Shlomo Rechnitz’s nursing home just outside Glendale, Calif. has been fined, charged with involuntary manslaughter and indicted by a Los Angeles Grand Jury stemming from two patient deaths.
Now the company that insured the home is suing Rechnitz, the state’s largest nursing home operator, accusing him of omitting those facts when he applied for an insurance policy.
The lawsuit filed in federal court late last year by the Michagan-based firm ProAssurance could prove costly to Rechnitz, a billionaire, who recently found himself knee-deep in a Ponzi scheme.
ProAssurance is asking a federal judge to rescind its policy for Verdugo Valley Skilled Nursing & Wellness Center, LLC – a subsidiary of Rechnitz’s Brius Healthcare Inc., which controls one out of every 14 nursing home beds in California. ProAssurance is also asking the judge to declare that it has no duty to pay up if Rechnitz and Verdugo Valley lose an ongoing wrongful death lawsuit.
That could leave Rechnitz on the hook for any damages a jury awards to Carl Populus, whose 58-year-old brother James Populus died after receiving “grossly negligent” care at Verdugo Valley three years ago, according to a 2015 investigation by state Attorney General Kamala Harris.
The investigation found that the facility’s failure to provide proper medical care led Populus to suffer “severe weight loss, sepsis and pneumonia.”
When a nurse reported that Populus had become verbally unresponsive and had a weak pulse, facility managers waited over an hour to call for an ambulance, according to court papers. Populus died at a nearby hospital six days later of “multiple system failure due to sepsis” with infections throughout his body, state investigators determined.
Prosecutors also filed felony abuse charges against two nurses at the facility.
Yet, according to court papers, Rechnitz’s facility answered “No” on its insurance application when asked by ProAssurance if it had ever been “the subject or investigatory or disciplinary proceedings or reprimanded by an administrative or governmental agency or professional association.”
The facility also made no mention on the application that the California Department of Public Health had issued it a Class AA Citation and a $100,000 fine in 2009 in connection to the suicide of 34-year-old Charles Morrill.
The CDPH later reduced the fine to $45,000, but a grand jury in Los Angeles County indicted the facility alleging that it had permitted Morrill to suffer “unjustifiable physical pain and mental suffering.” It further held that the home was complicit in Morrill ending his life by discharging a fire extinguisher down his throat.
Rechnitz still owns Verdugo Valley, but last year state regulators rejected his bid to buy five more nursing homes. They cited records showing that his homes had racked up 386 serious violations over the previous three years — none more serious than the death of Populus.