A group of residents who allege a nursing home management company’s omission of key details from licensing applications rose to racketeering-level behavior is seeking new life for what could be a nearly $1 billion lawsuit.

An attorney for three residents or their estates earlier this month asked the US Court of Appeals for the Eleventh Circuit to allow the case — with a potential for some $900 million in damages if granted class standing — to proceed.

The case has had a complicated and winding journey, with several fights over jurisdiction and standing that initially resulted in a 2021 District Court dismissal. In her original 2018 filing, former short-stay resident Betty Smith claimed that she and two other plaintiffs had suffered financial harm because the three nursing homes they had stayed in had all been licensed under false pretenses.

They accused defendant Michael Bokor, owner of the nursing homes’ management companies, of supplying incorrect information on the licensing applications of the three skilled nursing facilities where they stayed, as well as 19 others in Florida. They alleged Bokor and earlier co-defendants schemed to sell the properties before the state’s licensing agency realized any issues. 

The plaintiffs said they were injured because they paid for services at facilities they argued should not have been licensed, a claim attorney Mary Perry repeated before a panel of Circuit Court judges on Oct. 5.

“Nursing home licenses were obtained by making misrepresentations as to management companies and individuals involved in the nursing home chain that had significant problems in the past,” said Perry, arguing that the lower court dismissed the case improperly before allowing the plaintiffs to get to the discovery phase.

Ownership structure worries

Taking a page from Biden Administration talking points that have taken center stage since the case’s initial filing, Perry pointed to complicated ownership structures and related parties that made it hard for the residents — and the state licensing body — to know who was really in charge of facilities. She alleged that Bokor and his businesses had a prior history of whistleblower claims and civil lawsuits and argued that nursing homes in the state often skirted licensing requirements by changing their names to avoid detection.

In an amended complaint filed as part of the lawsuit, the plaintiffs outlined their theory that Bokor committed wire and mail fraud through the companies’ submission of claims to the Centers for Medicare & Medicaid Services. They also alleged he failed to uphold his fiduciary responsibility to patients.

In court, defense attorney Diane Evans said “neither claim is plausible.”

“Even if the court were so inclined to consider the merits, the merits also dictate that this court should affirm the District Court’s decision,” she said, noting the allegations failed to show a pattern of behavior needed to prove racketeering.

Evans and at least one judge also took exception with the idea that Bokor had caused harm to the patients or their estates. In fact, there was little proof presented that anyone had paid expenses out of pocket. Instead, government payers bore most of the costs of care, and Evans said it wasn’t a fair legal avenue to claim money paid by the government should be “raked over” to the plaintiffs.

Questioned by a judge, Perry confirmed that none of the core plaintiffs alleged that they suffered any physical harm by the providers or management companies, and instead, they brought the initial claim in state court to seek damages for financial injury. She said the estates of several patients face liens to reimburse government payers using remaining assets.

Perry described that as “monies owed to entities that might very well not have been licensed had the truth been told at inception.”

But the judges expressed skepticism on several key points of the plaintiffs’ case, including whether state lawmakers envisioned class-action lawsuits as a remedy for invalid licensing or if nursing home licensees hold any fiduciary responsibility for patients under state law.

The court took the case under advisement with no date for an expected ruling.