Carelessness of the Worst Kind

Shameful. That’s the only word that describes the chain of events that led to 63 elderly residents of a bankrupt Reseda nursing home being turned out onto the streets in the dead of night last weekend. Even worse, though, was the finger pointing that followed the last-minute closure of the Reseda Care Center. As everyone from the court-appointed bankruptcy trustee to state and county health departments tries to shove away blame, the bottom line remains that none of them did their jobs as aggressively or as conscientiously as they should have.

U.S. Bankruptcy Judge Arthur M. Greenwald was right on when he angrily criticized trustee Alfred Siegel in open court last week for evicting residents--one of whom is 106 years old--without proper notice to families or state and local health authorities. Siegel’s defense has been that he had no choice. Bills were mounting with no cash to pay them. The home’s staff had not been paid in weeks. Insurance had lapsed. So after frantic--but ultimately unsuccessful--efforts to find funding to keep the home open, Siegel made the kind of tough choice common to bankruptcy trustees. He shut the operation down.

Though such a choice would have been the right one for, say, a tool factory, it was the wrong one for a nursing home, where the product is the care of society’s frailest members. As a bankruptcy trustee, Siegel’s primary duty was to the creditors of the failed nursing home. A trustee’s job is to maximize the return to creditors. In fact, a trustee’s fee is based on how much he or she can salvage from a failed business and disburse to creditors. Such a system works fine for regular businesses, but not for one such as this.

California and Los Angeles County health officials have been quick to condemn Siegel for the closure, saying he broke a state law that requires 30 days notice before any health facility can be shut down. They also contend that Siegel could have gotten emergency funding to keep the Reseda home running a few more days. All true, but state and county agencies share culpability for not intervening sooner and making sure that Siegel understood available options such as emergency state money. Top officials at the state’s Department of Health Services claim they did not intervene because they had been assured that matters at Reseda Care were under control and had no reason to believe otherwise. Yet just weeks before Reseda Care closed, an Orange County facility operated by the same principal owners shut its doors with just a few days’ notice. That should have been a red flag.

In the week since the home was closed, steps have been taken to avoid a similar disaster at two other homes owned by the failing Phoenix Health Group. One home, in Alta Loma, will be handed back to its former owner and any action at the other, in north Long Beach, will be scrutinized by Greenwald. The County Board of Supervisors, meanwhile, called for federal legislation requiring advance notice of health facilities closing during bankruptcy. Fine, but such a law is already in place, requiring notice to state authorities. A new law isn’t the answer. Following the old one might have helped.

The closure of Reseda Care should not have come as a surprise. Bankruptcies don’t just happen overnight. They unfold over weeks and months with plenty of notice to interested parties. Creditors knew what was happening. State officials knew what was happening. County officials knew what was happening. The only group the bankruptcy caught by surprise were the residents of Reseda Care and their families, some of whom learned of the closure on the evening news. They deserve better than last week’s excuses.