The owners of a chain of nursing homes housed in multiple states around the United States have been held to have committed fraudulent transactions in an attempt to transfer liabilities to a “shell company.” The owners of Fundamental Long Term Care Inc. have been the subject of multiple wrongful death cases related to negligence in handling nursing home residents.
Liabilities that included many judgments in Florida have never been paid to the families of the residents who died at the hands of the nursing home personnel. There were reports of four wrongful death judgments in Florida alone. The company filed for bankruptcy protection, but not without careful scrutiny by the court and the judgment creditors.
The U.S. Bankruptcy Court judge in Tampa, Fla., ruled that the owners of Fundamental Long-Term Care Holdings LLC engaged in a “carefully orchestrated sham transaction” by selling a unit of the company in 2006 to a retired graphic artist who didn’t even know he had purchased the shares of the company.
The long-term nursing care company held on to the unencumbered assets of another healthcare/nursing home company while the other unit was saddled with the judgments that were never paid.
The presiding U.S. district court bankruptcy judge stated that the transfer “has all of the hallmarks of fraud.” There are still many lawsuits against the nursing home and long-term facility corporation that have been stayed by the bankruptcy filing and remain unpaid and unresolved until the bankruptcy judge reaches a final decision arising from a mediation that was called.
In the bankruptcy litigation, the plaintiffs have alleged that the nursing home corporation has separated companies in such a way as to insulate it from possible judgments and/or current judgments uncollected. It was claimed that separating the liabilities from the assets is a common practice that has been undertaken by many nursing home companies throughout the United States. In that attempt, the owners of the nursing homes insulate themselves from possible liability arising from judgments against them.
Essentially what the nursing home in this case did was acquire stock of two healthcare/nursing home entities, one in Baltimore and one in Nevada, while keeping the assets such as real estate and more than 100 nursing homes nationwide. In a different but linked transaction, the nursing home sold all of its stock in THMI, whose sole owner was a retired graphic artist unaware of his purchase at the time. He was obviously selected because he is judgment proof. The graphic artist also provided sworn testimony that he didn’t know he owned the company and didn’t put up any money to purchase it. He said he wanted only to buy an interest in THMI because he would acquire some computer equipment.
Fraudulent transfers are illegal because it is a method often used to remove assets from a corporation to avoid paying liabilities.
Kreisman Law Offices has been handling nursing home negligence cases, nursing home abuse cases and nursing home injury cases for individuals, families and nursing home residents for more than 38 years in and around Chicago, Cook County and its surrounding areas, including Rolling Meadows, Richton Park, Schaumburg, Schiller Park, Waukegan, Joliet, Elgin, Aurora, St. Charles, Bolingbrook, Romeoville, Mundelein, Midlothian, Chicago Heights, Blue Island and Worth, Ill.
Related blog posts: