Friday, November 30, 2007


NEW HAVEN, Conn. - There's an agreement in principle between the state and the troubled Haven Healthcare nursing home chain to have a restructuring officer temporarily oversee some of the company's finances until a court hearing is held next month.

State Attorney General Richard Blumenthal says the agreement was reached after a day of hearings and negotiations. A document outlining the details of the agreement must be submitted to a federal bankruptcy court judge by Friday.

The restructuring officer would have the power to co-sign checks, co-approve financial transactions and approve any employee firings. The officer would also work with a new patient ombudsman, who is expected to be selected by Friday.

Blumenthal says the state still wants the court to appoint a trustee with broader powers to oversee operations at the nursing home chain. A hearing is scheduled for December 17.

Haven Healthcare has filed for Chapter 11 bankruptcy and faces state investigations into allegations it misused millions of dollars in Medicaid funding. The company denies the claims.
State Attorney General Richard Blumenthal will argue in U.S. Bankruptcy Court today that a trustee should be appointed to immediately take over the operation of all Haven Healthcare nursing homes to enhance patient care and prevent top managers from further misappropriating funds.

After the nursing home chain filed for bankruptcy protection last week, Blumenthal announced he would seek to have a trustee appointed and alleged Haven Healthcare had diverted nursing home funds to invest in unrelated entities, such as a Nashville recording company.

"I have said and I will say again that the mismanagement and misuse of government funds could well have criminal ramifications," Blumenthal said Monday.

Related links
A Courant Special Report: Haven Healthcare
No Haven For The Elderly
State Soft On Nursing Levels
Haven Debt Woes
Haven Healthcare: State Takes Action, Legislators Weigh In
Nursing Home Takeover Sought
Haven Healthcare: Violations By Location Multimedia
Hundreds of readers have reacted to our Haven Healthcare series on the Topix message boards that appear at the end of each story.

To view those comments and leave some of your own, here are some short-cut links:

Day 1 | Day 2 | Day 3
To research a nursing home's health care deficiencies, according to the most recent federal data, visit

To research nursing homes in Connecticut that have faced major sanctions by the state Department of Public Health:

Haven Healthcare Photos Photos
Consequences Of Understaffing Graphic
Fox 61 Video
>> State To Investigate
Haven Healthcare
Gov. M. Jodi Rell's letter to the to the commissioners of the departments of social services and public health

Statement of Haven Healthcare CEO Ray Termini Regarding Nov. 19 Comments By Connecticut Gov. M. Jodi Rell & Attorney General Richard Blumenthal
Haven Healthcare Management Bankruptcy Filing
Blumenthal speaks to reporters Photo
'Attorney General's Press Conference On Haven Healthcare Video
Haven Sent Staff South
Blumenthal said in court documents that Haven Eldercare, the flagship of the many Haven Healthcare entities, loaned $8.9 million to Nashville-based Category 5 Records between November 2005 and July 2007. Ray Termini, chief executive officer of Haven Healthcare, launched the record label in 2005 and is also CEO of Category 5.

"The Haven entities have grossly mismanaged millions of dollars of governmental funds intended for patient care, including the diversion of federal and state money intended for patient care services to improper investments in a record company and personal real estate," Blumenthal stated in his motion for a trustee.

The intricate web of Haven entities is $46 million in debt, not including long-term loans and mortgages.

Haven Healthcare Management's chief financial officer, Michael Lipnicki, asserted in court documents that Haven Healthcare operates profitably, with pretax earnings for 2007 estimated to come in at $17 million.

Lipnicki said most of the company's financial problems stem largely from its goal of acquiring financially distressed nursing homes that are in bankruptcy or receivership and renovating and turning around those homes. In the interim, during renovations, those homes had negative cash flow, he said. Haven officials argue that a trustee is not necessary.

Haven Healthcare, in court documents, said the bankruptcy filing was precipitated by a combination of defaulting on a major pharmaceutical debt, the settlement of a negligence lawsuit, strong indications the state was considering placing some or all of its homes into receivership, and negative publicity from a three-day Courant investigative series on the firm.

The Courant reported that Haven Healthcare, which operates 15 homes serving about 2,000 patients in Connecticut, has been mired in spiraling debt and negligence lawsuits alleging egregious patient-care failures. The company also has been fined more than 45 times in the past three years for serious patient-care deficiencies ― at least 30 times by the state health department and 15 by the federal Centers for Medicare & Medicaid Services.

Failure by Haven Healthcare to make an agreed upon payment of $7 million to the pharmaceutical company, Omnicare, prompted Omnicare to serve a demand notice on Termini last week. Haven had agreed to pay Omnicare a total of $14 million to settle a lawsuit filed by the pharmaceutical supplier in December 2006.

"Finally, on Nov. 19, following the unfortunate timing of the Courant articles, Haven had a meeting with the [state] Office of Quality Assurance that left Haven with the concern the state might be contemplating the appointment of a receiver for Haven due to the recent publicity and to its perception that the dispute with Omnicare threatened Haven's viability," Lipnicki's affidavit states.

Filing for reorganization under Chapter 11 will allow Haven to hold certain creditors at bay and negotiate settlements with others.

Haven plans to stop making monthly payments totaling $84,000 to the Rev. Edward Doherty, founder of the Roncalli Institute and the nursing home chain that later became Haven Eldercare and Haven Healthcare. Attorney William McGrath Jr., who represents Doherty, Monday said he had no comment on Haven's intent to halt payments to Doherty, but would be in court today.

Doherty this month sought a court order that Termini turn over to him financial records of Haven entities in which Doherty still maintains an interest, in some cases up to a 40 percent interest. Doherty claims Termini used Haven assets for personal gain and committed "dishonest acts" in managing the corporation and its subsidiaries. A hearing on Doherty's petition is scheduled for Dec. 10.

Gov. M. Jodi Rell Monday asked Blumenthal to also seek the appointment of an ombudsman to monitor patient care at the homes.

"I want to be sure that all steps are being taken to prevent placing even a single patient in potential jeopardy," Rell said.

Blumenthal assured Rell such appointments are mandatory in bankruptcy matters involving long-term care facilities, and that Nancy Shaffer, the state's Long Term Care Ombudsman, has said she is willing to be appointed to monitor the 15 Connecticut homes. U.S. Bankruptcy Judge Albert S. Dabrowski is expected to take up that issue in court today as well.

"Our priorities are patient care first, and preserving assets," Blumenthal said.

Haven officials also are asking Dabrowski to permit them to retain the Manhattan law firm of Moses and Singer to be their primary counsel in the bankruptcy proceedings. They list nine members of the firm, from partners to paralegals, who would be involved and their respective hourly rates. Collectively, the nine bill at $3,945 per hour, with hourly rates ranging from $200 to $750.

Read the Courant's special report on Haven Heathcare at www.courant


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