CT Attorney General Seeks To Remove Corporate Leaders Of Failed Nursing Home Chain And Its 15 State Nursing Homes

November 20, 2007 -- Connecticut Attorney General Richard Blumenthal today is filing a motion in federal bankruptcy court seeking to appoint a Chapter 11 trustee to take over Haven Eldercare, LLC and its 44 entities, including 15 Connecticut nursing homes after the financially failed corporation filed for bankruptcy today.

If approved, Haven Eldercare's corporate leaders would be removed and replaced by a trustee with complete control over the corporation, as well as its 15 Connecticut nursing homes, including Haven Health Centers in Cromwell, Danielson, East Hartford, Farmington, Jewett City, Litchfield Hills, New Haven, Norwich, Rocky Hill, Soundview, South Windsor, Waterbury, Waterford, Windham and West Hartford.

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The corporation has allegedly grossly mismanaged millions of dollars intended for patient care, diverting federal and state money intended for patient services to improper investments in a record company and personal real estate, Blumenthal said.

Blumenthal said the alleged severe mismanagement has jeopardized the health, safety and welfare of patients at all Haven Eldercare nursing homes, which collectively operate nearly 2,000 patient beds in the state.

"This takeover is unprecedented in magnitude, but so is the potential fraud and danger to patient safety," Blumenthal said. "We seek removal of Haven Eldercare's corporate management and appointment of a trustee with complete control over the corporation and its 15 Connecticut nursing homes. This move is vital to ensure financial stability and adequate care for nursing homes across the state, accounting for nearly 2,000 beds.

"Haven Eldercare has been anything but a haven for its patients - allegedly gravely jeopardizing patient care and diverting federal and state money to a record company and other self-serving improper investments. Haven Eldercare has allegedly bled its nursing homes to near death - apparently siphoning money from patient care, defying decency and law.

"Today's action is the beginning of the end for Haven Eldercare's stonewalling and shortchanging. We will hold it accountable. No healthcare institution can shortchange patient care services while diverting Medicaid money - funds intended solely for patient care - for unconscionable unrelated expenses. Haven Eldercare's practices have compromised our state's most precious vulnerable citizens."

The Haven Nursing Homes, as of July 31, owed approximately $12.9 million to creditors, including suppliers for services and goods vital to the nursing homes. About 34 percent of that - $4.6 million - was between 90 to 361 days past due and an additional 30 percent is more than 361 days past due. This debt does not include accrued unpaid rent, payroll, interest and long term liabilities.

While Haven failed to pay severely overdue debt to vendors for patient care services, Haven Eldercare allegedly provided $8.9 million in loans to an affiliate recording company, Category 5 out of Nashville, Tenn.

Blumenthal detailed some of Haven Eldercare's numerous alleged financial failings involving its Connecticut nursing homes:

* During the month of October 2007, utilities notified the state that accounts for Haven Health Care Management, LLC were so delinquent that state intervention was sought and termination of service was in process. For one utility, the delinquent account had ballooned to $270,935 by Oct. 31, and the utility had received only one payment for the year 2007, which was paid in October.

* On Oct. 29 , the Department of Public Health was notified that the medical director of Haven Health Center of West Hartford, LLC had not been paid for the prior six months of service.

* As of June 2007, the medical director of Haven Health Center of Norwich has allegedly not been paid for the prior six months.

Haven Eldercare's bankruptcy filings also cover nursing homes in Massachusetts, New Hampshire, Rhode Island and Vermont.

Source: Connecticut Attorney General