The state attorney general’s office says it will scrutinize a troubled Massachusetts nursing home chain for allegedly leaving many of its employees without health insurance after deducting premiums from their paychecks but failing to pay the insurer.
The coverage lapse affected workers at all 10 of Synergy Health Centers’ nursing homes, according to court records and a letter sent to employees by the insurer that was obtained by the Globe.
A spokeswoman for Attorney General Maura Healey said companies that withhold money from employee paychecks for health insurance benefits but do not pay premiums would be in violation of the state’s wage and hour laws.
“Our office will review this matter and plan on reaching out to the company to get more information,” said Jillian Fennimore.
Avi “Zisha” Lipschutz, listed in court documents as a majority owner of Synergy, did not return phone calls.
The attorney general’s probe comes amid cascading problems for Synergy, a New Jersey company with two of its Massachusetts nursing homes now on a federal regulator’s list of the worst facilities in the country. With the company’s finances deteriorating, eight Synergy facilities have been placed into the hands of a court-appointed receiver, which is trying to untangle a labyrinth of unpaid bills for everything from medicine and food to cleaning services, court records show.
Toby Edelman, a senior policy attorney at the Center for Medicare Advocacy in Washington, D.C., who tracks nursing homes nationwide, said Synergy’s downward spiral “is shocking.”
She said it is unusual for a company to have one nursing home on the federal watch list, let alone two.
Federal regulators “are saying something about the chain, too, that they recognize it’s a problem,” Edelman said, referring to the low standing of some Synergy homes on the list compiled by the federal Centers for Medicare & Medicaid Services.
The summer has been especially rocky for patients and employees at Synergy’s Grosvenor Park Health Center in Salem, which was placed under court-ordered receivership July 30.
Malfunctioning air conditioning went unrepaired for days during sweltering heat in early July and workers’ paychecks bounced, according to several employees who asked to remain anonymous for fear of retribution.
Then, workers discovered their health insurance had been canceled, according to the insurer’s letter.
Damian Dell’Anno, chief executive of Next Step Healthcare, a company hired by Synergy last year to manage its Massachusetts nursing homes, said coverage has been restored and Synergy will reimburse workers for rejected medical claims they paid out of their pockets when their insurance was canceled from June 5 until Aug. 7 .
Synergy entered Massachusetts in late 2012 with no record of owning nursing homes and continued to receive licenses from state regulators despite mounting health and safety problems at some of its nursing homes. The company now owns facilities licensed to care for more than 1,200 residents.
State Senator Mark Montigny, a New Bedford Democrat who has repeatedly proposed laws to boost penalties and scrutiny of Massachusetts nursing homes, said the Synergy problem could have been avoided.
“Until and unless we start criminally charging owners and fine them at a fair fine, our parents and grandparents will continue to suffer,” Montigny said.
“The fact that companies can come into Massachusetts and take over quality homes and destroy them, and not go to jail, says the culture in Massachusetts supports lobbyists and special interests more than patients and quality care,” he added.
State lawmakers for the past three years killed attempts to strengthen scrutiny of nursing homes.
Four of Synergy’s nursing homes received bottom of the barrel scores — one out of a possible five stars — in their most recent state health inspections, according to federal records. Three others received two stars, considered below average.
Next Step’s Dell’Anno said the quality of care is improving at the Synergy-owned nursing homes run by his company.
“Are the facilities better today than prior to Next Step coming in, from a clinical perspective? The answer is yes,” Dell’Anno said. “Is it perfect? By no means.”
Court records show Next Step is among the many vendors Synergy has failed to pay.
Synergy, with more than $31 million in unpaid mortgage loans and other debts, has for months moved money around to stay one step ahead of creditors, according to records from US District Court.
The courts stepped in last November, when a Middlesex Superior Court judge ordered Synergy to relinquish financial control of its Wilmington nursing home, Woodbriar Health Center, to KCP Advisory Group, a Burlington firm.
Woodbriar was facing at least two wrongful death lawsuits and a pile of unpaid bills. Synergy’s financial free fall continued, as other courts moved to place seven more of the company’s nursing homes under KCP’s control.
KCP officials soon discovered that Synergy was siphoning money, including health insurance premiums, from some of its nursing homes to pay outstanding bills at others, according to a July 31 court filing by KCP’s Paul Valentine, the court-appointed receiver.
“Essentially, as its business declined, it paid the most urgent bills with whatever funds were available,” according to the records.
Valentine described in court documents his frustration with trying to get straight answers from Synergy leaders about the company’s vanishing funds.
“Synergy [officials] . . . have been incommunicado with the Receiver on the arrears, and have failed to turn over all records necessary for the Receiver to resolve these issues,” he said.
An earlier filing by Valentine chronicled the progressive failure of services at several Synergy nursing homes before he stepped in.
At the company’s facility in Revere, a total of more than $1 million was already months overdue last December for critical staples, such as physical therapy, food, and medicine. The company’s pharmacy threatened to cut off Synergy if it didn’t get paid, according to the court documents.
In February, the heating and air conditioning company refused to fix the heating system at Synergy’s Waban Health Center in Newton because it was owed money. And creditors were closing in on most of Synergy’s nursing homes after the company repeatedly missed mortgage payments.
“In sum, defendants’ financial situation is something more than doubtful — it is dire,” Valentine told the court. “Moreover, the court is mindful that defendants operate skilled nursing homes with hundreds of patients. Operational mishaps, service interruptions, and license revocations may well affect the health and safety of patient-residents.”
About 400 nursing homes in Massachusetts provide long-term care to roughly 30,000 residents, according to the industry’s trade group, Massachusetts Senior Care Association. Another 120,000 residents rely on nursing homes for short-term rehabilitation services.