Paycheck problems at luxury Wellington rehab ‘under review’ by state
held meetings with anxious employees, hoping to calm fears and explain why paychecks had been late, held back or bounced in recent months.
Officials at the luxury rehabilitation and senior living facility blamed payroll problems on two factors: a delayed Medicare payment and a shortfall from an investment partner. NuVista officials, including chairwoman
Then Fago, who lives in a
"I'd like to say a prayer for every one of us, that we not only make it to Friday, but we make it," Fago said. "Pray as deepest and hardest as you ever have."
The employees, some of whom are low-paid nursing assistants, formed a circle, held hands and prayed.
They prayed for their company -- and their paychecks.
The leader of the vigil is a feisty, politically connected entrepreneur who was once a national nursing home magnate. In addition to operating the
The institute once was scheduled to open in 2016 but still isn't open, and
Meanwhile, Fago's payroll company, owned with her son,
NuVista investors and an investor in another venture, however, are in large part getting paid -- at least
Stressed, caring for elderly
But life has been much more tenuous for the 400 full- and part-time employees at NuVista Living, which is west of
Not only have employees worried about getting their paychecks on time, off and on during the past six months, their health-care premiums weren't always paid on time, workers said, forcing them to check with their insurance company before they saw a doctor. Employees say they are stressed, even as they must set aside worries to care for frail and vulnerable patients.
As her payroll company fell behind in taxes, Fago contributed
Self-described fighters, Fago, chairwoman of
NuVista has maintained strong marks for patient care and administration, earning mostly five stars from the state's
Walczak said they're providing a new type of health care for
During a daylong interview with
"I'm highly confident that once that's done, it puts us back on solid footing," Walczak said.
Fago and Walczak said the capital infusion also would resolve three pending lawsuits from two investors:
The refinancing is expected to be completed in 30 to 60 days, Walczak said
Tendrich said NuVista's problems were totally unforeseen, an "unbelievable perfect storm, events that have occurred that no one could have ever predicted."
A history of lawsuits
NuVista's investors or employees may not have been able to predict the current situation, but Fago and Walczak are no strangers to lawsuits and IRS liens, according to public records.
Fago was the subject of a 2004 investigation by
After working as a real estate broker selling nursing homes, Fago began buying and operating them in 1993. She found success turning around troubled facilities. She said her
At the time, Fago also had been a defendant in nearly three dozen lawsuits brought by local residents or businesses -- mostly for nonpayment and breach of contract. Fago defended herself or countersued. Over time, the suits all settled.
Fago was an early backer of
During the
But after
She stayed on the state board until
In
Two years later, Walczak created
Founding NuVista members included Walczak, Fago, Tendrich and
'Don't give up on me'
During a reporter's April visit to the
Marcus raved about the care at the facility. She recalled a patient she knew at NuVista. "She loved the food," Marcus said. "She's French. They're very particular about food."
But the payroll issues have taken their toll. Employees have left, and several jobs remain unfilled, sources said.
On Indeed.com, a job website, employees frequently comment about pay. While some comments praised the facility as friendly and innovative, other comments complained about management, staffing levels and pay issues. The reviews were evenly split between positive and negative.
"Productive, friendly environment," wrote one reviewer on
"Do not work here I repeat do not work here," read the title of an
Other recent reviews said the facility was regularly understaffed and had "very high staff turnover."
Fago and Walczak said turnover is low.
They also say they refuse to lay off employees, outsource workers or cut food costs because any of those actions would hurt the high quality of care they provide.
"This is one team, one culture," Walczak said. "Sometimes it's more costly in the short run, but in the long run, you produce a product that the consumer gets healthy with."
Walczak said he's been up front with staff about the company's financial condition. During April meetings with employees, Walczak apologized repeatedly for the payroll issues.
"I am not making any excuses," he told employees. "I'm trying to be as open as possible so we are all on the same page."
Walczak pleaded with them to stay as he worked to refinance NuVista with one of two investment groups, a deal that also would mean buying back the
But Walczak said negotiations have been difficult because they are dealing with the REIT's lawyers.
Walczak urged patience.
"I know a lot of you are very upset and concerned, but we're working through it," Walczak said. "We have to come work every day, all of us, and provide the best care and be the best place for our residents, day in, day out, because that's what allows us to solve this situation.
"I beg of you, don't give up on me."
Walczak lashed out at vendors: "Everybody's putting the screws to us right now." He singled out
During one employee meeting, Fago offered to provide grocery money if workers needed it.
A company's financial instability can affect employee performance, especially workers who care for people in need, said
"If employees are not on stable footing, how can they care for patients to get back on stable footing?"
The NuVista meetings left some employees exasperated. "Just do right by people and pay them," one employee said.
Cupcakes and hugs
Despite the tense times, employees put on bright smiles as they greeted Fago and Walczak during the tour in late April. Dr.
"The smiles," Walczak said. "You can't create smiles on a staff. They've got to love to be here and love to work here. If they love to work here, the product being delivered to our customers is what allows us to get them healthy and get them home."
Workers, who just had been told to be patient about NuVista's cash flow problems, were amazed that a broken employee elevator was fixed soon after hearing a reporter would be visiting. Also improved was the landscaping, which quickly blossomed with freshly planted pink and white pentas.
The creamy yellow walls and jewel-colored carpets in the hallways give the facility a feeling of a hotel, with 120 beds for short-term care plus 52 beds for assisted living.
Fruit-infused water dispensers were stationed throughout. Outside the conference room, a pianist played.
NuVista's upscale look is deliberate. Most people are afraid of traditional, institutional-style rehab centers, Walczak said.
But at NuVista, "when a customer is brought through the door, their emotional, physical and mental effect is, 'Wow. I can do this. Maybe I'm not going to die.' And they are hit with, 'We want you healthy. We want you back home.'"
In the conference room, the facility's chef had prepared a spread of food described as a sampling of items available every day to patients, or as NuVista executives call them, customers.
Menu items included vegan vanilla cupcakes, strawberries covered in gourmet chocolate, vegetable crudites and homemade dip.
Fago stressed the importance of diet to a customer's well-being. "Food can heal you, or it can kill you," Fago said.
Walczak said NuVista spends between
The physical therapy room hummed with customers and therapists. It featured the latest in exercise equipment, including a zero-gravity treadmill. NuVista employs 55 full-time physical therapists, and patients receive two hours of physical therapy daily, seven days a week, Fago and Walczak said.
Tendrich said NuVista Living is in high demand by rehab patients. "They cry when they leave here, and they cry when they can't get in here," Tendrich said.
Patient referrals come from area hospitals, including
Executives from
A new type of health care
NuVista at
In addition to being paid per service by Medicare, NuVista oversees and coordinates a 90-day period after a patient is discharged from a hospital for rehabilitation and recovery, Walczak said. After the 90-day period is over, Medicare then "reconciles" all the costs.
Success is measured in a patient's wellness. If there are savings during that patient's recovery greater than the traditional costs incurred for say, a hip surgery, the government splits it with the provider.
Walczak said 16,000 rehab patients have come through NuVista during the past six years, spending an average of 14 days. Some 93 percent of them highly recommend NuVista in customer surveys, he said.
Fago said NuVista's original business model anticipated the Medicare bundled payments would be paid within seven to nine months of service. But payments have been much slower. At one time, a payment was delayed 17 months, Walczak said.
The latest delayed Medicare payment to NuVista totals about
Walczak blamed the check delay on problems Medicare has had reviewing services during the 90-day post-surgery period and the increased number of providers participating in the voluntary bundled payment plan.
A Medicare spokesman said
the payments typically are made three quarters after the period of performance.
However cumbersome the bundled payment system is, NuVista's health-care model, based on improving quality and coordination of care, is the future, Walczak said.
"It's good for the patient, and it incentivizes doctors to perform at the highest level," Fago said.
Added heat from a REIT
The Medicare payment lags aren't the only reason for NuVista's cash flow problems, Walczak said.
He blamed the real estate investment trust,
In 2014 and 2015,
But in 2014,
Walczak said
Since 2014, NuVista has not consistently paid payroll taxes to the IRS, county records show. In March, the IRS placed another lien on NuVista's payroll company,
The liens total
"That's a lot of money," said
"I would assume at some point in time, they've entered into an installment agreement to pay this off," Bochicchio said. "But
Under the law, the IRS can seize assets of a "responsible party," Bochicchio and other tax experts said. PHP Employment Services is owned by
An IRS spokesman in
Walczak said, "We're working closely with (the IRS), and this will be one of the obligations that is met in the refinancing."
Walczak also said NuVista's vendors are being paid and providing services.
As an example, he cited the facility's pharmacy. "We've never had a glitch in any medication, and there's never been a stop in services provided," said
As for the company's health insurance provider,
In addition, any bounced check fees or overdraft costs have been reimbursed to employees, he said.
Fago said the refinancing will provide plenty of working capital and give NuVista an 18-month cushion. In addition, the money may be used to expand NuVista to
Recent investor lawsuits
Original investors in NuVista poured money in between 2009 and 2013, according to court records. By
But by mid-2014, "due to infighting, self-dealing and severe mismanagement," NuVista was no longer able to pay its operating expenses and was in "severe financial distress," according to a
Puder's lawsuit claimed investors weren't told PHP Employment Services, (also owned by Meyer and Tendrich at the time) had failed to pay payroll taxes to the IRS for more than
The lawsuit named Fago, Walczak, Meyer and Tendrich personally, plus a number of investment affiliates.
It was only when the IRS threatened to seize NuVista's assets, the lawsuit said, that
Most, but not all, investors voted to sell NuVista's
In 2015,
But some investors said in lawsuits that they didn't receive all the money due them in the second phase. Affiliates owned by Puder, Fireman (the Reebok mogul),
In 2017, judgments of
All the judgments were fully paid and satisfied in November, according to court records.
None of the money came from the NuVista facility in
Another investor who was paid was retired
Walczak said the plan was to build a condominium, but if that didn't work, then they would build an independent living facility. Walczak said the deal collapsed with the real estate recession. Lazzara couldn't be reached for comment.
After Lazzara obtained
In his bankruptcy filing, Walczak, a
But Fago, who had personally guaranteed a loan and who was sued by Lazzara in 2013, paid Lazzara
Fago said she's on good terms with investors such as Puder, who obtained a judgment of
In an interview, Puder said "everything's fine" with Fago and Walczak, but he's not committed to being an investor again: "I haven't had time to look at it."
Meanwhile, Fago and Walczak said "there's no issue" with investor Ecclestone, who sued
An Ecclestone attorney said his client does not comment on pending litigation.
Neighbors suing neighbors
Also suing are the Halles, Fago's neighbors on
The 2017 lawsuit seeks
Fago said
Walczak said Fago was unable to repay the Halles due to the cash flow issues, but both he and Fago said the Halles also are waiting on the refinance to be repaid, and there are no hard feelings. "We had dinner!" Fago said.
"I don't know any business person that's hasn't had a lawsuit," Fago added.
An attorney for the Halles did not return a phone call seeking comment.
Will
Meanwhile, the
Both Fago and Walczak offered assurances that the institute would open and employ 500 people.
The institute was seen as a bid to capture returns on the state's Scripps investment by blending research and academia with health care. "This is what the whole
Scripps Executive Vice President
"They're delayed due to a disagreement with the owner of the building, and I guess they're moving forward toward completion," Bingham said. "I wish whoever is building the facility would get it done because it will be an asset to the community."
On a bright day in April, several subcontractors were at the pastel-colored Caribbean-style facility, a 240,000-square-foot center on
The institute features a 129-bed nursing home, a 70-bed assisted living facility and a 30-bed center for people with brain disorders. It also has a clinical research center that will give scientists from
During a tour, Fago, her brother, Tony, and her other son,
From a room in the facility, Scripps' iconic silver spire can be seen through the trees.
Fago is proud of her efforts to advance Scripps, which she sees as the future for her children and grandchildren. She said biomedical research expands the county's economy beyond construction and real estate. "We didn't have the life sciences that they bring to us," she said.
She said she even flew local leaders up to
Fago donated
Today, Fago said she not only sits on a Scripps advisory board but is willing to do "whatever I can" for the research center.
In addition to arranging fund-raisers, "I am probably the person who brings more awareness (of Scripps) since its conception. When you talk Scripps,
Scripps was vague about Fago's contribution to the research center.
"
When asked to elaborate, Singer replied: "Nope."
At one time,
But Jupiter Medical ended its ties to NuVista in February "to focus on our expanding clinical services and growing hospital campus," hospital spokeswoman
Walczak said the relationship was always loosely defined and could have constituted a partnership or just the sale of beds. He said the hospital recently decided to sell beds.
Walczak said final inspections at the institute by the town of
But employees hired for the institute have been reassigned to positions in
Indeed, during April meetings with employees, Walczak was tentative about the
"This is our number priority," he said of the
Walczak then told employees he planned to borrow money from a friend to make payroll.
"I'm giving him the title to my house; I"ll do whatever's necessary," Walczak said. "That's how much I believe in us."
That Friday, and every Friday since, the company has paid employees on time.
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