wiping away legal and other creditor debts in the
process." Lawyers representing those in charge of the auction did not
respond to a request for comment.
Families of former Genesis residents said they fear the capacity to
purge lawsuits through bankruptcy emboldens nursing home owners who
provide deficient care.
"They can file bankruptcy again," said Gabe Betancourt, whose wife,
Nellie, died after her stay at Uptown Rehabilitation Center in
Albuquerque. "And we're the ones that will pay for it, with our
memories, our lives."
Full Article & Source:
How delays and bankruptcy let a nursing home chain avoid paying settlements for injuries and deaths
