Casa Real, Santa Fe Care Center file for bankruptcy
Move comes after $28.6M judgment against related Preferred Care facility in Ky.
The Casa Real and Santa Fe Care Center nursing homes, along with related facilities in Española and nine other New Mexico cities, have filed for financial reorganization in U.S. Bankruptcy Court in Texas.
Also filing for reorganization Monday was Preferred Care Inc. of Plano, Texas, which is affiliated with the New Mexico nursing homes as well as 21 homes in Kentucky.
Government inspectors, residents and families repeatedly have accused Preferred Care and its nursing homes in New Mexico and Kentucky of providing inadequate care. Preferred Care faces a nearly $30 million jury judgment in Kentucky and a lawsuit filed by the state Attorney General’s Office in New Mexico.
Administrators at Casa Real and the Santa Fe Care Center said the homes continue to operate but declined further comment, referring questions to a bank-
ruptcy manager. He couldn’t be reached for comment Tuesday.
Casa Real and the Santa Fe Care Center, both located in the city’s medical district off St. Michael’s Drive, are the only nursing homes in Santa Fe that accept Medicare and Medicaid patients.
In filing for reorganization, Preferred Care and its related nursing homes seek to become profitable through — for example — discharge of debts, renegotiations of contracts and leases, and new financing. A judge will have to approve any reorganization plan. Preferred Care and the homes can continue to operate while a plan is developed.
The bankruptcy filings follow a recommendation by a jury in Paducah, Ky., that a Preferred Care nursing home pay a $28.6 million judgment for improper care of a resident. The jury also found the home destroyed records of the resident’s care. Of the $28.6 million judgment, $25 million was awarded to punish Preferred Care and the nursing home.
Preferred Care also has faced numerous lawsuits over its care of residents in New Mexico.
The Attorney General’s Office alleges in its lawsuit that Preferred Care has defrauded Medicaid by having insufficient staff to meet the needs of residents at its Santa Fe nursing homes, Española Valley Nursing and Rehabilitation Center, and facilities in four other New Mexico cities. Preferred Care has denied the allegation.
The case is scheduled to go to trial next year but could be put on hold because of the bankruptcy filing. A spokesman for the Attorney General’s Office said lawyers were reviewing the issue.
The New Mexican reported in July that Casa Real and its sister facility, the Santa Fe Care Center, have received the federal government’s lowest rating for nursing homes — one out of five stars — and have been cited repeatedly by inspectors for serious deficiencies in resident care over the past 15 years.
The nursing homes also have faced hundreds of complaints from patients and several wrongful death lawsuits in recent years.
In May, the federal agency that administers Medicaid and Medicare designated Casa Real as a “special focus facility” because of its poor record of complying with care standards, and it said the nursing home would be subject to more frequent inspections. The designation is given to the nation’s poorest-performing nursing homes and is meant to address the “yo-yo” problem of facilities routinely falling in and out of compliance with care standards.
The only other New Mexico nursing home designated as a special focus facility is Preferred Care’s Sagecrest Nursing and Rehabilitation Center in Las Cruces.
For two months this summer, Casa Real was barred from billing Medicaid or Medicare for newly admitted residents until persistent quality-of-care problems were corrected.
A state inspection in August found Casa Real residents weren’t receiving medications as directed by their physicians and that the nursing home wasn’t doing enough to ensure that residents didn’t receive unnecessary drugs, including psychotropic medications.
Other inspections this year turned up a long list of problems, including medication errors, expired food and drugs on shelves, unreported resident injuries and assault, poor care of bed sores, nursing understaffing and inadequate safeguards against the spread of dangerous infections.
Preferred Care repeatedly has declined to comment on inspection findings.
The Reuters news agency reported that the operators of the Preferred Care nursing homes issued a statement saying the bankruptcy filings will allow them to stay in business, pay employees and vendors, and care for 2,900 residents while seeking to restructure their finances.
“The health, safety, and comfort of the residents will be the primary concern going forward,” a spokesman for the homes’ operator said in a statement provided to the news agency.
Preferred Care, according to Reuters, blamed the bankruptcies on 163 personal injury cases filed against the company.
In its bankruptcy filing, Preferred Care’s list of its biggest 30 debts included $350,000 owed to the New Mexico Taxation and Revenue Department.