Officials in Massachusetts successfully petitioned to have five skilled nursing facilities operated by the troubled Skyline Healthcare placed in temporary receivership.

The receivership petition and order appointing the receiver, which the Massachusetts Office of Attorney General provided to Skilled Nursing News, was approved Monday by a Suffolk County Superior Court judge.

KCP Advisory Group LLC was named the temporary receiver.

The office of attorney general Maura Healey argued in the petition that a receiver was necessary for the Skyline facilities to protect the immediate health and safety of residents; to make sure that vendors and staff could be retained over the coming weeks; and to ensure the safe transfer of residents and safe closure of the SNFs.

In fact, the facilities were at risk of dangerously low staffing levels because of unpaid wages, and it was quite possible that they would not make payroll on May 3, Healey’s office said.

The receivership comes after multiple news reports about the dire financial straits of the facilities — at some cost to the state. In an attempt to help keep the buildings afloat, the Massachusetts Medicaid program, MassHealth, had directed $528,754 in payments to the facilities through an electronic funds transfer, according to the receivership petition.

That money was scheduled to hit the facilities’ bank accounts on April 22 for services provided from March 1 to March 31 of this year. But the administrators of the Skyline facilities couldn’t access the payments, and were unable to pay direct care staff or essential vendors as a result, according to the petition.

A number for Skyline appeared to be disconnected when SNN attempted to reach the company for comment.

KCP did not return a message left by SNN as of press time.

Unpaid bills pile up

One company with firsthand knowledge of the problems at Skyline is Vero Health Management. The Columbia, Md.-based firm had been asked by one of the lenders involved with Skyline to manage the Massachusetts facilities until a transaction could could be closed, Vero president David Vincent told SNN.

The company had experience turning around distressed properties along the East Coast, and its employees worked in the Skyline facilities on behalf of the lender from May to August of last year and received payment for the work it did for that entity, Vincent noted.

But from September 2018 until March of this year, it managed the five Massachusetts properties without receiving any payment from Skyline, Vincent said.

“We ended up working with a third party who was going to buy the real estate, take the deeds and the debt, and then lease to us,” he explained. “Time was the enemy of this deal; the current operator — Skyline — and the third party couldn’t reach terms before the surveyors entered the buildings. And not a lot of transactions close over open surveys.”

Timeline of the trouble

The nursing homes held by Skyline Healthcare in Massachusetts had seen their paychecks bounce in recent weeks, with one facility forced to close an entire floor because of how many nurses’ aides left.

Skyline, which is based in New Jersey, agreed to surrender the licenses for the five Massachusetts facilities, with another facility formerly operated by the troubled operator in Nebraska is slated to close.

The affected properties in the Bay State consist of Bedford Gardens & Rehabilitation Center, Bedford Village Care & Rehabilitation Center, and Rockdale Care & Rehabilitation Center, all in New Bedford; Dighton Care & Rehabilitation Center in Dighton; and Highland Manor Care & Rehabilitation Center in Fall River

The AG’s office had received multiple complaints from workers at the five facilities about late payments, non-payment of wages and overtime, and bounced checks, among many other financial issues, according to the petition.

“The nursing homes are also without critical supplies, because the current operators are not paying their vendors,” Healey said in the petition. “At least one facility has been put on notice that its food service vendor will no longer deliver food starting tomorrow [April 30, 2019] due to nonpayment. Another facility has run out of milk for its residents.”

That experience seems to match the situation found in other states where Skyline Healthcare left its mark. The company had left workers in Kansas without insurance coverage despite deducting premiums from paychecks, and former Skyline facilities in Arkansas caused similar problems for their new managers. In South Dakota, Skyline facilities were left with only a few days’ worth of supplies when the company told its administrator in that state that the company would be dissolved.

The Massachusetts Department of Public Health, the state agency responsible for licensing long-term care facilities, became aware of the issues Skyline was having in multiple states last year, when the company went into a slow-motion collapse in several states.

At some point in 2018, the DPH contacted the facilities and Skyline to discuss plans for the five facilities in Massachusetts; Skyline indicated to the agency that a third party was negotiating to purchase all five SNFs. Management at the operator also said the unaffiliated third party to which the potential purchaser planned to lease the facilities was managing them during negotiations.

Vero was not named in the receivership documents, but Vincent confirmed the company’s involvement. The firm had been managing the facilities until a cash shortfall made it obvious there was no way to keep the business moving forward, he said.

Vero terminated its management agreements in March.

That same month, when the proposed sale fell through, the facilities brought in a new manager, according to the receivership petition. The administrators “raised serious concerns related to ongoing issues at the facilities” on March 27. These concerns included the inability to order supplies, uncertainty about whether payroll would be fully funded, and the inability of facility personnel to communicate with anyone connected to Skyline.

The facility administrators told the DPH on April 5 that the properties might not be able to make payroll due to lack of funding and issues with the payroll company, according to the petition for appointment of a receiver.

Services to the facilities have been hit particularly hard. Among other unpaid bills, two facilities lost phone service, which affected access to patients’ electronic medical records; an EMR provider listed in the court documents as “Point Click” has an unpaid balance of more than $50,000; and RNC Nursing, a temporary staffing agency, was owed more than $180,000 for staffing for Bedford Gardens, Bedford Village, Dighton, and Highland Manor.

That didn’t affect Skyline’s pursuit of payments for services, the document noted.

“Respondents regularly billed and have been receiving payment from the Commonwealth for services provided to residents who are members of the Massachusetts Medicaid program,” the petition said.

SNFs in Massachusetts have been facing reimbursement shortfalls that leave them in danger of closing altogether, nursing home trade groups in the state have argued. Though Skyline didn’t make the best decisions in its handling of the facilities, Vincent said he believes the problems it had speak to a wider trend.

“No, they weren’t the best actors, and yes, they could have done a lot of things better, but Skyline is so symptomatic of tremendous problems across the country with the long-term care industry,” Vincent told SNN.