Colorado nursing homes face lawsuits alleging millions in unpaid bills

Twenty-six Colorado nursing homes managed by the same company have been sued over the last year for a combined $5 million after they allegedly failed to pay vendors who provided short-term staffing.

The nursing homes — 10 in metro Denver and the rest located across the state — were all managed by the same company, Vivage-Beecan, when they fell behind on their bills.

While many elder care facilities faced increased costs during the pandemic, it would be unusual for a facility to not pay its vendors, said David Grabowski, a professor of health care policy at Harvard University’s medical school.

Residents do best when their homes’ ownership and management are stable, so possible financial problems that could lead to a sale or closure are concerning, he said.

“That’s a warning sign,” Grabowski said. “Maybe beyond a warning sign, a cry for help.”

Glendale-based Vivage, which announced a merger with California management company Beecan in 2023, owns 17 elder care communities in Colorado, including seven that face lawsuits. Beecan provides services to homes in Colorado, California and New Mexico.

The two companies said they are currently separate, but couldn’t answer before deadline if they hadn’t completed the merger, or had split at some point.

A statement from Beecan said the homes’ owners hired it to improve care quality while they were dealing with staffing shortages. Nursing facilities struggled during the pandemic, and lost a combined $122 million in 2022, it said.

“The pandemic had a devastating impact on nursing homes throughout the country due to the age vulnerability of patients, staff shortages and burnout, and financial strain resulting from temporary staffing agencies charging two to three times their pre-pandemic rates,” the statement said.

Judges in Boulder District Court already ordered six of the homes being sued to pay a combined $506,000 after their attorney quit and they didn’t hire a new one by the court’s deadline.

If the remaining lawsuits go against them, the owners of the individual homes could be on the hook for anywhere from about $1,700 to more than $1.2 million, according to court filings. The totals could grow because of interest on the original bills and legal fees, which the losing party typically has to cover for the winner.

None of the attorneys representing the companies that filed 10 of the ongoing lawsuits or three of the completed ones responded to questions from The Denver Post.

If a nursing home closed, the impact could reverberate throughout Colorado’s health care system. People who are recovering from a serious injury or surgery sometimes need to undergo physical therapy in a nursing home before returning home. If homes closed, patients could get stuck spending more time in hospitals, increasing costs and leaving fewer beds available for others who need care.

Matt Nielsen, a regional operations director overseeing eight homes that Beecan manages in the Denver area, spoke on behalf of Wellsprings Care Center in Englewood, which faces about $253,000 in claims.

Some homes have improved under Beecan’s management, and Wellsprings will continue to provide quality care, he said.

“I have facilities that have increased their overall ratings from three or four stars (in Medicare’s ratings) to five stars,” Nielsen said.

Nineteen homes still facing lawsuits now belong to Kansas-based Recover Care, though only one suit listed the company as a defendant. Representatives for the company didn’t return phone messages, and its email system refused to accept messages from addresses it didn’t list as approved.

Who owned the nursing homes now belonging to Recover Care at the time when they allegedly went into debt remains unclear. Some nursing home administrators called Vivage-Beecan a former owner, while representatives for the company said it only offered management services.

Nielsen said he didn’t know who owned the homes he works with. A company executive pointed to SavaSeniorCare, which shut down in 2023, but didn’t answer which of the homes belonged to Sava. Beecan’s statement said Sava sold its Colorado homes to new owners between 2021 and 2023.

Most of the lawsuits involved staffing companies, though an insurance company, a pharmacy and a business offering therapy for people who can’t swallow also filed claims. During the pandemic, nurses had more options, leading some to take higher-paid temporary assignments or to switch to other settings, most of which pay more than nursing homes.

A state report found staffing agencies made roughly 50% profit margins when they supplied certified nursing assistants, licensed practical nurses and registered nurses in the first half of 2023. Nursing homes used fewer temporary staff hours in 2023 than they had the previous year, but still more than they had in 2017.

The ratio of residents to staff and the mix of types of health care workers in a home are two of the most important factors in care quality, so any debt that interferes with a facility’s ability to staff its shifts could create a problem, said Andrew Olenski, an assistant professor of economics at Lehigh University in Pennsylvania.

“A staffing company is generally not a vendor you want to stiff,” he said.

Matt Dollar, administrator for Poudre Canyon Health and Rehabilitation in Fort Collins, said the lawsuits won’t affect residents. The home, which sold in September, faces about $264,000 in claims from two lawsuits.