In August of 2017, the National Union of Healthcare Workers (NUHW) published a report (“Brius Healthcare’s Insider Transactions”) describing how Brius CEO Shlomo Rechnitz may be profiting at nursing home residents’ expense by steering millions of dollars in taxpayer funds to a web of companies he created to service his nursing homes.
The following are links to some of the source documents used to prepare the report. Many of the documents are public records obtained from government agencies including the California Department of Public Health, the California Office of Statewide Health Planning and Development and California courthouses.
(1) Deposition of Shlomo Rechnitz. On January 24, 2013, Rechnitz gave this deposition in a civil lawsuit known as “Samuel Nevarrez vs San Marino Skilled Nursing and Wellness Centre, LLC et al” (Los Angeles County Superior Court Case No. BC491081). On pp. 68-69 of the transcript (which are excerpted and reproduced at the beginning of the attached document for ease of viewing), Rechnitz testifies about his role at Boardwalk West Financial Services, LLC, which in 2015 collected $3.5 million from Brius nursing homes for providing financial consulting services, according to financial records filed by Brius nursing homes with the State of California.
(2) Shlomo Rechnitz’ control of a “middleman” property company. This document describes the ownership structure of a “middleman” property firm set up by Shlomo Rechnitz to lease and then sublease five nursing homes in Humboldt County including Eureka Rehabilitation & Wellness Center. According to this one-page chart (which was attached as an exhibit to the lease agreement), Rechnitz is a 99.9% owner of Eureka-LET, LP (the “middleman”). Meanwhile, Shlomo Rechnitz and his wife Tamar Rechnitz are 99% and 1% owners, respectively, of Eureka-LET LP’s general partner, Eureka-LET GP, LLC.
(3) 2015 Annual Lease Expense per Average Bed: Brius vs. Non-Brius Investor-Operated Nursing Homes. In order to evaluate whether Brius nursing homes paid inflated rents to other Rechnitz-controlled firms, NUHW compared their rental rates with those paid by non-Brius for-profit nursing homes operating in the same county. This document displays the results of NUHW’s analysis, which computed a metric of “Annual Lease Expense per Average Bed” using data supplied by OSHPD. The analysis, utilizing data covering more than 600 California facilities, found that Brius nursing homes paid rental rates that were 36.6 percent higher, on average, than those of the non-Brius nursing homes in the same county during 2015, the most recent year for which data is available. NUHW included in its analysis only those nursing homes with complete 365-day reporting data.
(4) Lease Agreement for San Rafael Healthcare & Wellness Center in Marin County. Shlomo Rechnitz signed this 28-page lease agreement, dated August 7, 2012, on behalf of the tenant (“Eretz San Rafael Properties, LLC”), which served as a “middleman” property firm.
(5) Sublease Agreement for San Rafael Healthcare & Wellness Center in Marin County. Shlomo Rechnitz signed this 3-page sublease agreement, dated November 1, 2012, on behalf of both the middleman (“Eretz San Rafael properties, LLC”) and the subtenant (“San Rafael Healthcare & Wellness Centre, LP”).
(6) San Rafael Healthcare and Wellness Center’s rental payments for 2012 and 2016. Since Brius took over this 54-bed facility in 2012, its rental payments have nearly tripled from $152,535 in 2012 to $421,177 in 2016. This document contains one-page excerpts from the facility’s “Long-Term Care Facility Integrated Disclosure and Medi-Cal Cost Reports” documenting these payments. The reports are filed with California’s Office of Statewide Health Planning & Development and are available at https://siera.oshpd.ca.gov/FinancialDisclosure.aspx
(7) CDPH’s $15,000 Fine against San Rafael Healthcare & Wellness Center for staffing violations. On June 8, 2017, the California Department of Public Health imposed an administrative penalty and $15,000 fine on the facility for violating California’s minimum nurse staffing requirement, which requires nursing homes to provide residents with a minimum of 3.2 hours of nursing care per patient per day.
(8) Master Lease Agreement for Brius’ nursing homes in Humboldt County. Shlomo Rechnitz signed this 86-page lease agreement, dated March 3, 2011, on behalf of the tenant (“Eureka-LET, LP”), which serves as a “middleman” property firm. See Exhibit B (page 107 of 110) for the Allocated Minimum Rent that the property owner charged a middleman firm for each of Brius’ five nursing homes in Humboldt County. See Exhibit H (page 110 of 110) for an “Organizational Chart” describing the ownership shares held by Shlomo and Tamar Rechnitz in Eureka-LET, LP.
(9) Sublease Agreement for Eureka Rehabilitation & Wellness Center in Humboldt County. Shlomo Rechnitz signed this 3-page sublease agreement, dated March 3, 2011, on behalf of both the middleman (“Eureka-LET, LP) and the subtenant (“Eureka Rehabilitation & Wellness Center, LP”).
(10) Eureka Rehabilitation and Wellness Center’s rental payments for 2010, 2012 and 2016. Rental costs at this 99-bed facility nearly tripled after Brius took over in 2011. Specifically, the facility’s rental payments jumped from $333,530 in 2010 to $827,751 in 2012, and then further increased to $890,846 in 2016. This document contains excerpts from the facility’s “Long-Term Care Facility Integrated Disclosure and Medi-Cal Cost Reports” documenting these payments.
(11) CDPH’s $20,000 fine against Eureka Rehabilitation & Wellness Center for staffing violations. On February 28, 2017, the California Department of Public Health imposed a “Class A” citation and a $20,000 fine on the facility for “fail[ure] to ensure adequate nursing staff to provide quality care, which caused harm to their residents as evidenced by…” (p. 2 and p. 31) The 32-page citation goes on to describe more than 25 falls by just seven residents, resulting in three residents suffering fractures (pelvis, nose, and neck), two residents being admitted to acute-care hospitals, and a laceration to the side of one resident’s head requiring eight staples. Investigators discovered that the facility required nursing assistants to care for up to three times more patients than they could reasonably handle.
(12) Theresa Kruger vs. Eureka Rehabilitation & Wellness Center. In March 2017, Ms. Kruger filed this lawsuit in Humboldt County Superior Court (Case No. DR 170144) following the death of her husband, Randy Kruger, who died in November 2016 after developing a Stage 4 pressure ulcer “protruding to the bone” at Brius’ Eureka Rehabilitation & Wellness Center. The lawsuit alleges that the defendants, including Shlomo Rechnitz, violated California’s laws governing elder abuse and wrongful death.
(13) Sherri McKenna vs Eureka Rehabilitation & Wellness Center. In March 2017, Ms. McKenna filed this lawsuit in Humboldt County Superior Court (Case No. DR 170143) on behalf of her brother, Alan Dewey. Mr. Dewey, who suffered from dementia, blindness and a seizure disorder, had been living at the Brius nursing home for nearly two years before he was allegedly evicted, deposited and left alone in a local hotel room where he died four days later in October 2016.
(14) Lease Agreement for East Terrace Rehabilitation & Wellness Center in Los Angeles. Shlomo Rechnitz signed this 76-page lease agreement, dated October 31, 2014, on behalf of the tenant (“East Terrace-LET, LLC”), which serves as a “middleman” property firm.
(15) Sublease Agreement for East Terrace Rehabilitation & Wellness Center in Los Angeles. Shlomo Rechnitz signed this three-page sublease agreement on behalf of both the middleman (“East Terrace-LET, LLC”) and the subtenant (“East Terrace Rehabilitation & Wellness Centre, LP”).
(16) Monterey Healthcare and Wellness Center’s related-party transactions and related-party indebtedness in 2015. In 2015, this facility reported paying $530,382 in “interest” payments to Rechnitz’ SR Capital, LLC and YTR Capital, LLC. It also reported owing $5.6 million in debt to the two firms. This document contains a two-page excerpt from the facility’s “Long-Term Care Facility Integrated Disclosure and Medi-Cal Cost Report.”