In May of 2018, KELOLAND investigates reported on the Skyline Healthcare debacle. The company, which had taken over 19 South Dakota nursing homes in 2017, put 900 seniors at risk after it couldn’t pay its bills or its employees.

The homes were placed into receivership and a new owner, Avantara, took over in July of 2019.

“In South Dakota, Black Hills Receiver, LLC, an entity created by Golden Living, the previous operator of the facilities (and owner of the facility buildings) petitioned the court to place the facilities into receivership in May 2018. The Department was supportive of their efforts, however no additional state funds were used to operate the facilities. Avantara assumed operations of the facilities on July 1, 2019.”

Derrick Haskins, Communications Director, South Dakota Dept. of Health

While the immediate threat to nursing home residents was averted, the fallout from Skyline continues today.

Charles Johnson worked as director of rehab for 15 years in nursing homes before becoming the administrator of the Golden Living Center in Arlington.

Skyline Healthcare took over Golden Living Centers in South Dakota in 2017. At the time, Skyline operated above a New Jersey Pizza Shop.

“My first two years of being a nursing home administrator were in an environment under Skyline; (I was) baptized by fire,” Johnson said.

Just a few months into the job, vendors began calling, demanding payments for food and medical supplies.

“It’s a little unnerving when you’re responsible for the health and welfare of the residents in your building and you have the families’ expectations that everything is fine. So you have to do a lot of things behind the scenes to make sure that’s happening,” Johnson said.

Johnson couldn’t help but wonder what Skyline was doing with the money.

Kennecke: You’re seeing the money come in.
Johnson: Uh-huh.
Kennecke: But the bills aren’t being paid.
Johnson: Correct.
Kennecke: Do you have any idea where that money went?
Johnson: No.
Kennecke: To this day?
Johnson: We were never told, no.

Johnson was relieved when the 19 South Dakota Skyline homes were placed into receivership and Golden Living took back control of the buildings it still owned.

However, then came the next big whammy.

Johnson: It was discovered that Skyline hadn’t paid the self-funded insurance plan for about six months.
Kennecke: Deductions were taken out of the employees paychecks and weren’t applied to the premium. Is that fraud?
Johnson: I think so. I think it could be considered fraud. Or could it be considered theft?

“I felt we were victims. It should be a crime,” Theresa Dante said.

We reached Theresa Dante, who now lives in Georgia, by phone. This former cook at the Redfield Care and Rehab Center discovered she didn’t have insurance despite the fact that she’d been paying for premiums.

“I had an allergic reaction and when I went to a doctor, he threw the insurance card at me. He said, ‘I’m sick of you people. You guys don’t have insurance. You have little plastic cards. If you want to come here for an appointment, you have to pay everything up front before you walk through the door. You do not have insurance,'” Dante said.

Dante says she was lucky and only had to cover a few hundred dollars’ worth of medical bills. But Johnson wasn’t as fortunate. Both he and his wife, who was also on Skyline’s insurance plan, had undergone surgery, with prior authorization from American Plan Administrators.

They were notified by a letter from the Brookings Health System that “Due to the recent and ongoing legal issues surrounding the bankruptcy of Skyline Healthcare, your accounts with Brookings Health system have not been paid according to your benefit plan.”

Kennecke: Money had been taken out of your check. You think your surgery is covered.
Johnson: Yes.
Kennecke: And it’s not.
Johnson: Yes.
Kennecke: And you’re stuck with a bill for how much?
Johnson: $20,000 to $30,000.

That’s right; the Johnson family medical bills alone reached nearly $30,000.

“They’re taking money that we think is going toward an insurance policy, or premium and they’re allowing us to get these services and then at the end of the day, none of it was covered,” Johnson said.

“This does happen. It happens with other employers. Generally they’re employers that are financially in trouble. And they end up taking premiums that they take out of employees’ paychecks. They’re supposed to deposit it in a trust account or pay it to the insurance provider as soon as administratively possible. That’s what the law is,” Attorney Jean Bender, who specializes in employment law, said.

Read information from the Department of Labor about similar incidents with benefit payments

Johnson and Dante have both filed complaints with the U.S. Department of Labor. Johnson received this letter back, saying that the “formal review process can be very lengthy.” and that, “specific steps or findings during the review process cannot be publicly disclosed.”

“That’s what makes this a little complicated. What direction do we go? What can we do until this investigation is done? And they have some sort of answers?” Johnson said.

Take a look at two letters Johnson received from the U.S. Department of Labor.

Employment Attorney Jean Bender says the answers, even in court, are tough to come by.

“Courts who have looked at these kinds of situations where there’s a troubled employer and he hasn’t paid premiums like he was supposed to or he absconded with premiums, what they typically find under ERISA is the only damages, if they can find some money somewhere, which is generally the biggest obstacle.  But if they can, really all that employee can get back is the insurance premiums,” Bender said.

Today Skyline owner Joseph Schwartz is fighting more than a dozen lawsuits in several states.

Read about a lawsuit filed in Illinois against the Skyline owners

In June, Massachusetts’ Attorney General fined Skyline nearly $85,000 for failing to pay more than 100 nursing home workers.

Kansas sued the Schwartz family in federal court, accusing them of deliberately siphoning cash from the nursing home as part of a nationwide scheme to defraud the nursing home residents and employees. That lawsuit alleges that Skyline did the same thing in Kansas that it did in South Dakota by withholding money from employees paychecks for health insurance, but not paying premiums.

The Kansas Department for Aging and Disability Services has since withdrawn the case and turned it over to the Kansas Attorney General and Department of Justice for investigation.

Kansas now requires a lot more financial information from people who apply for licenses to operate nursing homes in that state after it had to take over more than a dozen of Skyline’s homes.

Read about the Adult Care Home Licensure changes made in Kansas

KELOLAND Investigates checked with the Centers for Medicare and Medicaid Services and found that as of Nov. 20 the cite listed Schwartz and his family as still owning dozens of nursing homes across the country.

The information for this map was obtained from the Centers for Medicare and Medicaid in Baltimore, Maryland. The information was listed as current as of Nov. 20, 2019. 

“I think the next wave of victims is coming. I applaud you for staying on this case and I hope we can stop that from happening,” Dante said.

Joseph Schwartz currently faces no criminal charges.

Courtesy NBC News

“You can’t get mad, you can’t walk around mad about it. Life goes on and you just try to put your faith in the entities that are doing the investigation and be able to take care of this in the long run,” Johnson said.

KELOLAND Investigates requested on-camera interviews from several South Dakota state agencies on this matter, but we were turned down by the Department of Health, The Division of Insurance and the Department of Labor. 

The Department of Health did tell us via email that South Dakota has not implemented any changes to state laws regarding changes in ownership/operation of nursing homes, like Kansas has.

“We do not have anyone available for an interview. South Dakota has not implemented any changes to our state laws regarding changes in ownership/operation of nursing homes. However, under South Dakota’s current laws, a state license cannot be issued until the change of ownership has been approved by the federal Centers for Medicare and Medicaid Services (CMS) and their Fiscal Intermediary. In addition, in its regulatory role, the Department works daily with providers to ensure that safe, high-quality care is provided to nursing home residents.

Derrick Haskins, Communications Director, South Dakota Dept. of Health

They also referred us to the Centers for Medicare and Medicaid Services, or CMS.

CMS told us that it has limited authority to intervene when a facility is struggling financially and does not have the authority to close a facility.

CMS screens all providers and suppliers, including the individuals that are associated with those providers and suppliers, prior to enrollment. Screening includes checks to determine if the provider or supplier, individual, or organizational associates are excluded from participation in federal healthcare programs or are otherwise ineligible for participation in the Medicare program. Once the screening is successfully completed and the provider or supplier meets all enrollment requirements and applicable conditions of participation, CMS enrolls the provider or supplier in the program. CMS does not have authority to prohibit a provider or supplier’s enrollment in the program outside of the denial authorities listed in 42 C.F.R. § 424.530. CMS continuously monitors all providers and suppliers and associated individuals for any felony convictions by checking against various Federal, State, and Local data sources and for any exclusions by OIG, Medicaid or any other federal programs. CMS can revoke an organization if one of its owners has been excluded by the HHS OIG from Medicare, Medicaid, and any other Federal health care program. CMS has the ability to revoke an organization, such as a skilled nursing facility, if an owner has been convicted of a felony. Additionally, CMS gained new denial and revocation authorities with Program Integrity Enhancements to the Provider Enrollment Process (CMS-6058-FC), effective November 4, 2019.  The new authorities allow for additional safeguards which are in the best interest of the Program and the public.
CMS has limited authority to intervene when a facility is struggling financially and does not have the authority to close a facility. Whenever a nursing home closes, CMS works with the state to safeguard residents and transfer them to facilities where their care may continue. CMS took an agency-wide approach to gather information about Skyline facilities and worked across impacted Regional Offices and states to communicate regarding a facility’s status and changes to ensure quality and safety for residents. CMS is committed to protecting nursing home residents to the fullest extent within the agency’s legal authority to set and enforce safety and quality standards.

Centers for Medicare and Medicaid Services Statement

Our repeated phone calls to Skyline Health were not answered.