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The many extracts on this page are from copyright material. They are reproduced here for educational purposes and to stimulate public debate about the provision of health and aged care. I consider this to be "fair use" in the common interest. They should not be reproduced for commercial purposes. The material is selective and I have not included denials and explanations. I am not claiming that all of the allegations are true. The intention is to show the general thrust of corporate practices as well as the nature and extent of the allegations made.

National Healthcare Corporation

COMMENT:- National Health Corp describes itself as one of the nation's oldest publicly traded long-term health care companies. Its press releases indicate the scope of its activities.

NHC gets new liability insurance
Business Wire October 2, 2000, Monday

NHC operates for itself and for third parties long-term health care centers in 11 states. NHC also operates homecare programs, independent living centers and assisted living centers. NHC's other services include managed care specialty medical units, Alzheimer's units and a rehabilitation services company.

Florida Approves NHC Divestiture
Business Wire December 21, 2000, Thursday

NHC operates for itself and third parties, 77 long-term health care centers with 10,144 beds. NHC also operates or provides services to 33 homecare programs, six independent living centers and assisted living centers at 16 locations. NHC's other services include managed care specialty medical units, Alzheimer's units, accounting and financial services at 31 additional projects, and a rehabilitation services company.

COMMENT:- Greedy groups saw home care and assisted living facilities as pots of gold and rushed in to exploit the opportunities. Health care Corp like other corporate chains seized the opportunity. An integrated system like this would have provided a referral source for its nursing homes.

There were too many of them and not surprisingly some of these groups took more money than they were entitled to and did not provide the care they were being paid to provide. Federal investigations have exposed fraud in these areas and also poor care.

The Tennessean October 17, 1999

Not long ago, Wall Street's high rollers considered assisted-living companies a sure bet.

Here was a segment of the health-care industry that seemed to have it all: a lucrative market, no federal regulation and little exposure to government budget cuts or dickering by managed-care insurance companies.

Suddenly, all bets are off.

"It's an exodus by Wall Street," said William Sheriff, chairman and chief executive officer of Brentwood-based American Retirement Corp. , whose stock has taken a drubbing. "There's nobody in the sector that hasn't been decimated."

While there are different explanations for what happened, analysts agree that fundamental concerns about supply and demand too many retirement communities and not enough retirees are driving investors out of the market and into more attractive opportunities.
American Retirement Corp. is trading around $ 7, down sharply from a recent high of $ 17.75 in May. And National Healthcare Corp., a Murfreesboro-based nursing home operator with some assisted-living business, has tumbled from a recent high of $ 10 in July to about $ 6.
But assisted living expanded too quickly because, unlike hospitals, such companies don't need to get approval from state health regulators before they build, Morgan said. And, with the economy strong, real estate speculators fueled the growth, he said.
"We knew two years ago there was tremendous capital flowing into this industry," he said. "And that's a build-it-and-they-will-come mentality that is hard to sustain."

COMMENT:- One of the ways in which this company controlled costs was to supply less nursing care than it claimed and charge Medicare for care not provided.

The Tennessean March 31, 2000, Friday CITY EDITION

National HealthCare Corp. said yesterday it earned 18 cents a share on stronger revenue in its fourth quarter, compared to a loss of $ 1.29 a share a year ago.
NHC President Andy Adams said the nursing home company did better, despite Medicare reimbursement cuts, because it was able to control costs.

COMMENT:- Critics claim NHC provides poor care. NHC faces 108 lawsuits, many in Florida and the insurer which paid US $25.8 million to settle cases against NHC has withdrawn. No one else will insure them.

Care manager says it might leave Florida
Sarasota Herald-Tribune July 12, 2000

A health care company that manages a nursing home in Sarasota and leases another in Port Charlotte may withdraw from Florida if it can't secure a new liability insurance carrier.

National HealthCare Corp., a public company whose stock is traded on the American Stock Exchange, announced this week that Caliber One of Yardley, Pa. , will cancel its policy Sept. 28.
National HealthCare manages or leases 105 long-term centers in 12 states, including 22 in Florida. They include Sarasota Health Care Center, a 120-bed skilled nursing facility at 5157 Park Club Drive, and NHC HealthCare, a 180- bed nursing home with 30 beds for Alzheimer's patients at 4000 Kings Highway in Port Charlotte.
National HealthCare also operates 17 home care programs in Florida but says replacement coverage will probably be obtainable for that sector.

Goodpaster (spokesperson) said unless the company finds another liability insurance carrier for nursing homes, it will be forced to leave Florida. It plans to announce its decision by mid-August.

Although National HealthCare has more nursing homes in Tennessee, Goodpaster said the latest action is especially bad news for facilities in Florida, where liability insurance has risen more than 100 percent in the past two years.

A majority of the 108 lawsuits filed against the company last year were in Florida.

Press Journal (Vero Beach, FL) September 27, 2000

But at least one company, National Healthcare Corp. , a Tennessee-based company that plans to sell The Health Center of Stuart, says litigation remains the chief reason why nursing homes find it so hard to find insurance for their Florida properties.

NHC spokeswoman Liz Goodpastor reiterated Thursday that litigation costs are a key reason why the company is selling its 12 Florida nursing homes to a group of private investors, led by a former NHC vice president. The company now operates nursing homes in 12 states including Florida.

Our insurance carrier has so far paid $25.8 million in settlements on our behalf across those 12 states, $25 million of that is Florida, Goodpastor said. I think that is a strong indication that that is a state with a problem.

COMMENT:- Corporate chains are pressing to have the law changed so that they can be sued only under medical malpractice laws. These do not contain punitive provisions. The patients are usually dead by the time the case comes to court and the damages paid to relatives in that case are very much less. Citizens consider that this will remove the only means they have of making these corporate chains maintain standards of care. They point out that this is not medical care but basic residential care and the residents are powerless and unable to fend for themselves. Abuse of their trust deserves large punitive damages.

Company may sell 22 Florida nursing homes;
Florida Today July 29, 2000
Tony Manolatos

Company may sell 22 Florida nursing homes; 1 in Brevard Skyrocketing insurance costs hit state's long-term care centers

A national nursing home company that plans to sell its 22 facilities in Florida if it can't find affordable liability insurance is setting a trend that either will alter legislation or eliminate the state's nursing homes, industry insiders say.
NHC won't release insurance estimates excluding its Florida sites but said its best rate including the state is about $21 million. The Murfreesboro, Tenn., company paid $8.9 million this year to cover the 105 long-term care centers it owns and operates in 12 states. It paid a little more than $1 million for the same coverage four years ago.

Company administrators and industry representatives blame the nursing homes' dilemma on lawyers and laws unique to Florida that require a low standard of proof to prevail in lawsuits against nursing homes, then allow attorneys to collect their fees, in addition to awards.

Lawyers blame the insurance rate increases on nursing home mismanagement and the fallout from Medicare fraud.
The company's Merritt Island home, which has 170 patients and 10 open beds, is the only facility NHC owns in Brevard County. Its liability insurance premiums have gone up 2,120 percent since 1996, Williams said. The yearly premium for the home was $10,000 in 1996. For the most recent year, it was $222,000.
The average long-term care liability cost per annual occupied bed in Florida is $6,283, which is eight times the average cost for the rest of the country, according to a January study by Aon Worldwide Actuarial Solutions.

The study, requested by a trade organization representing Florida nursing homes, also concludes that approximately half of the total claim costs paid by insurance companies go directly to attorneys.
"We know the problems are a result of pervasive fraud and mismanagement, and that's what the (federal government's) General Accounting Office has concluded too," said Ken Connor, a member of the state's task force on the Availability and Affordability of Long Term Health Care.

The task force was appointed earlier this year to look at the situation of Florida's nursing homes.
Connor, an attorney with Wilkes and McHugh, the Tampa-based law firm that represents more nursing home clients than any other firm in Florida, said NHC has "major quality-care issues," which have a direct bearing on insurance costs.

"They're providing lousy care, and so are the other homes in Florida," Connor said. "Florida leads the nation in regulatory violations and also leads the nation in short-staffing. The problem is not lawsuits. The problem is quality of care."
"We don't allege poor medical care a lot of times because that's not what they get," said Steven J. VanCore, spokesman for Wilkes and McHugh. "It's residential treatment they're not getting. That's 95 percent of our cases."
"Not a single insurer that has dropped coverage in Florida has not dropped insurance nationwide," VanCore (Consumer representative) said. "The companies are going in the toilet. They've been grossly mismanaged."

COMMENT:- Residents and their families have banded together to take HRC to court because of their concerns about care.

Federal Court Declines to Dismiss Abuse Charges Against Ga. Home
Nursing Home Litigation Reporter August 10, 2000
Abuse and Neglect Litigation:Brogdon v. National Healthcare Corp.

An elder-abuse action brought by the present and deceased residents of a Georgia nursing home against their corporate owners has survived, in large part, a motion to dismiss. In upholding the complaint, which includes contract, professional malpractice and residents' rights claims, the Northern District of Georgia also retained primary jurisdiction of the action.
The present and former residents of NHC of Ft. Oglethorpe filed the lawsuit against its owners and operators, alleging that residents are (or were) subjected to "inhumane conditions" at the facility. Because the nursing staff has high turnover, receives low wages, and lacks training and supervision, the staff allegedly fails to timely respond to the residents' needs. Consequently, the residents suffer from inadequate care, placing their health and safety in jeopardy. U.S. District Judge Harold L. Murphy rejected most of the defendants' attacks on the complaint.

COMMENT:- Note HRC's claims about nursing staff levels and the large amoiunt of time they give to each patient.

NHC Announces Divestiture of Florida Operations
Business Wire August 28, 2000, Monday

National HealthCare Corporation (AMEX:NHC), today announced that it will divest itself of its Florida operations on Oct. 1 because liability insurance for its Florida operations is not available.

NHC's Florida portfolio of 12 owned or leased long-term health care centers and three assisted living centers are being leased to non-NHC affiliated companies. These companies are newly formed by certain health care professionals and other investors. These companies are finalizing negotiations for similar leases on nine Florida long-term health care centers that NHC manages for unrelated owners. NHC will either cancel its management contracts or assign them to the new companies by Sept. 30.

COMMENT: NHC is another of the companies which has established a separate REIT to own its facilities and then lease them back. It seems the REIT holds the debt.

S&P Lowers Ratings on National Health Investors Inc.
Business Wire September 22, 2000, Friday

Standard & Poor's-- Standard & Poor's today lowered its rating on National Health Investors Inc. In addition, ratings were lowered on the company's senior unsecured notes and mixed-shelf registration (see list). All ratings were placed on CreditWatch with negative implications.

The rating actions are driven by concerns that debt coverage measures will continue to weaken and that there is uncertainty surrounding current negotiations with the company's unsecured bank lenders. The ongoing challenges facing a number of National Health's health care operators, including its advisor and largest operator, National Healthcare Corp. (NHC), also remain a material credit concern.

National Health is a Tennessee-based REIT that has invested roughly $624 million in 188 mortgage and/or equity investments, the majority of which are long-term care and assisted-living facilities.
National Health's largest single-operator exposure (about 35% of revenues) is to its former sponsor and present advisor, unrated NHC.
NHC was modestly profitable in 1999 (despite the adoption of Medicare's new Prospective Payment System) and has remained so through the first six months of this year. However, NHC has litigation-related contingent liabilities, which, until resolved, will materially constrain its own financial flexibility.

COMMENT:- Citizens and their lawyers are concerned about the sale of NHC facilities in Florida to a former vice president. It is not clear what the relationship between the two is but each home is to be a separate company. Is NHC lending the money and getting its income from the interest. It sounds as if the new homes will carry minimal insurance and will not be able to pay large settlements. They are banking that they will not be sued simply to close them down. It basically means that residents will not enjoy legal redress. If an injured resident wins a case there will be no money and they will have to fund the costs themselves.

Purchase of nursing home draws criticism
St. Petersburg Times September 27, 2000

The change in management of the Hudson facility amounts to a "shell game" that could harm patients, critics of the sale charge.

HUDSON - NHC Health Center of Hudson, a 180-bed nursing home near the Regional Medical Center Bayonet Point, should be under new management starting Oct. 1.

But the change of ownership has attracted the critical eye of the Coalition to Protect America's Elders, a group affiliated with Jim Wilkes, the Tampa attorney who has made millions suing nursing homes.
NHC will turn over ownership of the homes to Steve Strawn, the corporation's former vice president of operations. In the case of Hudson, Strawn will share a small percentage of the ownership with nursing home administrator David Cross.

Cross said the new ownership group, whose assets will be minuscule compared to NHC's, will reduce the financial incentive for Florida's fee-hungry trial lawyers to sue the home. As a result, the home's insurance premiums should fall.

"There's no profit margin in it for the attorneys," Cross said.

But the Coalition to Protect America's Elders calls the management change a "nursing home shell game" that could bilk taxpayers and harm patients.

Barbara Hengstebeck, the coalition's executive director, said NHC is setting up its former employees in business by financing the purchases of the nursing homes.
As a result of the "scam," Hengstebeck said, the quality of care in Hudson and the other homes would dip.
"Cuts in staff, cuts in food, cuts in supplies: The residents are always the one to suffer when stuff like this happens," Hengstebeck said.
HRC can change ownership only with approval of the state Agency for Health Care Administration. The nursing home's new name will be Bayonet Point Health and Rehab Center.
Pat Glynn, spokesman for the health care administration, said his office is reviewing the sale from all angles, taking into consideration the critique of Wilkes' group.

"The bottom line for the state is the financial viability of any proposed owner," Glynn said. "These are homes for the most delicate of health care conditions."

Florida Approves NHC Divestiture
Business Wire December 21, 2000, Thursday

National HealthCare Corporation (AMEX: NHC), one of the nation's oldest

publicly traded long-term health care companies, today announced that the State of Florida has nursing facilities into new entities, effective October 1, 2000.

President W. Andrew Adams said, "NHC is pleased the Florida State Agency has approved the change of ownership of the 12 skilled nursing facilities NHC formerly operated in Florida. This approval transfers ownership to twelve newly-formed and non-related companies effective October 1, 2000.

NHC gets new liability insurance
Business Wire October 2, 2000, Monday

National HealthCare Corporation (AMEX:NHC), one of the nation's oldest publicly traded long-term health care companies, today announced that it has a new liability insurance carrier for its operations in 11 states.
"We are happy to be able to maintain our liability insurance coverage without having a lapse," NHC President Andy Adams said.

COMMENT:- This little gem is very interesting when set against the one that follows. NHC is piously claiming that you cant provide care for the small amount of time its competitors provide. It has increased the salary of nurses and gives its patient 3.2 hours of nurses time a day each. Could all those allegations about understaffing and poor care be false?

Half of nursing homes short staffed, study says
Chattanooga Times / Chattanooga Free Press August 15, 2000, Tuesday

More than half of the nation's nursing homes are so understaffed they may be endangering the welfare of their patients, according to a new federal report.

And under one think-tank proposal for raising nursing home standards, 87 percent of Tennessee nursing homes would have to hire more staffers while 94 percent of Georgia facilities would need to post help-wanted signs.
The report, prepared by the Senate Special Committee on Aging, found 54 percent of the nation's nursing homes staff at levels below what it considers minimum -- two hours. The report recommends Congress set a higher staffing standard and provide more money to fund the improved care.

The report also found one-third of nursing homes, 31 percent, are below the suggested minimum of just 12 minutes per resident day for registered nurse staffing.
The tight labor market is forcing up wages for nursing home workers, said John Strawn, administrator of The Health Care Center at Standifer Place. National Healthcare Corp. bought the former Hamilton County Nursing Home late last year.

"We've separated ourselves from the fast-food industry and other 'minimum-wage' type jobs," Mr. Strawn said.

Certified nursing assistants and licensed practical nurses got a "substantial" raise in May, Mr. Strawn said. With night and weekend differentials, CNAs can earn $10 an hour or more.

The parent company, National Heathcare Corp., is running two training classes in Chattanooga for certified nursing assistants, who deliver basic care such as feeding and cleaning to nursing home patients. Patients at National Heathcare Corp. facilities average about 3.2 hours of care a day, Mr. Strawn said.

"You can't operate on two hours a day," he said.

Life Care Centers of America, based in Cleveland, Tenn., is the largest private nursing-home company in the nation.

Its homes in Southeast Tennessee, Virginia, North and South Carolina average about 2.8 hours per day of care, said Allison Pierce, senior vice president of operations for human resources.
Nationally, a suggestion known as the Hartford proposal would set the minimum at 4.55 total hours of nursing care. The new report takes no stand on the Hartford proposal, recommended by the National Citizens Coalition for Nursing Home Reform. But the report notes that since only 11 percent of nursing homes met that standard in 1998, it would require most facilities to increase staffing levels.

COMMENT:- In spite of paying nurses more and allowing them to spend longer than others NHC is making a profit. Nurses are the single major expense in nursing homes.

NHC Reports Third Quarter Earnings
Business Wire November 14, 2000, Tuesday

National HealthCare Corporation (AMEX:NHC), one of the nation's oldest publicly traded long-term health care companies, today announced third quarter earnings for the period ended Sept. 30 of $2,513,000 or 22 cents per share compared to $1,846,000 or 16 cents per share for the same period last year.

COMMENT:- It all becomes clear when we discover that NHC has not been providing all those nursing hours after all. They have charged Medicare for them, but in fact the patients never got this care. It was all bogus in order to defraud Medicare.

National Healthcare to pay $27 million on heels of huge HCA fraud settlement
The Charleston Gazette December 16, 2000, Saturday

WASHINGTON - National Healthcare Corp. agreed Friday to pay $ 27 million to settle allegations it had defrauded the government since 1991 by exaggerating the amount of time its nursing home staff spent caring for Medicare patients, the Justice Department announced.

The complaint, originally brought by a private whistleblower and later joined by the government, said the company submitted cost reports overstating the nursing time for Medicare patients in order to get more money from the federal health care program.

But the Justice Department said the false cost reports were contradicted by the nursing staff's time records and that some workers were listed as performing therapy on Medicare patients when they did not do that type of work.
The lawsuit against National Healthcare was initially brought in 1996 in Tampa, Fla. by Philip Chares Braeuning, a former nursing home administrator at Palm Gardens of Orlando, then managed by National Healthcare. The government joined the lawsuit March 18, 1997.

The Palm Beach Post April 24, 2001
Mary Ellen Klas, Palm Beach Post Capital Bureau

COMMENT:- Here is another reason why NHC is selling its homes. Under a loophole in the law they will get higher Medicaid fees if they do.

As the House budget committee meets today to discuss whether it can afford to increase the staffing levels at nursing homes, companies across the state are using a loophole in the law to do what the legislature has refused to do - raise the Medicaid reimbursement rate for nursing homes.

The Agency for Health Care Administration has 45 applications pending for changes of ownership from nursing homes from Palm Beach Gardens to Pensacola.

If the new owner can prove it is not related to the previous owner, the nursing home is eligible for an automatic increase in its Medicaid reimbursement rate, drawing down more state and federal money to pay for the poorest residents, whose care the industry claims the state has chronically underfunded.
But others are going to extraordinary means to take advantage of the law.

National Healthcare, a for-profit chain, sold 16 of its homes in Florida. Twelve went to Steven Strawn, a director with the company for 21 years, who bought them for $1,000 down with the help of a loan from NHC.

To conform to legal requirement that the new company have new owners, Strawn made the administrator of each of the homes a partner and invited a Bush family supporter to join them.
Now, the Agency for Health Care Administration, an agency under the governor's direction, must decide whether the NHC change of ownership, and others that may be modeled after it, meet the legal test for being an unrelated party and qualify for the bumped-up rate.

Initial reviews by the Medicaid office at AHCA rejected the new structure but AHCA Secretary Ruben King-Shaw is questioning whether the agency has the legal ground to prevent it.
I would hope the agency would reject it and recognize some things just don't pass the smell test. But I think its hands are tied," said Sen. Ginny Brown-Waite, R-Spring Hill, sponsor of the Senate bill to limit lawsuits against nursing homes.

NHC Reports First Quarter Earnings
Business Wire May 10, 2001, Thursday

National HealthCare Corporation (AMEX: NHC), a long-term health care company, today announced first quarter earnings for the period ended March 31 of $2,389,000 or 21 cents per share compared to $2,379,000 or 21 cents per share for the same period last year.

Revenues for the quarter were $99,252,000 compared to $115,401,000 for the same period a year earlier. The declines in revenue and in total cost and expenses are due primarily to the October 1, 2000 divestiture of 12 long-term care centers and three assisted living centers in Florida.

An Opportune Time for Fraud Disclosures?
New York Law Journal January 29, 2002

Big Settlements

* $ 27 million from National Healthcare Corp. for inflating the amounts of time spent caring for nursing home patients;

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This page created Feb 2001, updated Aug 2001 and Aug 2003 by Michael Wynne