Legal Difficulties Unravel Network of Nursing Homes

In August the state attorney general’s office began the process of revoking the license of operators of the Riverside Convalescent Hospital in North Hollywood.

License revocation is rare. It occurs only when the state health director concludes that a nursing home presents a serious health hazard to its residents. Each year only one or two of California’s 1,150 nursing homes loses its license.

But for Vernon Will and his wife Connie, operators of Riverside, the process is not new. He has faced it four times.

Will, in fact, is part of a family whose members for more than a decade have engaged in a questionable pattern of nursing home operations, sometimes individually and sometimes in partnership with each other.

Entangled in Actions

Since the late 1960s two generations of Wills and their nursing home businesses have been the objects of actions by federal, state and local regulators, the Internal Revenue Service, hundreds of creditors and a small army of private attorneys.

Family members have operated at least 79 convalescent homes and affiliated corporations in six Western states, and one nationwide chain. They have been defendants in more than 200 lawsuits. They and the corporations they controlled have filed for bankruptcy at least 20 times, with most cases involving nursing homes. One member of the family pleaded guilty to a criminal charge in connection with operations of a Seattle convalescent home. In Los Angeles County alone, corporations controlled by members of the Will family have been stripped of five nursing home licenses since 1976.

The family includes four brothers--Oscar, John, Rudy and Reuben--and their sons, Vernon, Preston and Larry. At various times all but Reuben have been in the convalescent home business.

Vernon Will has this 10-year history of problems:

In 1976 the state revoked the license for the State Convalescent Hospital in South Gate. It was operated by State Moderncare Corp., a business of Vernon, Oscar, John and Larry Will and others. Inspectors said it neglected to keep patients dry and well-groomed, failed to notify physicians immediately when patients required medical attention and did not administer drugs when ordered. They also cited the home for not having enough nurses, towels and washcloths.

In 1979 the license for Vernon Will’s Extended Care Hospital of Long Beach was revoked. The revocation was stayed for three years, provided that Will comply with health and safety regulations. Their investigators found no evidence that the medical director was visiting the 240-bed home or performing any of his duties. Staffing was unacceptable. Patients were immodestly exposed. There was no indication that some drugs were being administered. The roof leaked. In seeking the revocation, the county health department told the state there had been a “steady deterioration of care” with “continuous and recurring problems in nursing, dietary, pharmacy, maintenance, housekeeping, administrative services and overall patient care.”

In 1980 the Santa Barbara County district attorney obtained a court order compelling Vernon Will to observe minimum health and safety standards at his convalescent home, Extended Care Hospital of Santa Barbara. The district attorney said there were problems with medical treatment at the facility and the hygiene needs of some patients were not met. Will sold the home in 1985.

In 1982 an administrative law judge had harsh words for Vernon Will’s Extended Care Hospital of Tarzana. During his five years as its operator, the judge said, Will had displayed a “continuing and pervasive disregard . . . for the care and well being of affected patients” and had exhibited “indifference or incompetence in administering a health care facility.” The examiner recommended that the license be revoked. It was.

The father of one former patient at Extended Care of Tarzana filed a lawsuit last year contending that Vernon Will’s greed crippled his son. The son, Laurence Vernon Alexander Jr., who is in his 30s, was admitted to Extended Care in 1982 after undergoing a brain operation that left him unable to speak. Through neglect, the lawsuit alleges, Alexander became grossly dehydrated, contracted severe bedsores and developed contractures that required the surgical removal of the upper part of one of his thighs. As a result, the complaint maintains, Alexander will never walk again.

License Pulled in 1982

Revocation isn’t even new in the case of Riverside, the North Hollywood home under attack. The license for the 108-bed home was revoked in 1982. That action was stayed provided that Vernon Will “substantially comply” with health and safety rules for three years. In August the state decided to seek revocation again after finding more violations. An administrative law judge is expected to hear the case later this year and will make a recommendation to the state health department on whether the license should be revoked.

Vernon Will has such a poor record in Los Angeles County that the county health department has taken the unusual step of recommending he not be issued any more nursing home licenses, said Marvin Brandon, an official of the department. According to state regulations, Brandon said, a license can be denied any operator who has had previous licenses revoked. Riverside is the last home Vernon Will is licensed to operate in the county.

Ralph Lopez, head of the county department’s health facilities division, maintained that Will corporations have leased homes with little money down, extracted excessive profits by skimping on care and not paying creditors, then sought protection in bankruptcy court.

‘Buy Facility and Bankrupt It’

“Their style was to buy a facility and bankrupt it,” Lopez said.

In an interview, Vernon Will said he was unaware of the specifics of any pending lawsuits involving patient care. He said it is not uncommon for a health facility, no matter how well run, to be sued.

The names of other Wills appear in state files as well.

The Vida Nueva Restorative Center, a Baldwin Park nursing home operated by a corporation listing Oscar Will and his son Preston as officers, provides an example.

Inspectors in 1976 found that patients were “extremely unkempt,” badly in need of oral hygiene and wearing dirty and torn clothing. The inspectors’ reports are a litany of problems. All the men needed shaves. Three patients were suffering from severe bedsores, and the inspectors concluded that the nursing aides did not know how to prevent them. Drugs were not being administered on a timely basis. Medical records were disorganized. Meals were not meeting recommended nutritional standards, and they were being served on contaminated dishes.

The facility’s water heater was broken, the inspectors said. A ceiling had collapsed. Junk had piled up on the grounds. The lawn was overgrown. Screens were missing, and maggots were crawling out of trash bins. Presiding over the 98-bed facility, inspectors determined, were an unqualified nursing director and a medical director who was not fulfilling his duties. The license to operate Vida Nueva was revoked in 1979.

The California Board of Examiners of Nursing Home Administrators suspended Preston Will’s administrative license in 1979 for his performance at a family nursing home in East Los Angeles, Buena Ventura Convalescent Hospital. The board concluded that Will was either “unable or unwilling to spend sufficient funds” at the nursing home, which had been on the brink of losing its Medi-Cal/Medicare provider status, to meet minimum health and safety standards.

In 1984, Preston Will, who was then administrator of a Will nursing home in Seattle, pleaded guilty to Medicaid fraud. He had gotten the state to pay unwittingly for such things as his wife’s lingerie, scuba diving gear, a snowmobile, half a hog, vacation trips to Yellowstone and Canada, landscaping and psychotherapy for himself.

Will also billed the state for his wife’s employment at the facility, Moderncare West Seattle, for hours she did not work, according to state documents submitted to a Seattle court to support the filing of criminal charges.

Preston Will was sentenced to 30 days in jail and ordered to pay $29,196 in penalties and restitution. Being the target of litigation appears to be a fact of life for some of the Wills.

Long Paper Trail

The Times found more than 200 civil actions filed since the early 1970s against various members of the family in Los Angeles and Orange counties and in Seattle.

A review of most of the suits reveals that the Wills have enjoyed little success in combating the onslaught of litigation. They have lost about 70 of the lawsuits and have entered settlements in almost as many. In Los Angeles, judgments against family members have totaled nearly $2.5 million.

About 17 suits are still pending in the three jurisdictions. The others were mostly consolidated, transferred to other jurisdictions, dropped after grievances were handled through bankruptcy courts or dismissed by judges because they were not brought to trial in five years.

The preponderance of suits accuse the Wills of entering into real estate or nursing home deals, then failing to honor financial commitments. Plaintiffs have accused the Wills of shirking their debts through such methods as filing bankruptcies or dissolving corporations with judgments against them.

Some lawsuits have been filed over conditions in nursing homes. Others were initiated by state officials to collect fines stemming from health violations.

One of Vernon Will’s current legal adversaries is his landlord at Riverside. This week, Jozef Nobel, president of C-V American Corp., will ask a Superior Court judge to cancel the lease agreement that would allow Will to buy the nursing home. Nobel, whose company operates several nursing homes, said he wants to evict Will because of the poor conditions the health department has found there.

‘Stigma’ on Industry

Vernon Will, Nobel said, has put “a stigma on thousands and thousands of facilities that are being operated properly.”

Vernon Will, however, maintains that he has obeyed terms of an option-to-purchase agreement and is entitled to buy the building.

Just who the Wills are, what attracted them to nursing homes and why so many of their convalescent homes have gone bankrupt and have been repossessed are questions that had to be answered primarily by reviewing administrative and court records. Everyone in the family except Vernon and Larry Will declined to be interviewed for this article.

“It strikes me as surprising that anyone would want to do a story on my family,” said Vernon Will. He disavowed any knowledge of his relatives’ business dealings in recent years. “We’re no different than any other family,” he said.

Larry Will described himself as a real estate contractor and developer in Riverside and said he has not been associated with Will corporations since 1977. He said the family facilities he operated as an administrator never had problems.

He attributed the Wills’ difficulties with nursing home regulators and creditors to the family’s ambitious accumulation of marginal nursing homes in the 1970s. The family did not have a lot of cash, so they picked up problem facilities with little money down and tried to turn them around. Sometimes the family succeeded and sometimes it did not, Larry Will said.

‘The American Way’

“That’s the American way,” he said. “We have a chance to succeed. That also gives us the chance to possibly fail in some cases.”

Vernon Will said his homes are as well maintained as “any in the state at any time.” He blamed many of his problems on the Los Angeles County health department, which he claims is embarked on a “personal vendetta” against him. Health regulators in other areas have not had problems with his facilities, he maintained.

Anne S. Pressman, the deputy attorney general in charge of nursing home litigation in Southern California, agreed that Vernon Will has had many problems locally but said that was not because of any grudge against the family. Los Angeles, unlike other California counties, regulates nursing homes itself instead of leaving it to the state, she pointed out.

“Los Angeles is just much more vigilant and much more enforcement-oriented and much more organized,” Pressman said.

The first American-born generation of Wills, the four brothers, were sons of a German immigrant family. They grew up in the 1920s in Montana and North Dakota. Reuben Will, Vernon’s clergyman father, stayed behind in North Dakota to run the family’s house-moving company in Dickinson, in the southwest portion of the state. (Vernon Will said he became interested in the nursing home business as a youth when he accompanied his father on his visits to nursing home patients in North Dakota.) The other brothers gravitated to the West Coast and became involved in real estate and then in nursing homes.

Oscar Will, an Assembly of God minister, apparently took the lead in getting his brothers, John and Rudy, into the nursing home business in the late 1960s.

Centered on West Coast

Since then, records indicate, the three brothers and some of their sons or nephews have operated at least 79 nursing homes and related corporations in the West. The largest concentration is in Los Angeles and Orange counties and the state of Washington. In addition, Oscar Will was president and other family members were employees of a Boston-based nationwide nursing home chain of about 80 facilities, called Healthcare, that later folded.

The Wills also have been involved in investment counseling, plumbing contracting, skateboard manufacturing and drug and furniture store businesses.

In what critics see as part of a pattern, Oscar Will and one of his real estate companies, Wakefield Investments, filed for reorganization with the federal bankruptcy court in Seattle in 1971.

According to court documents and attorneys involved in proceedings that required more than 100 court hearings, Oscar Will’s problems resulted from a sour real estate market and his rapid acquisition of property with little money down. He purchased rental property, then used rent receipts for more down payments. The majority of 100 or so properties had multiple loans against them. Many of the buildings were acquired just two years before the bankruptcy.

Overextended Himself

Former associates said Oscar Will ran his real estate operations the way he and the other Wills would later run their nursing homes in Southern California. He overextended himself.

“He always takes on more than he can handle. He does everything highly leveraged,” said Merrill Getzman, a former investor in Wakefield and some of the Wills’ nursing home interests. “They always feel they can turn quick profits.”

The nursing home industry was in financial turmoil in the late 1960s. Nursing homes were plagued with empty beds. Profits were low or nonexistent. Investors were panicking. Entrepreneurs were buying leases to operate nursing homes for bargain prices.

The Wills were among them. Others owned the buildings, and the Wills paid rent and obtained licenses from the state to operate the nursing homes.

It is sometimes possible for an entrepreneur with less cash than it takes to buy a new car to walk into a nursing home and take over. The state doesn’t question an operator’s financial capability. The price to lease the home is based upon the amount of money it can generate. Commonly, the lease payments are made each month using patient receipts.

Vernon Will accumulated substantial holdings that way. The records indicate that he left the family businesses to strike out on his own shortly before his uncle, Oscar Will, declared eight nursing home corporations bankrupt in 1975. With about $10,000, Vernon Will, mostly alone but occasionally with minority partners, acquired leases to operate at least 12 nursing homes with more than 1,500 beds in Los Angeles, Orange, Riverside and Santa Barbara counties.

Because homes now are considered a more lucrative investment, they are more expensive, which in turn makes it less likely that people can buy a nursing home lease with little money down.

Patients Endangered

The bankruptcy of a nursing home doesn’t simply mean trouble for the owner. It’s a threat to patients, too, officials say. Workers at the health department still remember when Oscar Will said he could not meet his nursing home payrolls and declared bankruptcy in 1975.

“At one point we thought we would have to deal with the movement of 1,500 patients,” said Marvin Brandon of the health department.

The department feared that the employees would walk out. That was prevented through court intervention that enabled the workers to be paid.

Less than four years later, Vernon Will had followed his uncle’s footsteps into bankruptcy court in Orange County. He concluded that he could not meet his payroll or pay at least 1,600 creditors. His modest investment had blossomed into more than $1 million in debts, according to Sam Jonas, the court-appointed controller in Vernon Will’s bankruptcies.

“He started with very little money . . . maybe with $10,000,” Jonas said. “He was undercapitalized from the very beginning.”

Again there was consternation in the health department. Vernon Will’s eight bankruptcy cases under Chapter 11 of the federal bankruptcy code involved a retirement home, 11 nursing homes, a management company and an office building.

Victor Arkin, a health official, recalled Will’s walking in to say he had gone bankrupt. “All I remember was his patent shoes and his brand-new Pontiac,” Arkin said. “I thought how can that be? How can he be a pauper?”

Blames Slow Payments

Vernon Will maintained that it was not a lack of financial backing that forced him into bankruptcy court but the slow reimbursement rate of Medicare and Medi-Cal, the federal and state public health insurance programs. Without government checks flowing in regularly, bills did not get paid, he said.

Oscar and Preston did walk out of Vida Nueva in Baldwin Park in 1976. After the damaging health department survey, officials started license-revocation proceedings. The Wills closed the home shortly after the inspection. The revocation was granted without the Wills’ protesting.

Nobel, whose company leased Vida Nueva to the Wills, recalled that during a visit before the closing, he had been shocked by the “deplorable condition” of many of the patients.

Still other Will family nursing home properties were lost in the mid-1970s when the Internal Revenue Service seized $400,000 from Moderncare of California for delinquent withholding taxes. Stockholders and officers of Moderncare have included Oscar, John, Rudy, Vernon and Larry Will. In addition, since the 1970s, the IRS and taxing agencies in California and Washington state have filed dozens of liens against seven family members for failing to pay tens of thousands of dollars in taxes.

Bankruptcies, revocations and the state’s prohibition on Vernon Will’s acquiring any more convalescent homes in Los Angeles appear to have taken a toll. A search of records turned up only half a dozen currently Will-operated convalescent homes in the Los Angeles-Orange County metropolitan area and one each in Riverside County and Seattle.

Today John Will, along with Oscar, Preston and Rudy Will, work at the Vescor Corp., a real estate business located in a modern office building in Fullerton, according to a worker who answered the phone. A report filed with the state lists Oscar Will as the chief financial officer and his son Preston as secretary. Family members also maintain an office in Dallas, where they are involved in real estate and nursing home brokering.

Creditors who have tried to follow the Wills’ paper trail have not received much help from family members. During various depositions, Oscar Will, for example, has been unable to answer basic questions about family members’ holdings, including where one of his corporation’s bank accounts was maintained.

Mysterious Disappearances

And there are apparently gaps in records. Filing cabinets and a truck containing corporate records, according to deposition statements, have mysteriously vanished over the years, and other documents reportedly have become misplaced or rendered illegible by water damage.

Critics accuse the Wills of cloaking themselves in many corporate layers to make it more difficult for outsiders to trace their activities and the flow of their assets.

“They use lots of names to confuse people,” said Jack Carlow, an attorney for the Los Angeles Department of Water and Power, which was a creditor in numerous Will bankruptcies. He constructed a partial corporate family tree of the Wills several years ago that has been used as a reference guide by the county health department. “What they are doing is prostituting the corporation code,” Carlow said.

David W. Waterbury, the assistant attorney general in charge of the Medicaid fraud control unit in Washington, said the sheer number of Will corporations hindered his office’s two-year investigation into what he called the “fascinating world of the Will brothers.”

What happened to the late Herb Cook and his wife, Joan Russell, provided an example of how the Wills work, the Russells’ attorney, David E. Wulfsberg, said.

In the mid-1970s, the couple subleased four nursing homes to Moderncare of California Inc., a corporation headed by Oscar Will. According to Wulfsberg, Oscar and John Will bled the homes while failing to pay rents, vendors and taxes or keep up the properties. This caused the owners of the buildings and numerous other creditors to demand payment from the Cooks.

Named in 130 Suits

“We just about lost everything we got,” Russell recalled. She said she and her husband were the target of 130 lawsuits filed by the Wills’ creditors. Russell said she and her husband leased to the Wills because they were considered leaders in nursing homes.

The Cooks obtained a $1.1-million judgment against Moderncare in 1979, only to discover that all of the corporation’s assets had dried up.

“He transferred all Moderncare’s assets to other corporations owned by him so he wouldn’t have to pay judgments obtained against Moderncare of California,” Wulfsberg said of Oscar Will. Wulfsberg is seeking a ruling in Los Angeles Superior Court to declare the alleged transfer fraudulent.

Robert Foster, a Newport Beach attorney who has represented the Wills, said Oscar Will has maintained that the transfer of funds represented a bona fide business transaction. Foster said he will fight the suit on grounds that a three-year statute of limitations has expired.

The transfer of assets has been an issue in the bankruptcy case of John Will and his wife, Loree. John Will, claiming he was no longer a financial partner in any nursing home corporations operated by relatives, filed a petition in 1982 listing $1.2 million in debts, mostly related to nursing homes, and $3,500 in assets.

Creditors challenged, among other things, Will’s allegation that he no longer owned his house, whose title he had transferred to his 20-year-old daughter. She in turn sold the house to Moderncare Convalescent Centers Inc., a Will family corporation.

A bankruptcy judge in Orange County eventually gave a savings and loan association permission to foreclose on the house.

On one occasion Oscar Will admitted that he shifted assets partly to avoid financial obligations. In a 1975 deposition he acknowledged that he transferred his financial interest in several Southern California nursing homes from Moderncare of California to Cloverdale Properties. Will family members were officers in both corporations.

An attorney asked Will if he made the transfer because Cloverdale was in a better position financially to operate the nursing homes. Oscar replied, “Sometimes it is consideration other than financial ability.”

“Was it the avoidance of debts?” the attorney asked.

“Partially . . . “ Oscar replied.

THE WILL FAMILY

These two generations of the Will family have operated nursing homes in California and other western states. Three of the four brothers and three of their sons (and one son’s wife) are involved.

Vernon

1978: Filed for bankruptcy in Santa Ana for himself and several corporations and partnerships operating 10 nursing homes and one retirement home in California.

July, 1979: His Extended Care Hospital of Long Beach, had its license revoked; revocation stayed, three-years’ probation.

Oct., 1980: Santa Barbara Superior Court issued a preliminary injunction, at the request of the district attorney, prohibiting his Extended Care Hospital of Santa Barbara from providing inadequate care.

Spring, 1982: His Extended Care Hospital of Tarzana’s license revoked.

June, 1982: His license of Riverside Convalescent Hospital in North Hollywood revoked; stayed, three years’ probation.

May, 1984: Along with his wife, Connie, indicted for alleged participation in Medicare kickback scheme involving his nursing homes. They were acquitted.

Aug., 1985: State attorney general sought to terminate stay of license revocation on Riverside Convalescent Hospital, which Vernon and his wife run.

Oct., 1985: Lost an attempt to obtain temporary restraining order to stop Riverside revocation.

Oscar

1971: Filed for bankruptcy for himself and his real estate company.

1975: Filed for bankruptcy for eight corporations operating six nursing homes.

John

April, 1982: Filed for bankruptcy with $1 million in debts, mostly related to nursing home operations.

Preston

1979: Board of Examiners of Nursing Home Administrators suspended his license for 90 days and placed him on three years’ probation for health and safety violations which occurred at Will-owned family nursing home in Los Angeles.

1984: Convicted of one count of Medicaid fraud in Seattle in connection with fraudulent claims he submitted as administrator of a Will nursing home there.

Larry A partner in various nursing home corporations. Reuben Not involved in nursing homes. Rudy A partner in some Will corporations. SECOND GENERATION

Also, licenses for Vernon, John, Larry and Oscar’s State Convalescent Hospital, South Gate, and Oscar and Preston’s Vida Nueva home, Baldwin Park, were revoked in 1976 and 1979.