on the cover / By Carol Harrison

‘Immediate Jeopardy’

Horror stories and deep legal troubles at Humboldt County’s for-profit nursing homes

(June 4, 2009) In the worst economic crisis since the Great Depression, skilled nursing facilities — those quasi-medical institutions for old or severely disabled folks more commonly called “nursing homes” — are one of the few booming businesses going. On any given day, 1.5 million Americans reside in the nation’s nursing homes. More than 3 million annually rely on their services at some point during the year.

Take, for example, the case of Skilled Healthcare Group, which owns five of Humboldt County’s six skilled nursing facilities and all but eight of the available beds.

GALLERY >

“We are pleased to report another record quarter of earnings,” stated Boyd Hendrickson, chairman and chief executive officer of Skilled Healthcare Group, in a press release aimed at investors released early last month. The occasion was the company’s quarterly earnings report, and the news was fantastic: first-quarter profits of $10.9 million, up almost 30 percent from the first quarter of 2008.

Skilled Healthcare is one of the giants of the nursing home industry. As of March 31, the firm, based in Foothill Ranch, California, owned or leased 76 skilled nursing homes and 21 assisted living facilities in California, Texas, Kansas, Mississippi, Nevada, New Mexico and Iowa. And it has a virtual monopoly on the Humboldt County market, owning Granada, Seaview, Pacific and Eureka Healthcare and Rehabilitation (all in Eureka) and St. Luke Healthcare Rehabilitation Center in Fortuna.

But while the bottom line may appear rosy enough for the $350 million company, state regulators and attorneys representing patients are charging that the care provided at many Skilled Healthcare facilities, including those in Humboldt County, is anything but. Skilled Healthcare Group and all five of its local skilled nursing facilities are embroiled in a large class action lawsuit set for trial Nov. 2. If that weren’t troubling enough, as many as three of the five appear to be targets of an investigation by the California Attorney General’s Bureau of Medi-Cal Fraud and Elder Abuse.

On April 13, the California Department of Justice received a warrant to serve on Eureka Healthcare and Skilled Healthcare, LLC, the administrative services provider for Eureka Healthcare. The search warrant required production of myriad staffing records, payroll records, time cards, time sheets, staffing formulas, e-mails, census documentation and computer hard drives, laptops and storage devices. The search warrant covered the period from Jan. 1, 2007 to the date of the search and specifically focused on information pertaining to 13 residents.

“The full scope of the DOJ’s investigation is currently unknown, but is likely to expand beyond one defendant facility,” wrote Kippy Wroten, attorney for Skilled Healthcare Group, in a motion to halt discovery in the pending civil lawsuit. Judge Bruce Watson heard Wroten’s motion May 11 in the Humboldt County Courthouse. (It was later denied.)

In his footnotes, Wroten identified Granada Healthcare and Rehabilitation Center in Eureka and St. Luke Healthcare Rehabilitation Center in Fortuna as additional targets of what “definitely appears to be a criminal investigation.”

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