Lawsuit Challenges Crackdown on Nursing Home Ownership Transfers

A nursing home owner whose request to take over a pair of facilities was denied has struck back with a lawsuit, claiming that the authorities didn’t provide sufficient justification for their decision.

Christopher Brogdon, an Atlanta-based owner of long-term care facilities, claims that Arkansas health officials made an “arbitrary and capricious” decision when they blocked his attempted takeover of properties in Hope and Horseshoe Bend, Ark., according to a Sunday report in the Arkansas Democrat-Gazette.

The outcome of the lawsuit could have a wide-ranging effect on the state’s push to crack down on ownership transfers in the wake of high-profile problems in the state.

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The facilities in question were previously run by the New Jersey-based Skyline Healthcare, whose stunning financial collapse across several states led to calls for increased scrutiny on nursing home owners and operators — particularly those without a historic presence in a given state.

After another operator took over from Skyline in 2018, a firm run by Brogdon assumed control of the properties on an interim basis, the Democrat-Gazette reported, investing about $700,000 in their operations — with the assumption that his affiliates would eventually receive approval to take over on a full-time basis.

But the state’s Human Services Department denied the applications, according to the publication, after officials determined that Brogdon failed to provide sufficient information about 11 other properties he owned in Georgia, Arkansas, and Oklahoma.

Though that rule — which requires applicants to prove that their other properties met state and federal regulations for the previous one-year period — had been in effect for nearly three decades, a spokesperson told the Democrat-Gazette that the Brogdon case was the first time it had been used to deny a transfer.

Brogdon’s past had also previously been the subject of scrutiny in the Democrat-Gazette, which in April reported that the state approved his assumption of other licenses in Arkansas despite an $83.1 million Securities and Exchange Commission judgment against him in a separate bond fraud case.

Ownership and operational transfers could be a key area of nursing home enforcement on both the state and federal levels over the next decade, as officials look to prevent providers with checkered pasts from setting up shop elsewhere. Kansas, which saw 15 Skyline properties fall into receivership, rolled out more stringent application rules for prospective nursing home operators last April, while also making it easier for officials to blacklist providers and owners deemed unfit.

Ohio followed suit in October, with lawmakers enshrining tighter transfer rules as part of its 2020-2021 operating budget; Pennsylvania was also in the process of developing new regulations around skilled nursing ownership changes, Skilled Nursing News reported at the time.