On Monday, Sept. 25. California Gov. Gavin Newsom formally rejected Assembly Bill 2079. Authored by Assemblymember Jim Wood, the bill would have required skilled nursing facilities to spend a minimum of 85 percent of revenue received from MediCal and private payers on the direct care of residents. A.B. 2079 was a response to the rampant practice of SNF operators racking up profits through related-party transactions, essentially paying themselves by doing business with companies they also own to increase profit margins. All four of Humboldt's skilled nursing facilities — Seaview, Granada, Eureka and Fortuna Rehabilitation and Wellness Centers — are owned by the same person, Shlomo Rechnitz, who operates close to 80 facilities across the state through his company Brius Healthcare and its subsidiaries.
In 2016, the North Coast Journal reported that Rechnitz's Humboldt skilled nursing facilities paid nearly $5 million in related-party expenses for administrative fees and medical supplies to other companies Rechnitz owned, according to financial reports submitted to the state. A recent review of those reports from the last four years shows that the number of related parties on the books for Brius' Humboldt facilities has effectively doubled, with the company's subsidiaries paying out an average of $2 million per facility per year to a complex network of LLCs, holding companies and other related parties. In total, the four facilities paid $31.5 million between 2018 and 2021 to affiliated companies. Over the same time period, also according to state reports, residents within these facilities suffered due to understaffing.
Skilled nursing facilities are responsible for some of the most medically fragile members of society, patients who require around-the-clock medical care, including replacing oxygen tubes, catheterization and repositioning due to physical limitations or paralysis. Residents range from people who were just discharged from local hospitals after a fall needing short-term physical therapy to those who might be institutionalized for multiple years.
"If somebody breaks their hip, they can't go home because they need physical therapy — they are there for a while," explains Suzi Fregeau, director of the Area 1 Agency on Aging's Long Term Care Ombudsman Program, which is responsible for visiting residents in long-term care facilities, reporting issues and advocating for residents' rights.
"On the other hand, we have people with serious medical conditions, usually at end of life, it becomes their permanent home," says Fregeau.
In June, inspectors with the California Department of Public Health visited Seaview Rehabilitation and Wellness as part of the facility's recertification process, the first such visit since March 2020. Per the CDPH's website, inspections were suspended during the COVID-19 pandemic due to visitation restrictions. As part of the inspection process, CDPH officials review the administrator's and nursing staffs' notes and speak to a representative sample of residents. Stories from these residents, as documented in these reports, can be found on page 15. For their report, investigators spoke to 13 residents and documented a total of 23 deficiencies, or instances in which the facility was found to have violated federal or state regulations. The deficiencies ranged in severity from emergency water supplies not being properly treated and cases in which residents were left on the floor for up to a half-hour after falls because their call lights were not answered, to residents being left in soiled adult undergarments, not turned regularly to prevent pressure sores from growing, left in "screeching pain" for days and not bathed for weeks, or in some cases months.
Per the report, many of these violations were the result of staffing shortages.
"There were insufficient staff to provide residents with their activities of daily living," the report's narrative read. "Sixteen [of 48] residents were found to not be receiving their scheduled showers/baths."
These findings were corroborated in investigators' interviews with Seaview staff, who — like the residents — were anonymized in the report. "Unlicensed Staff U" said that sometimes only two certified nursing assistants (CNAs) were assigned to a night shift, meaning they had a patient load of roughly 24 people each for eight hours, and that when they were assigned too many residents they were unable to give them showers. "Licensed Nurse C" confirmed the facility was having staffing issues.
Improper infection protocol was one of the major issues flagged at Seaview, with inspectors noting staff hadn't properly monitored the growth of mold in the kitchen's ice machine or on kitchen fans. They also observed staff not washing their hands properly and not wearing masks in accordance with the U.S. Centers for Disease Control's guidelines to prevent COVID-19. The facility's infection preventionist was found to be unqualified for his position due to not having been trained on appropriate antibiotic use and state requirements for checking visitors' vaccine status, and "was unaware of simple infection control tasks such as how often tubing changes needed to be performed on residents using supplemental oxygen."
The CDPH also paid a visit to Fortuna in July, documenting the effects of a May COVID outbreak that had spread in large part due to understaffing. Per the report, staff did not notify the physician of a resident who tested positive May 20 until four days later, resulting in a delay of the resident receiving antiviral medication.
"'Licensed Nurse J' stated it had been so chaotic lately with so many residents positive for COVID at once that they could not report to the physician immediately," the report stated.
The facility's director of nursing told investigators that another resident had missed doses of her antiviral medication because "residents were turning positive in droves." According to the report, the facility did not have a full-time infection preventionist as required. When inspectors visited May 26, they found the door to the facility propped open and no one at the screening table to check visitors' temperatures or screen them for COVID symptoms.
According to the report: "Nurse Consultant B came to the screening table and stated she had just arrived. Nurse Consultant B stated she was texting the administrator and the director of nursing to inform them of this surveyor's arrival. Nurse Consultant B confirmed Administrator and Director of Nursing (DON) were not at the facility. Nurse Consultant B stated she did not work at the facility, she worked for a shell company."
When "Nurse Consultant B" called the traveling infection preventionist the company had retained, he told her he had already left the county and would not be returning. Investigators reviewed the facility's records and found that on the day prior, 11 staff and 37 residents had been infected with COVID-19. Another three residents tested positive the next day.
Although the facility's COVID mitigation plan stated it had a full-time infection preventionist and an infection prevention nurse, this was found to be untrue. The report documents a patchwork of traveling and part-time employees, including an IP nurse who worked 2.25 hours a week. "Nurse Consultant B" said she was onsite indefinitely, but only as a consultant.
In March, Fortuna residents were found to be in "immediate jeopardy" due to a lack of trained staff in nutrition services. The proper preparation of food for medically fragile residents is important because it must meet their nutritional requirements and be prepared according to the ability of individual residents to chew, swallow and digest. Mistakes can pose choking hazards or leave residents malnourished. After three members of the kitchen staff were suspended, management tapped the activities director to step in, along with a dietary aide. This resulted in the residents not having any activities for several days while their food was being prepared by someone without adequate training. The facility subsequently brought back the suspended staff members, including the dietary supervisor, who frequently also served as a cook. When inspectors interviewed the dietary supervisor, she told them she had not had any days off for nine months, with the exception of a few days in November and an additional three days when she broke her foot. In her absence, she told investigators she "remotely cooked," giving unqualified staff instructions over the phone. Investigators asked upper management at the facility what they had done to hire and retain more staff for the kitchen. They were told low wages were one reason they could not hire more staff.
Investigators also found instances of leaking toilets, extremely dirty bathrooms, residents who had not been showered in several days, catheters that were not cleaned and improper pressure ulcer care. Additionally, they observed cleaning staff go from room to room without observing proper hand hygiene or masking procedures.
Tony Chicotel, staff attorney for the nonprofit advocacy group California Advocates for Nursing Home Reform (CANHR), said the pandemic had a number of cascading impacts on skilled nursing facilities across the state, in large part due to lack of staffing and lack of oversight.
"All the focus was on infection control but, unsurprisingly, a whole lot of people died in nursing homes prematurely for reasons unrelated to COVID," said Chicotel. "Everyone was trying to protect the residents, doing that we created those barriers around the residents so COVID couldn't come in. What we've seen is when there's no oversight things get pretty bad pretty quickly. We had awful reports of weight loss, dehydration, malnutrition. Residents weren't getting enough care. Staff didn't want to work there anymore."
The financial reports provided annually to the state include turnover statistics for staff at skilled nursing facilities. For all four SNFs in Humboldt County, average turnover has hovered at around 50 percent for the past four years, meaning half their staff level year over year. The average hourly wage has risen from $15 an hour to $18 an hour for certified nursing assistants (CNAs) during this same time period, but Fregeau said she believes this isn't an attractive enough wage for the demands of the job.
"Staffing is a major problem," said Fregeau. "Everybody up here is hiring. [CNAs] —they're doing personal hygiene, turning people. These people work hard."
According to In-N-Out Burger's website, the company's wages start at $17 an hour for its Eureka location.
Chicotel said he found the turnover rates at Humboldt's SNFs unsurprising.
"Fifty percent sounds pretty average to me," he said. "Generally, it's not a good job. There are other jobs out there. The wages are minimal, the benefits are often minimal and the working conditions can be very tough."
Revenue from MediCal and MediCare are the primary sources of income for skilled nursing facilities in Humboldt, although MediCal dwarfs its federal counterpart by a few million dollars per facility annually. MediCare typically pays for several days of post-acute care and short-term rehabilitation, while MediCal is more commonly billed for long-term stays. In 2021, Seaview received approximately $4 million in gross revenue from MediCal and $2 million from MediCare, down slightly from previous years due to the facility running at less than half capacity. Fortuna reported similar numbers. Adding in money from private pay and various other sources, all of which are negligible compared to state and federal dollars, the average reported net operating revenue for each facility annually is approximately $9 million dollars.
How is that money being spent? A lot of it — about 44 percent — is being paid to other companies owned by Rechnitz.
According to the financial reporting submitted by Brius to the state, each facility pays a flat fee of $42,000 per year to Boardwalk West Financial Consulting, an LLC that lists Rechnitz as a director. The fee is listed annually for home office expenses. The LLC's address, according to filings, is 7223 Beverly Blvd., a mixed-use office and retail building in Los Angeles.
Rechnitz is also an officer of SR Capital, LLC, which in 2021 alone took in approximately $1 million in interest payments from Humboldt facilities. He is also an officer of YTR Capital, LLC, which took in $313,364 from Humboldt's facilities the same year. Both share that Beverly Boulevard address.
Other companies listed in financial documents as related parties include Remodeling Design Specialists, Inc., which is owned by Rechnitz's son in law and was suspended by the California Franchise Tax Board in 2021. It was paid $786,840 by Rechnitz's Humboldt facilities between 2018 and 2021.
As of 2019, employees were screened by a background check company based out of Lakewood, New Jersey, run by an Ahron Rechnitz. Backtrack Background Screening, LLC, charged a total of $38,015 between 2018 and 2021 for background checks of employees at Humboldt facilities. A worker's compensation company based in the Cayman Islands, meanwhile, took in $3.5 million. All together, companies listed as related parties in the facilities' financial documents were paid approximately $31 million over the past four years, nearly $8 million annually.
Among the annual charges listed in the filings are lease expenses paid to Eureka-LET, LP, a company that lists Rechnitz as one of its officers. Rechnitz, who owns the four buildings that house his operations in Humboldt County, leases them back to his own company using Eureka-LET, LP, as a third party to the tune of roughly $1 million per facility per year. At $20 an hour, that money could have funded 50,000 certified nursing assistant hours per facility, or more than 136 additional staff hours — the equivalent of 17 full-time positions — per day.
The Journal also used these financial filings to calculate how much money the four facilities have spent in wages paid to CNAs — the line-level workers responsible for the health, safety, comfort and care of residents — every year. It came out to approximately $1 million dollars annually.
Chicotel said the legislative year has been a tough one for patient advocates. Newsom signed a different bill, Assembly Bill 1502, into law despite CANHR withdrawing its support. Also co-authored by Wood, the bill was intended to close a loophole that allowed nursing home operators to run facilities without receiving a license, and was drafted in part as a response to Brius' operation of several facilities despite having "pending" licenses, or in some cases having suspended licenses due to poor patient care. CANHR pulled its initial support of the bill and came out in opposition after language in it was changed to remove stringent suitability standards for licensing. The group said this "cemented" the status quo rather than creating real reform.
As for A.B. 2079, Newsom's veto came as a surprise but CANHR officially became "neutral" on the legislation after CDPH got involved and effectively changed its language to remove MediCare spending from the percentage of money to be dedicated to patient care.
"Say you have $100 in revenue, $50 from MediCare and $50 from MediCal," explained Chicotel. "If you're required to spend 85 percent on patient care [from MediCare alone], that's only $48.50 on patient care. We thought the bill became ineffectual when it came to exclude MediCare."
In his rejection of A.B. 2079, Newsom said its methodology "does not align" with new budget legislation that creates a new MediCal reimbursement rate structure according to quality of patient care. This rate structure includes a penalty for not meeting quality metrics. The Journal asked Chicotel if these new metrics would help close the gap in patient care.
"No," he said. "Once there is a new reimbursement system in place, they've received a raise. ... Knowing what we know about the last system for performance-based rewards, it will all be gamed. It will be set up for measures facilities have control over, not by providing good performance but providing good data."
Per Chicotel, CANHR is working with CDPH to anticipate some of the ways SNF operators might game the system once quality metrics come into play next year.
Speaking to the Journal in early August, as his bill was entering the appropriations process, Wood expressed optimism for the potential of applying financial pressure to operators like Rechnitz in order to effect better patient care.
"What is always tough, these are the most vulnerable people in our society," said Wood. "At the end of the day, I believe they deserve the dignity of good quality care. It's tough that we have to fight over and over again for the resources of people who really need our help, that can't fight for themselves."
In an email after Newsom's decision, Wood's spokesperson Cathy Mudge said the assembly member was preparing for a new legislative year and does not yet know if he will again try for related party expense reform.
"Given the governor's veto message on A.B. 2079, he and staff don't know yet whether another approach would ultimately be acceptable to the governor," wrote Mudge.
The Journal attempted to reach out to Brius Healthcare as part of our reporting, but the company appears to have scrubbed its contact information from the internet. A call to an attorney who recently represented the company went unreturned, as did emails to administrators of Seaview and Fortuna Rehabilitation and Wellness. A full spreadsheet of the data garnered from the company's reports to the California Department of Healthcare Access and Information is below.
A look at the experiences behind the deficiencies documented at two local skilled nursing facilities
Representatives from the California Department of Public Health spent May 2 through May 9 visiting Seaview Rehabilitation and Wellness, on Humboldt Hill, both owned by Brius Healthcare, as part of the facilities' recertification process. They interviewed 13 residents and documented 23 total deficiencies. In the report residents were assigned numbers to protect their identities. These are some of their stories.
Resident 17 was admitted to Seaview on Jan. 29, 2021, with medical diagnoses including Diabetes mellitus (a condition in which blood sugars are abnormally high), circulatory complications and memory problems. She required assistance using the bathroom and with other hygiene tasks. On the date of her interview, May 2, she said she had not been showered for two weeks. A review of the facility's records showed she received only two showers and no bed baths for the month of March. In April she received five showers and one bed bath. Her care plan called for two showers or bed baths per week, (eight to nine per month). Resident 17 did not receive prompt incontinence care and was left in soiled briefs for hours at a time. In a May 3 interview, she told CDPH it took staff an hour or more to respond to call lights, "she had not been changed in hours" and "felt uncomfortable." CDPH noted her room smelled of feces. Resident 17 also said facility staff had asked her not to speak to the surveyors, and she was hesitant in answering more questions during the interview.
The state requires facilities to have activities that meet the interest and needs of each resident. A staff member told investigators the facility did not provide residents with any activities other than bingo and nail painting, and these activities did not include all residents. He also said the facility did not have birthday parties for residents. A different member of staff said he had never observed in-room activities offered to residents. While staff logged that Resident 17 had been watching TV from March through May as her activity, an interview with the facility's maintenance director confirmed her TV was not working.
Resident 35 was admitted to Seaview on March 17 with congestive heart failure and respiratory failure. He told CDPH investigators on May 2 that he wanted to discuss whether he could leave the facility with his wife but had not had any care conferences since arriving. Staff admitted he was "overlooked." No comprehensive plan was made for activities. He spent most of his time in bed in his room and said he would like to watch TV, but his TV hadn't worked since he arrived. He was one of 17 residents who said they had not received a shower or bath in weeks. During the resident council meeting on May 3, Resident 35 stated he had only received one shower in three months. Resident 35 said staff takes 20 to 25 minutes to answer call lights, saying one time he slid from his bed onto the floor and waited almost a half-hour for someone to help him back in bed. He was not injured but said he was "embarrassed and uncomfortable" waiting on the floor.
During a phone interview on May 6 at 10:41 a.m., Unlicensed Staff U said sometimes the resident assignments were overwhelming for certified nursing assistants, making them unable to complete their tasks. Unlicensed Staff U said sometimes only two certified nursing assistants were assigned for night shift, with a resident census of 48 residents and call lights could wait up to 10 minutes to be answered. During an interview on May 6, Licensed Nurse C confirmed they were recently having staffing issues, as there were a lot of call offs from staff. During an interview at 11:42 a.m. the same day, Unlicensed Staff J also confirmed the facility had staffing issues, and stated call lights not being answered promptly was a big problem in the facility. Unlicensed Staff J stated some licensed nurses and staff who were not nursing assistants refused to answer call lights.
Resident 39 was admitted to Seaview on March 18 with a diagnosis of Alzheimer's disease. She entered hospice care April 6. When she entered the facility she had a Stage 3 pressure ulcer roughly the size of a quarter at the base of her spine and boggy heels. These are skin injuries that occur when a person is confined to a bed or wheelchair for an extended period of time. A Stage 3 pressure ulcer is one that has gone through the first two layers of skin and is described as "deep and painful." At the time of admission, the interdisciplinary team responsible for setting resident care goals noted the resident should be repositioned hourly and have her heels floated. But these recommendations were not integrated into Resident 39's care plan, with the assistant director of nursing instead saying the treatment nurse would remind staff to turn the woman. A doctor also ordered a special low air loss mattress designed to keep her skin dry, but she was not using one at the time of the CDPH visit. According to the director of nursing, the resident had an unsupervised fall from her bed and they had to switch her to another type of mattress. Clinical direction that Resident 39 be given a high-protein diet and nutritional supplements to help stave off pressure sores was not followed. By April 10, the pressure ulcer had grown to the size of a silver dollar. By May 1, it had grown by another half-inch in diameter. CDPH investigators observed Resident 39 lying flat on her back on May 2 and again on May 3. They visited twice in three hours and Resident 39's roommate confirmed she had not been turned. They asked how she was doing but she was not able to respond. Resident 39 was one of several residents who did not receive the required eight to nine showers or bed baths per month. The assistant director of nursing was asked about the lack of the special mattress and other interventions, and responded that the patient was "already on hospice services" and "the goal was to keep her comfortable."
Resident 24 was admitted to the facility on March 25, 2014, with medical diagnoses that included paralysis, weakness of one side of the body and chronic pain. She told investigators she was frequently in pain, mostly in her feet, and gave her pain level as nine out of 10.
Her care plan for chronic pain did not include any specific interventions to manage her pain, and no non-pharmacological interventions at all. She was asked if she took part in any activities and replied, "I hurt too much to do other activities than TV." Resident 24 was among those who did not receive scheduled baths or showers for weeks. During the interview on May 6, Resident 24 was asked if there were times she requested pain medication and was denied the medication for not being due for it. Resident 24 responded, "Yes, often." When asked how she felt about it, she stated, "Like I am helpless, there's nothing I can do."
Resident 94 was described as a "pleasant 84 years (sic) old female with a ... past medical history of mild dementia" who had fallen at home April 19 and was taken to a local hospital. She was diagnosed with fractures in both arms and one heel. Her left elbow was operated on April 20, and she was transferred to Seaview six days later. Her medical record indicated she was "completely immobile" and at "extremely high risk" of developing pressure ulcers. She was not given a pressure-relieving mattress. CDPH observed on May 3 she had a yellow bruise on the left side of her face. She could not remember how she had injured her arms or fallen. When asked if she was in pain, Resident 94 said her pain was "excruciating" and that she had "screeching" pain in her hand going up to her elbow. When asked if they were able to reposition Resident 94 every two hours to prevent pressure ulcers, staff stated they were not able to turn her due to her pain. Resident 94's medical record did not contain documentation that staff had contacted the resident's physician to inform him his patient's pain was ranging from a seven to nine out of 10 despite medication.
Resident 36 was admitted to the facility on Sept. 20, 2017, with a diagnosis of Multiple Sclerosis, quadriplegia (paralysis from the neck down, including the trunk, legs and arms) and contractures of ankles and hand. Records show the resident had only two bed baths and one shower for the month of March, and four bed baths and no showers for the entire month of April. In her interview with investigators, Resident 36 said she was supposed to have showers twice a week but had not been given one since the COVID-19 pandemic began (two years prior) but had received bed baths instead. Resident 36 said the licensed nurse told her they only have two female aides in her hallway and that she could not have a shower. When asked how she felt about not getting showers, she stated she felt "dirty and terrible."
A review of records showed some residents had received as few as one to two showers or bed baths throughout a two-month period. For one resident, there were no documented showers or baths at all throughout March or April. Staff members said they were sometimes assigned too many residents, making them unable to provide them with showers.
Resident 29 suffered severe burns on Jan. 9, 2021, when he attempted to light a cigarette while wearing a nasal cannula, a small, flexible plastic tube worn around the head that directs oxygen from a source to a person's nostrils. Resident 29, described as an 83-year-old man suffering from pneumonia, bipolar disorder and nicotine addiction, was airlifted to San Francisco to be treated for burns on his face, lip, cheek and nose. The director of nursing stated there were no policies or procedures at the facility to help residents with smoking cessation and she could not find any documentation indicating Resident 29 had been informed safe oxygen use required no smoking and no use around an open flame. The incident was found by the state to have had the potential of "substantial harm and possibly death."
A visit to the Fortuna Rehabilitation and Wellness Center in July substantiated five complaints and two facility-reported incidents, including a status of "Immediate Jeopardy."
Resident 26 was admitted to Fortuna Rehabilitation and Wellness on June 23, 2019, with a history of chronic kidney disease, immunodeficiency and obstructive sleep apnea. On July 19, a family member visiting from out of town told investigators his trash can was full and had not been emptied in several days. The floor had "debris of papers, brown dirt, lint and other items scattered around the floor and under [the] bed." The bathroom was "filthy," the toilet full of what looked to be spit and a "brown film" rising up the side of the bowl. The sink was "observed to have an approximate 6-inch film of tan type dirt from the drain up to the sides ... the sink had remnants of the paper towel, hair and general slimy tan gunk at the drain." Records indicate the room had not been cleaned in several days, although the head of housekeeping could not say why. The family member also said Resident 26 had not received a shower over the course of the five days she visited.
Resident 199 was admitted to Fortuna on June 28. He was described as bed-bound and immobile, with paralysis from cancer lesions. His transfer orders stated the need for "frequent turnings to prevent ulcerations." He had a pre-existing Stage 3 pressure ulcer on his tailbone, meaning the skin had worn away and fat was visible in the wound. Per the report, the facility failed to complete a risk assessment for pressure injuries until two weeks after admission. By then, Resident 199 had developed five additional pressure ulcers. The facility did not develop a care plan for bedsores until three weeks after admission. By then, Resident 199 had acquired 10 pressure ulcers. Per investigators, the care plan did not "include key interventions pertinent to the resident's situation, such as turning and repositioning the resident every two hours, use of heel protectors, use of wedge pillows for positioning and pressure relief, and off-loading heels."
It took 10 days for the facility to provide Resident 199 with a pressure-relieving mattress, despite having one on hand. The doctor told the facility to remove Resident 199's cervical collar after a week; it was left on for a month, which caused a Stage 2 pressure ulcer on his clavicle. Another ulcer formed on his nose due to the pressure of his glasses. Of the 10 total pressure ulcers that developed within two weeks of his entry to the facility, six were described as "deep tissue" injuries and another as "unstageable," meaning the injury had been covered with dead tissue and its stage couldn't be determined. According to the Centers for MediCare and MediCaid Service, an unstageable ulcer, once cleaned, is usually diagnosed as a Stage 3 or 4 injury. A review of records indicates Resident 199's wounds went untreated for 10 out of 30 days. When asked why the clavicle collar had not been removed, the director of nursing said the facility had been unable to obtain a neurology consultation and have an X-ray done to ensure it was safe to remove, adding there were no neurology specialists available in the area and no mobile X-ray services able to come to the facility. Staff also failed to provide proper catheter care, resulting in a urinary tract infection.
Reach her at firstname.lastname@example.org. Follow her on Twitter @LCStansberry.Editor's note: This story was updated from a previous version that incorrectly referenced Assembly Bill 2079. The Journal regrets the error.