A partner of Cleveland, Tn.,-based Life Care Centers of America founder Forrest Preston is suing him in three states claiming that "his pattern of mismanagement of multiple skilled nursing facilities has devalued the properties, and in some cases, negatively impacted their ratings from state and federal agencies."
David Weiss, partner with Forrest Preston on the projects in question, is also seeking to terminate the management agreements as well as seek monetary damages.
Previously, Mr. Weiss was one of only two independent directors on the Life Care Centers of America board and he served as the organization’s mortgage and investment advisor for over a decade. Mr. Weiss and Mr. Preston each hold a 50 percent interest in the companies that own all six facilities. Mr. Preston serves as the chief manager of the entities and the suits claim he has the primary responsibility for the general management of the companies.
Life Care Centers is facing a federal lawsuit which charges Medicare fraud, and Mr. Preston has also been sued by the federal government.
Attorneys for Mr. Weiss allege that at five of the six facilities in which he invested with Mr. Preston, the facility and its ownership entity suffered monetary damages due to misconduct by Life Care Centers of America and the failure of Mr. Preston to correct the problems once they were brought to his attention.
The six lawsuits have been filed in three states – Massachusetts, Missouri and Texas.
The suits filed in Worcester County, Mass., allege Life Care Centers of America ’s alleged failure to follow care protocols required by state and federal regulatory authorities negatively impacted those properties’ Centers for Medicare and Medicaid Services (CMS) scores.
Attorneys for Mr. Weiss "claim these ratings are important in the skilled nursing industry because they are publicly available and searchable by prospective residents and their families. Low ratings drastically reduce the likelihood that a prospective resident will select a facility."
Because of the citations for violations of state and federal standards and corresponding decreases in quality ratings, attorneys for Mr. Weiss say the facilities have lost revenue, but Life Care Centers of America and Mr. Preston have failed to acknowledge the need to improve, or to recommend actions to increase the ratings and benefit the facilities and residents.
The suits allege that in many of the other facilities owned solely by Mr. Preston, Life Care Centers of America effectively performed its duties, including the same duties it failed to perform in the properties named in the lawsuits. As a result, Mr. Preston’s other facilities, which are not operated in partnership with Mr. Weiss, have generated significantly higher profits than the six facilities included in the complaints.