September 22, 2019

Fraud, mismanagement class action lawsuit against philanthropist Shlomo Rechnitz

A class action lawsuit filed Oct. 7 against against local businessman and philanthropist Shlomo Rechnitz claims that his healthcare company, Brius Management, which owns 57 nursing homes in California, has misrepresented the quality of its care, routinely violated industry regulations and committed fraud. 

In response, Rechnitz’s high-profile attorney, Patricia Glaser of law firm Glaser Weil, said the lawsuit is baseless and lacking in evidence. A statement released by Brius said it is “a case in point of how anyone can say anything in a lawsuit” and that the plaintiff’s lawyer, Stephen Garcia, a partner in the Long Beach law firm Garcia, Artigliere & Medby, made the filing after Rechnitz denied him a “lucrative consulting contract.” 

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CORRECTION: This article previously incorrectly stated that Goldstar Healthcare of Santa Monica is owned by Shlomo Rechnitz. It is not and never has been.

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The 175-page class action lawsuit does not state how many nursing home residents are involved, and a spokesperson for Garcia, Artigliere & Medby wrote in an email that the plaintiffs “don’t want to be subjected to retaliation” and so are not revealing their names for the time being. Still, according to the lawsuit, the plaintiffs’ class includes anyone who lived at one of Rechnitz’s California nursing homes at any point in the past four years. 

Rechnitz, the suit claims, has a history of failing to comply with regulations enforced by the California Department of Health Care Services (DHCS) and the federal Centers for Medicare and Medicaid Services (CMS). 

It references an enforcement order by DHCS against two of Rechnitz’s nursing homes — the agency withheld all Medi-Cal payments from his Highland Park and Brighton Place Spring Valley nursing homes from Oct. 10, 2013, until Oct. 7, 2014, when he submitted required audit materials to the agency. The lawsuit also noted that DHCS recently threatened to withhold Medi-Cal payments from all of Rechnitz’s nursing homes in California. 

A DHCS spokeswoman wrote in an email that the agency had indicated it would withhold an additional 20 percent of Medi-Cal payments from all of Rechnitz’s nursing homes in the state if he did not submit “certain home office cost reports sought by the department” by Sept. 22. 

“DHCS subsequently received the reports and has not implemented the withhold, pending the outcome of the review,” the spokeswoman said. 

The lawsuit claims that Rechnitz “chronically understaffed” his facilities, purposely withheld that information from residents, reduced their level of care below an acceptable level and violated their rights as laid out in the state’s health and safety code. 

Garcia pointed to a suit filed by his office on Oct. 9 on behalf of Raymond Foreman, a former resident at Inglewood’s Centinela Skilled Nursing & Wellness Centre West and the only defendant named in the class action. Foreman's personal injury complaint says he suffered a broken leg when a nurse’s assistant fell on him and that he did not receive adequate care from the nursing home due in part to “understaffing, lack of training, [and] failure to allot sufficient economic resources.” 

A CMS inspection of Centinela, the results of which are available at medicare.gov, grades both the facility and its registered nurse staffing at one out of five stars, or “much below average.” 

Garcia also pointed to a March complaint issued by DHCS and California Department of Public Health (CDPH) in bankruptcy court that attempts to disqualify Rechnitz from purchasing 19 financially beleaguered nursing homes, citing the Medi-Cal withholds and his failure to promptly file home office cost reports. That case is still working its way through court. 

“They are painting this beautiful picture that does not match the reality of the situation, and their residents are having poor outcomes because of it,” Garcia said. 

Nowhere in the lengthy lawsuit, however, are any specific examples of damages caused to anyone in the plaintiff’s class, and only one plaintiff, Foreman, is named. 

Glaser disputed Garcia’s allegation that Rechnitz’s nursing facilities are understaffed, saying, “We have always met and frequently exceeded the nurse-to-patient ratio that is required under the law,” referring to a CDPH requirement that nursing homes provide 3.2 “nursing hours per patient day,” a metric that helps quantify the amount of time each nurse can spend with each resident. 

Glaser accused Garcia of burdening “responsible runners of nursing homes with this kind of huge [legal] expense” and of inaccurately painting Rechnitz as an irresponsible nursing home operator. 

“Shlomo Rechnitz is not one of those people,” Glaser said. 

Rechnitz made headlines twice last year for much different reasons. In April 2013, he bought Doheny Glatt Kosher Meat Market, the scandal-ridden Los Angeles meat distributor and retailer that closed its doors last year, before arranging to transfer it to a third party. One month later, he donated $250,000 to help restore the badly vandalized Mount Zion Cemetery in East Los Angeles. 

Glaser accused Garcia of filing a baseless suit and pointed to a 2012 lawsuit in which Goldstar Healthcare Center of Santa Monica sued Garcia for attempted extortion. (That case was dismissed last year after being settled out of court.)

Firing back, Garcia said that an aide to Rechnitz threatened him with a counter-lawsuit if he does not drop the case.