Reporter Debrief: The Connection Between 5 Vt. Eldercare Facilities And A Nursing Home Owner Under Criminal Investigation
It has been described as a jigsaw puzzle of corporate and individual ownership surrounding multiple nursing home facilities in different states. And the knot of ownership – that's now being untangled in Vermont – involves five nursing homes poised to be purchased by a group with close ties to a nursing home magnate, whose homes in Pennsylvania are facing a criminal investigation.
VPR’s Mitch Wertlieb spoke with Seven Days reporter Derek Brouwer, who broke this story. Their conversation below has been edited and condensed for clarity.
Mitch Wertlieb: Now, you begin this story by explaining some really critical background info about a nursing home in Pittsburgh. And this home is alleged to have kept false records in an effort to dupe regulators into thinking that it met state and federal staffing requirements. What happened there, and what does the company say about those allegations?
Derek Brouwer: That's right, Mitch. So early in the pandemic, there was a large nursing home outside of Pittsburgh, actually one of the largest in the state of Pennsylvania, that had a really severe COVID outbreak. More than 70 residents and staff died. The National Guard came in to help, as well as the state brought in some temporary managers to get through the disaster. In the months since, families have sued, saying there were too few staff at the home, and state and federal prosecutors opened a criminal investigation into the company.
In February of this year, the administrator of a sister facility in the Pittsburgh area was indicted for fraud. Prosecutors say that she and others had conspired to create phony staffing records to sort of trick regulators into thinking the home had more staff than it did. And when that indictment was unveiled, the Pennsylvania attorney general signaled that more indictments involving this network of homes may follow, and the investigation is still ongoing.
Now one of the owners of these homes is a man named Mordy Lahasky. He wrote an op-ed in a Pittsburgh newspaper earlier this year, in which he said that the government was unfairly targeting his company, and that any of the problems preceding the pandemic were a misunderstanding and unconnected to this deadly outbreak.
Well, that all sounds pretty thorny over there in Pennsylvania, with this company and Lahasky, but explain what the connection is to Vermont.
Right, so Genesis Healthcare, this is a large, struggling eldercare corporation, has contracted with a company with close ties to Lahasky to manage five homes in the state: Burlington Health & Rehab, and other homes in Bennington, Berlin, Springfield and St. Johnsbury. This management group is now waiting for state regulators to sign off on their purchase of the facilities outright. So they're managing now, they want to purchase them. It's a really large deal for Vermont, it involves almost 20% of the state's nursing home beds.
Now interestingly – and this is where these Pennsylvania homes come in – Mr. Lahasky, his name is on loan documents related to this Vermont purchase. But he is not listed as the would-be owner of these five facilities. Instead, his wife is on the application. Now, this is significant because the proposed owners have to disclose all sorts of information to the state about their holdings, their track record, and they have to answer questions like whether their companies are under investigation for fraud. So for instance, none of this information about these Pennsylvania homes involving Lahasky was disclosed on their application to Vermont regulators.
Wow. And you know, this is not just happening in Vermont, not just happening in Pennsylvania, apparently, because you uncovered Lahasky and his business partners are connected to more than 30 similar nursing home businesses in other states. What is going on here?
Right, so I wanted to try to better understand the connections between this array of companies and investors. As of last fall, these five homes are being run by a management company called Priority Healthcare. Its owners are David Gamzeh and Akiva Glatzer. Now this is a relatively young company, it's only five or six years old. But in that time, the owners have bought more than 30 homes in several states, mostly in Pennsylvania. Lahasky has been a coinvestor with these men in virtually all of the homes.
But the network seems to be even bigger than that. Lahasky has very quickly acquired stakes in more than 100 homes around the country. Most of these are low-performing homes that he claims he can turn around. As far as I can tell, he works with a series of management companies that are sort of the local face of each home. And Priority Healthcare, the group running these homes in Vermont, is one of these regional managers that is part of this network. It makes it hard to track where the money – and this is by and large taxpayer money that funds nursing home care – where this money ends up, who calls the shots and who is responsible when things go wrong.
It's also harder to understand their track record. I found that some of the homes that Priority has been running and bought only a few years ago have already been sold to other individuals, but don't seem to have improved at all. And one of the homes in Connecticut that was owned by them and Lahasky together went into a court-ordered receivership in 2019, after they told the state that a Medicaid rate cut meant they couldn't make payroll the next week.
Well, I understand that Lahasky has some Vermont attorneys. I'm wondering what he, his partners or his attorneys have to say about all this?
Well, none of them responded to my request for comment or questions that I sent them. That was disappointing. It wasn't that surprising. After this outbreak in Pittsburgh that I mentioned, reporters from newspapers there even went to Lahasky’s door in Long Island to knock on it, but they weren't able to get him to respond.
However, I did get some emails between Vermont regulators and these buyers’ attorneys, which explains their perspective on the arrangement. And what they told regulators was that Lahasky was originally going to be a purchaser of these Vermont homes. But he stepped away to deal with an unspecified problem at an unspecified home in Pennsylvania. And when he decided to step away, their attorney said his wife offered to take his place.
These are troubling trends in corporate ownership that you've uncovered here from some of these eldercare facilities. I'm wondering about what might happen in Vermont to prevent, you know, similar problems from happening here.
Vermont lawmakers and regulators recognize that the industry was increasingly becoming more complicated, more sophisticated as nursing homes became investment vehicles. And so in 2018, the state actually passed a bill to scrap an old process to review these ownership transfers and come up with a new one.
Unfortunately, for the last three years, a proposal for the new process has just been sitting on the shelf. And so the state is still using this interim set of rules to review this unusually large transfer application, which is sort of another wrinkle in this deal, and might make it harder for the state to conduct its full due diligence.