Landlord seeks to evict operator of NuVista Living rehab center

Oct. 25--The operator of NuVista Living at Wellington, a rehabilitation center under review by a state agency, is being sued for eviction by its landlord.

Chatsworth at Wellington Green owes more than $5 million in back rent, according to a lawsuit filed in U.S. District Court.

ARHC NVWELF101 LLC, the center's New York-based owner, wants a federal court judge to kick Chatsworth out and appoint a receiver "for the safety and welfare of the residents," according to its complaint. ARHC said it needs a receiver so it can find a new company to manage the place and care for more than NuVista 150 patients and residents.

Without a receiver in place, "the facility would have no licensed and certified operator and could close" when Chatsworth is evicted, according to an ARHC court filing. But a receiver could keep NuVista residents in place instead of having to move them to another facility, which could traumatize elderly or sick patients, leading to depression or death, ARHC said in court documents.

Chatsworth is owned by Paul Walczak and a company that includes his mother, health care mogul Elizabeth Fago. In September, Fago was named to Florida Trend magazine's list of the Top 500 Most Influential Floridians.

Neither Fago nor Walczak responded to emailed requests for comment for this article. Their attorney, Michel Weisz, answered a phone call and said he would call back, but he did not.

NuVista Living at Wellington Green was the subject of an article earlier this year by the Palm Beach Post, which found that NuVista employees sometimes weren't paid on time or received paychecks that bounced. NuVista Living is west of State Road 7, just south of the Mall at Wellington Green.

The state Agency for Healthcare Administration, which regulates skilled nursing centers, said in May it was reviewing Nuvista's compensation and payroll issues.

On Wednesday, agency spokeswoman Shelisha Coleman said the agency is conducting a review of NuVista Living at Wellington's "financial ability to operate." Coleman did not elaborate.

Fago is a former real estate broker who began buying nursing homes in the 1990s. She built a large company, Home Quality Management, and later sold it for an undisclosed amount. In 2004, the Post detailed a history of lawsuits against Fago, all of which have been resolved. Late payroll taxes associated with another Fago company also were resolved.

Fago, who lives in a $7 million home on the Intracoastal Waterway in Jupiter, later went on to be a big backer of Scripps Florida, giving the Jupiter research center $2 million.

In 2009, Fago, Walczak and several investors formed NuVista, a luxury rehabilitation and assisted living company. NuVista opened the Wellington facility, and then spent years building a Jupiter facility dubbed the Institute for Healthy Living. The center is completed but not yet open.

During the past few years, lawsuits and IRS liens have dogged Fago and companies she owns with Walczak, according to Palm Beach County public records.

PHP Employment Services, Fago and Walczak's payroll company, owes the Internal Revenue Service more than $10 million in unpaid payroll taxes, according to liens filed with the Palm Beach County clerk's office.

Meanwhile, real estate developer E. Llywd Ecclestone Jr. in June won a lawsuit against Fago and NuVista Healthcare Investors. A Palm Beach County Circuit Court judge ruled he was owed $600,557 on an unpaid loan, plus interest. Still ongoing is a lawsuit filed against Fago by her neighbors in Admiral's Cove. Warren and Martha Halle allege they are owed $6.3 million by Fago and another Fago/Walczak entity, FW Healthcare Investments, according to a Palm Beach County Circuit Court lawsuit.

These debts are in addition to payroll issues that prompted NuVista employees to complain about bounced and late paychecks and periodic unpaid premiums to their health insurance company.

In a day-long interview in April, Fago and Walczak said a promised refinance of at least $200 million from an investment group would fix a cash-flow crunch. Fago and Walczak mostly blamed changes in Medicaire reimbursements for their money problems, as well as a money shortfall from the real estate investment trust associated with ARHC that bought the Wellington and Jupiter properties.

The federal reimbursement issue also is the basis of Chatsworth's defense in the lawsuit by ARHC, which was filed in June, court records show.

In a July 5 court filing, Chatsworth said it wasn't in default on its lease with ARHC due to force majeure. This is a legal term to describe a circumstance that is beyond the control of a party.

Chatsworth said that within a year of signing its lease with ARHC at Wellington, the government changed reimbursement programs for medical services. The changes cut the revenue generated by the services, and since then, Chatsworth said it's been unable to make enough money to pay the rent.

But ARHC said in court papers that force majeure isn't a valid argument, especially since the lease excludes general economic conditions as the type of event that would qualify.

In addition to poking holes in Chatsworth defense, ARHC filed a court document that complains about Chatsworth dragging out the litigation by repeatedly asking for extra time, "just as (Chatsworth) has refused to pay millions of dollars to (ARHC) for well over a year."

IF ARHC sounds frustrated, it is.

In addition to buying NuVista Living in Wellington, ARHC also bought The Institute for Health Living, on Central Boulevard just north of Donald Ross Road in Jupiter. This $75 million senior housing, rehabilitation and research complex was first approved for construction in 2010 but only recently was completed.

The buildings are painted and the property is landscaped, but the property is a ghost town, devoid of employees, residents or patients.

NuVista and another Fago/Walczak entity, Palm Health Partners, have a lease to operate the Institute, but relations between ARHC and NuVista have soured here, too.

ARHC blames Palm Health Partners for the Institute's construction delays, cost overruns and failure to secure agreements with research and medical partners, according to correspondence sent to the town of Jupiter.

In recent months, both Scripps and Jupiter Medical Center have cut ties to the Institute, even though both were heralded as close partners of the project when it won approval from the town of Jupiter years ago.

But now that the Institute is built, ARHC can't open it because there is no research component. Research was a key condition of approval by the town of Jupiter and necessary for the property to receive a certificate of occupancy to open.

ARHC wants to be excused from the research and medical requirement and is expected to go before the town of Jupiter's planning and zoning commission on Nov. 13 to discuss the issue.

As for NuVista Living at Wellington, Chatsworth is expected to file a legal response by Nov. 10 stating why a federal judge should not grant ARHC's eviction request.

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