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Thursday, March 13, 2014 12:01 am

Bruce Rauner’s nursing home problem

Company accused of neglecting seniors

Bruce Rauner may easily win the Republican primary in Illinois’ race for governor, but he faces a much tougher battle in federal court, where his investment company is accused of illegally trying to avoid paying up in a wrongful death lawsuit.

Rauner, a wealthy businessman from Winnetka, has downplayed allegations that his company offered substandard care in several nursing homes it operated, instead seeking to distance himself from the scandal in which at least three senior citizens died. But the plaintiffs in one of the lawsuits against Rauner’s company and several other companies claim the investors colluded with a court-appointed trustee to hide assets and appear unable to pay. Is it a case of investors wringing profit from seniors? Or trial lawyers playing the system for a large payday? The truth is probably somewhere in between.

The cases stem from the deaths of several senior citizens who lived in Florida nursing homes operated by Trans Healthcare Inc. (THI) and Trans Health Management Inc. (THMI). The two companies, operating as one, were funded by investment firm GTCR Golder Rauner, which was cofounded by Bruce Rauner and a partner in 1998 after splitting from another firm. Rauner is not personally named in the lawsuits, and he left GTCR in 2012 to run for governor.

At least three cases were awarded large judgments. Juanita Jackson died in 2003, allegedly as a result of abuse and neglect during the time she stayed at Auburndale Oaks Healthcare Center in Auburndale, Fla., and her estate was granted a judgment of $114 million. Arlene Townsend died in 2007, allegedly as a result of falling 12 times and receiving no care while staying at Good Shepherd Hospice, also in Auburndale. Her estate was awarded a judgment of $1.2 billion. Elvira Nunziata died at age 92 after falling down a stairwell at Pinellas Park Care and Rehab Center in Pinellas Park, Fla., in 2004. Her estate was awarded a $200 million judgment. In each case, the judge awarded a default judgment against THI and THMI because the companies essentially no longer existed.

The cases highlight a highly segmented nursing home industry in which several companies often get involved in a single enterprise to shield one another from liability in case of lawsuits. For example, one company owns the facility, while another operates it and a third company handles supplies. If one company is sued, the others face less legal liability, in theory.

The lawsuits on behalf of the women’s estates allege the nursing homes were understaffed and under-equipped, leading to falls, malnutrition, bedsores and other problems. Rauner’s shell companies, the lawsuits claimed, were set up to milk the nursing homes dry of federal Medicare payments without regard for the patients’ care. Once the lawsuits reaped large judgments, however, the plaintiffs claim the nursing home companies began shifting assets and liabilities to other shell companies in order to appear bankrupt.

Rauner’s campaign put out a “fact sheet” addressing attack ads run by a union coalition in February accusing Rauner of “severe corporate greed” and a “scheme to cash in on the elderly.” Rauner fired back, calling the attack “false and disgusting.”

“It’s shameful that (Gov.) Pat Quinn and his special interest friends are blatantly ignoring the truth and invoking others’ personal tragedies in an attempt at political gain,” said Chip Englander, campaign manager for Rauner. “This is politics at its worst and Pat Quinn, the Democratic Governors Association and the government union bosses behind this ad should be ashamed.”

Rauner’s fact sheet says the lawsuits’ claims were never proven in court because Trans Healthcare Inc. and Trans Health Management Inc. no longer existed and could not defend themselves.

“In other words, plaintiffs’ counsel put on whatever facts they wanted, and made whatever arguments they wanted, to a jury without any presentation of the other side of the story,” he said.

Rauner claims that his investment firm merely invested in the companies and had no say in how they were run. Rauner says his investment firm actually lost money investing in the nursing home companies, and he portrayed the plaintiffs’ attorneys as gold diggers out to reap a huge profit.

“This is a clear effort by plaintiff to use empty chair trials to go after as many deep-pocketed entities as possible,” Rauner said.

Rauner faces three Republican challengers in the March 18 gubernatorial primary, which he is expected to win based on his large lead in public polls. The winner of that primary will face presumptive Democratic nominee Gov. Pat Quinn.

Contact Patrick Yeagle at pyeagle@illinoistimes.com.

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