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A once-thriving chain of Iowa nursing homes now knee-deep in bankruptcy is getting closer to a settlement with the federal government over millions in unpaid fines, which would allow a sale of the troubled owner’s eight facilities to proceed.

QHC Properties, its state and federal government creditors, and interested potential buyers learned this week that efforts to lower federal fines of more than $2 million are nearing a resolution, according to statements made during a Tuesday hearing in front of Bankruptcy Judge Anita Shodeen.

QHC filed for bankruptcy in December 2021 amid several wrongful death lawsuits.

Francis Lawall, an attorney for many of the creditors in the bankruptcy case, told the court the latest “framework for an agreement” is being circulated at the Centers for Medicare & Medicaid Services. Complicating matters, meanwhile, is QHC’s efforts to raise the cash needed to pay off its various debts.

Lawall said CMS is demanding repayment before a new owner takes over contracts that allow the chain to bill Medicare for resident care. The federal fines are the accumulation of $2.1 in unpaid CMS debt related to quality-of-care regulatory violations and for COVID-19 Accelerated and Advanced Payments it collected in the midst of the pandemic.

The company’s immediate past owner also discovered after her husband’s death that the company had not paid quarterly state fees under his leadership, racking up an additional $3.9 million in debt.  QHC is in separate negotiations with the Iowa Attorney General’s office to settle those debts.

The couple’s son, now the owner, is pursuing this sale.

In addition to its eight owned nursing homes, QHC operates two assisted living facilities — Winterset Madison Square in Winterset, and Village Cottages in Fort Dodge.

Three QHC facilities — Sunnycrest Care Center in Dysart, QHC Humboldt South and QHC Mitchellville — will be closing soon, according to published reports. Their closure could result in the displacement of 53 residents. The remaining open QHC nursing homes include Crestridge Care Center in Maquoketa; Crestview Acres in Marion; QHC Fort Dodge Villa; QHC Humboldt North; and QHC Winterset North.

Meanwhile, those impending closures are complicating QHC’s efforts to finalize a purchase agreement, as is payment of the $6 million in CMS debt and state fees, the Iowa Capital Dispatch reported. A prior suitor, New Jersey-based holding company Cedar Health Group, was earlier approved by the bankruptcy court last March but the sale never materialized.

Bankruptcy judge Shodeen expressed concern that QHC could quickly become insolvent if issues related to debt and the sale price remain unresolved and the planned sale doesn’t go through.