DOJ

Nursing Home Giant Owes Landlord Over $300 Million In Rent

By Michael Soon Fah, J.D. Candidate 2019 | Posted on

Significant changes could be coming for thousands of elderly residents living at HCR ManorCare’s 292 nursing home and assisted care facilities. On August 17, 2017, HCR’s landlord and real estate company, Quality Care Properties, Inc., filed a complaint seeking to recover over $300 million in rent owed. The complaint asks the Court to appoint a receiver to facilitate transfer of the homes to a new operator. On October 19, QCP announced it had agreed to extend the deadline for HCR to respond to the receivership complaint. HCR now has until November 1 to respond.

A receivership is an alternative remedy to traditional bankruptcy and eviction. In a receivership proceeding, the court orders transfer of the insolvent’s assets to an appointed receiver. The receiver will facilitate transition of ownership to a new entity who will hopefully be able to run the operation profitably and meet its obligations. During the interim, the court empowers the receiver with the power to manage the business and protect its assets. Receiverships enable continuity and stability, but are only granted in certain circumstances that vary depending on jurisdiction.

Receiverships have been used to transfer ownership of smaller nursing home companies in the past. Recently in July 2017, a court approved the transfer of Fortis Management Group’s 65 nursing homes and assisted living facilities to a receiver. However, a court has yet to apply receivership to a nursing home giant like HCR ManorCare.

QCP’s lawsuit hits HCR amidst Department of Justice accusations of Medicare fraud. On April 21, 2015, the DOJ announced it had intervened in a consolidated False Claims Act lawsuit against HCR. The government alleged that HCR pressured staff to push unnecessary services on residents and kept discharge-worthy patients in its facilities to increase Medicare billables. The case is still pending in District Court. If the Court finds HCR engaged in intentional fraud, liability under the False Claims Act may not be dischargeable in bankruptcy.

HCR and QCP expect to use the deadline extension to discuss the possibility of selling and releasing properties, governance and protocol changes, and asset stewardship. It is unclear whether these talks are aimed at completely avoiding the receivership or preliminarily restructuring HCR’s assets in advance of the proceeding. Either way, for thousands of HCR ManorCare residents, home could be completely different in the not so distant future.

Nursing Home Giant Owes Landlord Over $300 Million In Rent (PDF)

US Regulators to Crack Down on Anti-Poaching Agreements

By By Emmett Carrier, J.D. Candidate 2018 | Posted on

In a joint press release, the Department of Justice (DOJ) and Federal Trade Commission (FTC) announced an intent to criminally prosecute companies engaged in antitrust violations, such as wage-fixing and no-poaching agreements. In addition, the federal regulators issued new guidance for human resources professionals designed to educate those in hiring positions about the applicability of antitrust laws in the context of employment decisions.

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How Trump’s Presidency Will Change the Justice Department and SEC

By Regina Molina, J.D. Candidate 2019 | Posted on

Donald Trump’s recent upset victory in the presidential election has raised speculation on what changes his administration will make to the leadership and focus areas of the Department of Justice. Equally important questions have surfaced on whether his election will lead to an opportunity for the Republican-controlled Congress to limit the Securities and Exchange Commission’s (SEC) authority.

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Martin Shkreli Subpoenas Former Lawyers

By Amanda Bradley, J.D. Candidate 2017 | Posted on

Martin Shkreli, the former hedge fund manager and founder of Retrophin and Turing Pharmaceuticals – most famous for engineering, and defending, the drastic overnight price increase of Daraprim – appears to be gearing up for another fight. This time, the fight is against his former lawyers. The suit arises from fraud charges filed by the Department of Justice after Mr. Shkreli’s price-altering program made national headlines.

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Wal-Mart Rejects Government Settlement of $600 Million

By Sami Jarbawi, J.D. Candidate 2018 | Posted on

After spending five years investigating allegations that Wal-Mart representatives bribed government officials over the course of a ten-year period to fast-track store openings, the United States government has finally put a settlement offer on the table.

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U.S. Judge Appoints Monitor to Deutsche Bank

By Kevin Jones, J.D. Candidate 2018 | Posted on

On August 18, 2016, the U.S. Commodity Futures Trading Commission (CFTC) filed suit against Deutsche Bank for failing to report any swap data for multiple classes of assets for five days. According to the CFTC, on April 16, 2016, Deutsche Bank’s swap data reporting system experienced a system outage for approximately five days. CFTC alleged that Deutsche Bank’s efforts to end the outage consistently worsened financial reporting problems. The CFTC claims that this is because Deutsche Bank failed to implement a satisfactory business continuity and disaster recovery plan in events like this outage.

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Judge Orders HSBC to Make Money-Laundering Report Public

By Kevin Jones, J.D. Candidate 2018 | Posted on

In December 2012, the Department of Justice filed to prosecute HSBC Bank for violating the Bank Secrecy Act, Emergency Economic Powers Act, and Trading with the Enemy Act. The Department of Justice’s investigation revealed significant evidence showing HSBC officers engaged in business protocol that allowed drug cartels in several different nations to launder money internationally. Before taking the case to trial, the Department of Justice agreed on a settlement with HSBC.

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Are Wall Street’s “Untouchables” Disbanding?

By Tamir Chagal, LLM Candidate 2015 | Posted on

Preet Bharara’s crack team of prosecutors at the US Department of Justice have earned many merits and accomplishments. The team is specifically known for going head on against the big names in the financial market. Two of the team’s notable successes are the conviction of Bernard Madoff for his Ponzi scheme and SAC Capital Investors’ securities fraud indictment.

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