A judge has slapped 15 nursing homes with a $35.8 million judgment after finding an owner, on-site managers and a shared management firm “routinely” and willingly failed to properly compensate workers over six years.
But whether nearly 6,000 affected workers will be able to collect on back pay and damages remains uncertain as several of the involved facilities are headed toward a bankruptcy sale next month.
Judge William S. Stickman of the US District Court for the Western District of Pennsylvania ruled on behalf of the Department of Labor Monday, following a 13-day bench trial to determine whether Comprehensive Healthcare Management Services, its 15 nursing homes and part owner Samuel Halper failed to keep accurate payroll records, denied employees overtime pay and failed to reimburse them for missed meal breaks.
In all, the DOL estimated employees in departments ranging from nursing to social work to housekeeping had been illegally denied some $17.9 million in pay. Stickman agreed, writing that the company and Halper had used broken time-keeping systems and made employee efforts to collect the right pay “unwieldy, inaccurate, and frequently ineffective.”
“Make no mistake, these were not occasional, innocent payroll errors,” Stickman wrote. “Rather, the Court finds that Halper, CHMS, and Facility Defendants created and intentionally maintained a system through which employees were consistently, systematically, and willfully subjected to payroll practices that did not remotely comply with the provisions of the [Fair Labor Standards] Act.”
“This was not a situation of if Defendants knew of their ongoing violations, rather, to what extent did Defendants know,” he added. “Credible evidence established that Defendants, Halper especially included, were aware of all the issues. … Any lack of awareness was due solely to Defendants’ own reckless disregard of and/or indifference to the continual issues raised by employees.”
Despite the harshly worded ruling alleging “malicious intent” — and an additional $17.9 million in damages Stickman tacked on — many employees may never get what they are due.
Nine of the 15 CHMS-managed nursing homes are set to be sold “free and clear” Aug. 5 in US Bankruptcy Court in Pittsburgh. With the judge’s approval, the new owners could obtain the operations without having to pay back any existing judgments related to the payroll case.
The Labor Department had tried to block that sale with a preliminary injunction last fall, noting
that Comprehensive Healthcare was planning to sell seven of the nursing homes to Kadima Healthcare Group. Like Comprehensive, Kadima is partly owned by Ephram “Mordy” Lahasky, and the government said owners were trying to divert resources that could be tied to a future claim.
Stickman allowed the potential $56 million sale to proceed, finding the government had failed to show it would suffer irreparable harm without the injunction. The Pittsburgh Post-Gazette said at the time that Stickman determined the Labor Department could recover damages “through other means.”
The nine nursing homes included in the coming bankruptcy sale are: The Grove at Greenville, The Grove at New Wilmington, The Grove at North Huntingdon, The Grove at New Castle, The Grove at Washington, The Grove at Harmony, The Grove at Latrobe, Cheswick Rehabilitation and Wellness Center and North Strabane Rehabilitation & Wellness Center.
Also involved in the Department of Labor case were Brighton Rehab and Wellness and Mt. Lebanon Rehabilitation and Wellness, which late last year were found guilty of healthcare fraud and falsification of records in a separate staffing upcoding case. In that case, a jury found five company and facility leaders — including Halper, Brighton’s CEO and 12% owner and an officer at Mt. Lebanon — not guilty.
In this case, Halper offered testimony that Stickman called “incredible” and called out his participation in anti-employee tactics.
“The evidence credibly establishes not only that Halper and other Defendants violated the FLSA, but that they did so willfully — if not maliciously,” Stickman wrote.
An attorney for Halper and Comprehensive did not immediately respond to a request for comment from McKnight’s Long-Term Care News.
In addition to the $38.8 million in fines, Stickman enjoined the defendants from ongoing labor rule violations, writing that they “have provided nothing to show that they have come into and will remain in compliance.”
Acting Secretary of Labor Julie Su had specifically requested the injunction as problems continued at the facilities even after she filed suit in 2018.
