New Start For Haven Healthcare?
Amid dozens of Chapter 11 bankruptcy filings, troubled Haven Healthcare has registered with the Secretary of State for a new business start.
The company, which operates 15 nursing homes throughout Connecticut, registered Haven Health Care Trust III, LLC on Nov. 2 as a new business entity just weeks before the state appointed an independent trustee to take control of the entire Haven Healthcare corporation and its nursing homes through federal bankruptcy court.
The state Department of Public Health has been investigating Middletown-based Haven Healthcare since 2006 for a number of health code violations, questionable financial activities and rampant patient-care deficiencies. It was also discovered that the nursing home operator is millions of dollars in debt.
Haven Healthcare General Counsel Philip F. Karpel, listed as the agent representing Haven Healthcare’s new business start filed with the Secretary of State’s office, said he could not recall the specific transaction Haven Health Care Trust III was established to serve.
“It was formed in anticipation of a business transaction that never came about,” said Karpel, who added that since the transaction never occurred, it is most likely the business will eventually be dissolved.
Attorney General Richard Blumenthal said he is not aware of any asset- or revenue-holding Haven Healthcare entities that are not in bankruptcy.
“Very possibly it’s a shell corporation,” he added. “But we can check into it.”
Restructuring Effort
Companies filing for bankruptcy commonly create new entities as a means to acquire their debt. According to Eric Brunstad Jr., a bankruptcy attorney with Bingham McCutchen in Hartford, businesses file for Chapter 11 in an effort to restructure themselves. Part of that restructuring process can be eliminating debt by selling assets to competitors or entities they have created.
That’s one possible reason Haven Healthcare created new business entity Haven Health Care Trust III, Brunstad said.
And with the ample checks and balances involved in the bankruptcy process, it is highly unlikely Haven Healthcare would be able to perform any illegal transferring of funds, Brunstad added.
Secretary of State Susan Bysiewicz said that a restructuring officer was appointed to Haven Healthcare in light of the bankruptcy proceedings. A group was also formed to protect the company’s assets that do exist.
Both the restructuring officer and the newly formed group are charged with making sure everyone operates according to the law, she added.
Facing Federal Scrutiny
Haven Healthcare’s woes aren’t limited to state regulatory actions and bankruptcy. The nursing home operator also is facing allegations that it misused millions of dollars in Medicaid funding.
Federal agents searched Haven Healthcare’s Middletown offices in December, and members of the multi-agency Health Care Fraud Task Force began executing search warrants just weeks after the corporation filed for a new business entity with the state.
The task force included agents from the FBI, the inspector general’s Health and Human Services Office and the IRS.
State authorities are investigating Haven Healthcare’s financial dealings, including nearly $9 million in company money that went to the Nashville country music label Category 5 Records, whose top star is Travis Tritt. None of the allegations involve Tritt.
Blumenthal has said that his office’s investigation centers on whether the company fraudulently used Medicaid funds for deals and investments not related to health care.
Blumenthal alleged the company, which has been fined more than 45 times in recent years by state and federal health agencies for poor patient care, has been putting its clients’ health and safety in jeopardy.
The largest debt listed in the bankruptcy documents is $13.7 million owed to Covington, Ky.-based Omnicare Value Health Care, which provides pharmaceutical care to the elderly.
In Connecticut, the company owes the state tax department nearly $600,000. It owes Connecticut Light & Power more than $400,000 in utility bills, according to the bankruptcy records. It also owes taxes in Vermont and Rhode Island.
Previously, Ray Termini, chief executive officer of both Haven Healthcare and Category 5 Records, has blamed much of the company’s financial problems on low Medicaid reimbursement rates for health care services. He said money for the record company investments came from refinancing Haven Healthcare properties, not from Medicaid funding. He insisted that the transactions never affected patient care.
An AP Report was included in this article.
WBJ Web Partners
Most Recent
Most Recent
0 Comments