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Nursing Homes With Safety Problems Deploy Trump-Connected Lobbyists

Some want direct government aid. Others want tax breaks. Many want protection against lawsuits.

Nursing homes have been the center of America’s coronavirus pandemic, with more than 62,000 residents and staff dying from Covid-19 at nursing homes and other long-term care facilities, about 40 percent of the country’s virus fatalities. Now the lightly regulated industry is campaigning in Washington for federal help that could increase its profits.

Some of the country’s largest nursing-home companies — including those with long histories of safety violations and misusing public funds — have assembled a fleet of lobbyists, many with close ties to the Trump administration.

Eliezer Scheiner, a nursing-home owner and major donor to President Trump, recently retained Brian Ballard, a friend of the president who used to lobby on behalf of Mr. Trump’s business. Genesis Healthcare, the largest nursing-home chain in the United States, hired two former top White House aides, including Jim Schultz, a former special assistant to Mr. Trump. LifeCare Centers of America, whose Kirkland, Wash., facility had the country’s first coronavirus outbreak in March, brought on four former Republican Senate aides. The industry’s main trade group enlisted Haley Barbour, a former chairman of the Republican National Committee.

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Credit…M. Scott Mahaskey, via Politico

It is hardly unusual for embattled industries to seek help from Washington. But the fact that individual nursing-home companies are hiring lobbyists, not just relying on trade associations, reflects the ambitious nature of the industry’s mobilization.

Nursing homes are not only seeking assistance in surviving a pandemic. They are also capitalizing on the public health crisis to pursue a long-sought wish list that, until now, has remained mostly out of reach.

The industry has already notched one potentially lucrative victory. LifeCare Centers and others successfully pushed the Trump administration in July to exempt nursing-home companies from a 2017 law that curtailed how much interest big companies can deduct from their taxes. The change could effectively lower the federal tax bills for many nursing-home operators.

Nursing homes — many of which were in deep financial trouble even before the pandemic — are also on the hunt for government cash infusions through the federal economic rescue that became law in March, as well as any future stimulus bills.

The industry has received about $7.6 billion in federal grants through the federal economic stimulus package, according to the American Health Care Association, an industry group, and will soon get another $5 billion. Nursing homes have also received an estimated $11 billion more in government loans and advance Medicare payments, according to an analysis of federal data by Good Jobs First, a progressive research group. Executives at Genesis, which has reported 1,500 deaths at its homes nationwide, told investors last week that the company had received nearly $190 million in federal grants and was looking for more.

On Saturday, Mr. Trump seemed to indicate that more aid was on its way. “We will announce additional measures to protect nursing home residents in the coming days,” he said at a news conference at his golf club in Bedminster, N.J. “We’ve worked very hard with nursing home companies.”

Among the industry’s biggest goals is for the federal government to block residents and their families from suing nursing homes for wrongful deaths and other malpractice claims — even those that have nothing to do with Covid-19.

Senate Republicans introduced legislation last month that would make it virtually impossible for families whose relatives died from neglect or the coronavirus to hold nursing homes accountable in court. The legislation would apply retroactively to 2019 and extend through 2024.

The Senate majority leader, Mitch McConnell, has said the liability-protection law — which would also apply to a range of other industries worried about being sued if they reopen during the pandemic — must be included in any new economic stimulus package.

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Credit…Anna Moneymaker for The New York Times

Mr. McConnell’s former chief of staff Kyle Simmons was recently hired by the American Health Care Association, the powerful trade group representing for-profit nursing-home companies, to work on legislative issues related to the virus, according to federal lobbying records. He is among the lobbyists who have championed the bill in the Senate, according to three people with direct knowledge of the matter.

Nursing-home operators have argued that they should not be held responsible for the deaths of residents, including many who were already uniquely vulnerable to the virus, because they were hit by a pandemic that no one could have anticipated. Many homes have argued that they struggled to get testing kits and other essential protective gear that might have helped them contain the spread.

“Without legal protections, many nursing homes and assisted-living communities could shut down completely, threatening access to long-term care for thousands of individuals and precious jobs for caregivers,” said Beth Martino, a spokeswoman for the American Health Care Association.

But even before the coronavirus, many nursing homes had poor records when it came to safety and staffing. A report this spring from the Government Accountability Office found that the industry failed to maintain basic infection-control standards like quarantining sick residents or requiring frequent hand washing.

Some of the nursing homes with high death tolls from the virus have been cited by regulators for safety and other problems. LifeCare Centers, for example, paid $145 million in 2016 to resolve allegations, without admitting wrongdoing, that its nursing homes had bilked Medicare. After the virus spread among LifeCare patients and staff in Kirkland, government inspectors faulted the home for failing to properly notify the state authorities.

Davis Lundy, a spokesman for LifeCare Centers, said the company is “fully compliant with any requirements of the settlement” with the Justice Department. He said that staff at the Kirkland home “deserve high praise, not criticism,” and that the company was appealing the decision by the state health department.

The industry has successfully lobbied at least 20 states to gain immunity from lawsuits in state courts. But the federal Safe to Work Act would go further than anything on the state level because it would cover lawsuits that had nothing to do with the coronavirus and apply to deaths that occurred months before the virus began spreading.

“The industry is using this epidemic to win a get-out-of-jail-free card,” said Toby Edelman, a senior lawyer at the Center for Medicare Advocacy, a nonprofit legal assistance group for the elderly.

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Credit…Eric Gay/Associated Press

With Mr. Trump in the White House, nursing-home companies have won numerous victories. In 2017, the Trump administration, under pressure from industry groups, adjusted how nursing homes were fined for violating federal rules. Under the new guidance, the average fine dropped more than 30 percent, according to an analysis last year of federal data by Kaiser Health News.

The Trump administration also proposed weakening infection-control rules, imposed under President Barack Obama, that required all nursing homes to employ at least one person who specialized in preventing infections.

In November, a group of nursing-home operators gathered in a ballroom at the InterContinental hotel in Midtown Manhattan to raise more than $3 million for Mr. Trump’s re-election campaign. Mr. Trump stood onstage and thanked Mr. Scheiner, who donated $750,000, the most of any attendee, “for doing such an incredible job.” Mr. Scheiner, who owns more than 20 nursing homes, received a thunderous round of applause, according to video of the event.

Mr. Scheiner and his company, TL Management, have faced serious problems. This year, he settled allegations, made by a federally appointed bankruptcy court trustee, that he and his partner fraudulently transferred more than $1 million in assets out of a nursing-home operator before it filed for bankruptcy. (Mr. Scheiner denied wrongdoing.) This year, 43 residents have died at homes owned by Mr. Scheiner, according to state records reviewed by The New York Times.

In May, Mr. Scheiner donated an additional $50,000 to a different political action committee bankrolling Mr. Trump’s campaign, federal records show.

TL Management has hired four lobbyists. One is Mr. Trump’s friend Mr. Ballard. Another is Emily Hargan, whose husband is a top official at the Department of Health and Human Services, which oversees the nation’s nursing homes.

The lobbyists’ mandate was to help win legal immunity for the industry and to secure financial aid from the federal government, records show. Since the pandemic began, Mr. Scheiner’s homes have received roughly $26 million in federal grants and loans, according to Good Jobs First.

Mr. Ballard’s lobbying firm had an additional goal: to help cut TL Management’s tax bill, according to two people familiar with the matter. The 2017 overhaul of the federal tax code limited how much interest companies can deduct from their taxes.

TL Management, along with LifeCare Centers and other large nursing-home companies, asked the Treasury Department to exempt the industry from some of those limits.

On July 28, they got what they wanted: Treasury proposed allowing companies that operate a “qualified residential living facility” to be able to deduct a larger amount of interest from their taxes.

But the protection against lawsuits may be a higher-stakes issue for Mr. Scheiner’s network of nursing homes.

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Credit…Matthew Busch for The New York Times

At Mr. Scheiner’s Southeast Nursing and Rehabilitation Center in San Antonio, which has been cited by regulators for failing to control infections three years in a row, 18 residents have died during the pandemic. That is the most deaths at any nursing home in the city, according to The Times analysis of state records.

The families of some of those residents have sued. In a lawsuit last month, the family of Jose Velasquez, who died after contracting the coronavirus, said Southeast staff repeatedly minimized the gravity of his illness. An hour before he died, employees told the family that Mr. Velasquez was “doing fine and showed no symptoms of the disease,” according to the lawsuit.

Texas is not among the 20 states that have shielded nursing homes from pandemic-related lawsuits. But if the federal liability bill passes, the families’ lawsuits would most likely be derailed.

At the November fund-raiser in New York, Mr. Trump also paid tribute to a longtime friend, Ruby Schron, who in 2003 agreed to pay more than $700 million to buy dozens of properties from Mr. Trump. “Ruby, I want to thank you,” Mr. Trump said at the event. “You’re a great guy.”

In 2010, Mr. Schron and SavaSeniorCare, one of the country’s largest nursing-home chains, agreed to pay $14 million to settle Justice Department allegations that they solicited kickbacks from a pharmacy to provide drugs to nursing-home patients. In a separate 2015 case, the Justice Department accused Sava of routinely submitting bogus claims to Medicare. The case is ongoing.

The Justice Department said in a 2010 court filing that Mr. Schron “controlled” Sava. In a 2016 report prepared with the input of Sava’s financial advisers, the bond-rating firm S&P Global said Mr. Schron “effectively owns most of the equity in Sava.”

Annaliese Impink, a spokeswoman for Sava, said Mr. Schron “is not involved in the operations” of the company. “He is the landlord of several of the centers.”

This year, the Trump administration has provided Sava with roughly $74 million in loans and grants through the economic stimulus package, according to Good Jobs First.

In June, the Democratic-controlled House committee overseeing the federal response to the coronavirus said it would be examining the records of the five largest for-profit nursing-home chains, including Sava, Genesis and LifeCare. It is looking at how the companies are spending the federal stimulus money they have already received.

As it looks for victories on Capitol Hill, the industry is trying to soften its image.

Mark Parkinson, who runs the American Health Care Association, told members this summer that the group was preparing a $15 million ad campaign in Washington. “We hope to shape the national conversation,” he wrote.

Kitty Bennett contributed research.

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Pandemic’s Costs Stagger the Nursing Home Industry

Even before they became deadly petri dishes for the worst pandemic in generations, many nursing homes were struggling to stay afloat and provide quality care.

But since the start of the coronavirus outbreak, nursing home operators have had to spend more money on protective equipment for staff and technology to connect residents with relatives who are no longer allowed to visit. Their revenues have shrunk because they are admitting fewer new residents in hopes of reducing the risk of infection.

The result is that some nursing homes, which often run on razor-thin profit margins, may be unable to pay their rent and other bills without government help.

“It could be a huge economic mess,” said Charlene Harrington, a professor emerita of nursing at the University of California, San Francisco. “It is possible that many nursing home chains could go bankrupt with the virus.”

Presbyterian Homes and Services, a Minnesota-based nonprofit operator of 16 nursing homes, estimates that the average 72-bed nursing home is spending an additional $2,265 a day on personal protective gear and an additional $1,500 a day on extra nursing staff.

At Meadow Ridge, a retirement community in Redding, Conn., with 62 nursing-home beds, executives have been forced to use Amazon or outside vendors to buy protective gear, said Kimberly Held, the community’s director of nursing.

“The pricing is unbelievable,” Ms. Held said. “I did have to order ponchos as a backup plan if we ran out of gowns. When we received our N95s, it felt like Christmas,” she added, referring to a type of mask that has been in short supply.

Nursing homes care for about 1.5 million people in the United States, and 70 percent of the 15,400 facilities are run for profit. While the financial picture for the industry, which also includes homes run by government agencies and nonprofits, was hardly rosy before the virus struck, it was especially precarious for many for-profit nursing homes.

Reimbursements from government programs like Medicaid are a main source of revenue for nursing homes, but operators have long complained those payments have not kept pace with the cost of care.

The industry is increasingly relying on the government for another form of support: The Department of Housing and Urban Development guarantees $20 billion in mortgages to more than 2,300 nursing homes — about 15 percent of the country’s total, up from about 5 percent a quarter-century ago. (Last year, the $146 million collapse of Rosewood Care Centers was the biggest default in the history of the mortgage-guarantee program.)

It can by pricey just to keep the doors open.

For-profit nursing homes often rent their properties under long-term leases from real estate investment trusts, known as REITs; investment firms; or private equity shops. A review of regulatory filings found that six major health care REITs — Sabra, Welltower, National Health Investors, Omega Healthcare Investors, LTC and CareTrust — had a business interest in more than 1,500 nursing homes.

The ownership structure has proved lucrative to investors in major health care REITs, which typically own a mix of nursing homes, elder care facilities and medical buildings. But those long-term leases can be problematic during an economic slowdown, because many include clauses to increase their rent every year, according to regulatory filings.

“There wasn’t a lot of wiggle room in these lease deals,” said David Stevenson, a professor of health policy at the Vanderbilt University School of Medicine who has studied the nursing home industry. Mr. Stevenson was talking broadly about the industry and not any specific company.

Advocates for the elderly say care inevitably suffers when nursing homes face financial trouble. More than a half-million nursing home residents lived in facilities rated below average or much below average in the federal government’s five-star rating system.

Some of the details in the current crisis have been grim: An anonymous tip led to the discovery of 17 bodies in the on-site morgue of one complex in New Jersey, and the death toll has since risen to 70 people. That facility, the Andover Subacute and Rehabilitation Center I and II nursing homes, is part of small chain in New Jersey and Pennsylvania operated by Alliance Healthcare, which rents the properties from affiliates of a Chicago-area firm, Altitude Investments, according to regulatory filings.

Altitude has had “more frequent communication” with the operator over the past month and has offered to provide assistance, said William Rothner, the firm’s president. He said Alliance had not requested any.

The lowest-rated homes were disproportionately operated for profit. Nearly half the residents of for-profit nursing homes lived in ones where the federal government found below-average staffing levels, compared with 23 percent of the residents of government or nonprofit facilities, according to a New York Times analysis of government data.

Genesis HealthCare, one of the country’s largest for-profit operators, exemplifies many of the pressures.

It rents the property for more than 70 percent of the 357 nursing homes it operates in the United States. Genesis’ shares trade for under $1, in part because of investor concern over its $1.6 billion in debt and the $5 billion outstanding on the value of its long-term leases. And nearly half the properties operated by Genesis scored two stars or lower in the government rankings.

Lori Mayer, a company spokeswoman, did not address Genesis’ financial situation and said any update would come when Genesis reports earnings next month. The company, she said, has taken a number of precautions to limit the spread of the highly contagious virus, which has torn through nursing homes from Washington State to New York.

The Times has identified more than 4,000 nursing homes and other long-term care or elder facilities across the United States with coronavirus cases, based on reports by states and counties. More than 36,500 residents and staff members at those facilities have contracted the virus, and more than 7,000 have died. The Times, however, has been able to identify at least 1,700 nursing homes on that list of facilities, which have reported 4,000 deaths.

In hopes of avoiding devastating outbreaks, nursing home operators have had to admit fewer residents. The pandemic has rippled in other ways, too: Many hospitals are postponing elective procedures that usually require short rehabilitation stints, taking away another source of clients.

“A very large fraction of their most profitable business is post-surgical rehabilitation,” said Howard Gleckman, a senior fellow at the Urban Institute. “And most of that business is gone.”

Nursing home advocates have said the industry may need $15 billion from the federal government to ride out the crisis. The Centers for Medicare and Medicaid Services, a federal regulator, filled in some of that gap by advancing payments to nursing homes and providing up to $1.5 billion in aid. But industry executives said it was not enough.

“I do think there will need to be more money,” said Rick Matros, chief executive officer of Sabra Health Care REIT, which holds the leases on 296 nursing homes and several hundred other senior living centers. “The financial stress is real.”

Mr. Matros said his firm was prepared to provide rent relief to operators if necessary. Most of Sabra’s tenants should not need that help, but that could change if the crisis continues for several more months.

“We are looking at each tenant individually, and some are stronger than others,” Mr. Matros said.

But Ms. Harrington, the professor who has written about the impact of for-profit nursing homes on resident care, is concerned about operators’ taking federal money to stabilize their balance sheets or pay Wall Street landlords at the expense of taking better care of residents and staff.

“I am hoping that nursing homes will use some of their money for hazard pay to workers and also to bring in and train a lot of additional care providers,” she said.

Reporting was contributed by Mitch Smith, Karen Yourish, Sarah Almukhtar and Danielle Ivory.

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