Avera enters dispute over operations transfer of SD nursing homes in receivership

Jun. 8--Avera is now the second entity attempting to intervene in the operations transfer of 17 state nursing facilities in receivership to new, permanent owners.

It's the latest court action in a crisis that began more than a year ago when a receivership was created to financially stabilize 18 nursing homes and one assisted-living center in South Dakota.

Golden LivingCenters, in Texas, which owns the facilities, formed Black Hills Receiver when their former manager, Skyline Health Care, did not have the money to operate the facilities, was delinquent on rent and couldn't pay other bills, according to court documents.

Receivership is a legal process in which a person or group -- the receiver -- is appointed by a judge to oversee business operations and finances. It's sometimes used when businesses have financial issues.

In court documents filed April 19, Black Hills Receiver requested that operations of the remaining 17 nursing facilities it manages be transferred to Cascade Capital Group, a new owner operator.

Cascade is a privately held health care real estate investment and management company based out of Illinois. The company oversees more than 135 facilities in 23 states, according to its website.

However, on May 23, Avera asked that the court deny the transfer until it has reviewed monies Black Hills Receiver owes Avera, and determined how payment will proceed.

In court documents, Avera said that it was repeatedly promised payment by Skyline for services it offered, including Avera eCare.

But Black Hills Receiver said in court documents filed on May 30 that now is not an appropriate time for Avera to intervene. Black Hills Receiver said that once all necessary court-approved expenses are paid for at the facilities, such as employee payrolls and vendor services, it will seek court direction as to how to handle leftover funds.

Avera's move comes after MidCap, a financial lender to Skyline, argued in court documents that if the nursing facilities are sold, it will not be paid back. MidCap is asking that the court require Black Hills Receiver to modify its motion to include the money that is owed to MidCap -- money that MidCap says instead has been used to fund the operations for the last 12 months.

In response to MidCap's claim, Black Hills Receiver said that denial of the transfer completely or with the limitation that MidCap is paid back first would hurt every party involved, while putting the health of hundreds at risk.

If those funds intended for payroll and vendors are all directed to MidCap, it would "signal to the employees providing care and the vendors providing goods and services that they may not receive payment for their final weeks of service," Black Hills Receiver said in court documents.

"... (It) risks having those employees quit or refuse to work in the final weeks and those vendors terminate services ..." the documents said.

Black Hills Receiver will go through the court to determine debt allocation once those other expenses are paid, according to the documents.

In November 2018, the state approved the closings of nursing homes in Mobridge and Madison while under the management of Black Hills Receiver.

Of the 17 remaining facilities, nursing homes in the local area are in Groton, Ipswich, Milbank, Redfield and Watertown. There's also an assisted-living center in Milbank.

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