Free Letter - District Court of Delaware - Delaware

C se 1:04-cv-00910-Gl\/IS Document 228-2 Filed 07/30/2007 Page 1 of 4
Wolff & Samson PC
The Offices at Crystal Lake
One Boland Drive
West Orange, New Jersey 07052
973—325»1500
Attorneys for Defendant
THCI Company LLC
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
INTEGRATED HEALTH SERVICES OP
CLIP`]? MANOR, INC., INTEGRATED E
HEALTH SERVICES AT RIVERBEND, y
INTEGRATED HEALTH SERVICES AT
SOMERSET VALLEY, INC., ALPINE
MANOR, INC., BRIARCLIFP NURSING
HOME, INC., INTEGRATED HEALTH
GROUP, INC., SPRING CREEK OF IHS, l
INC., FIRELANDS OF IHS, INC., ELM
CREEK OF IHS, INC. and IHS LONG I I
TERM CARE SERVICES, INC. I
l
Piaianrrs,
Civil Action No.: O4··9lO (GMS)
v. .
SUPPLEMENTAL AFFIDAVIT OF
THC} COMPANY LLC, ‘ ROBERT W. HEYERT IN SUPPORT OF
1 THE MOTION BY THCI COMPANY
, LLC TO ENFORCE THE STIPULATION
. Defendant, l AND ORDER OF SETTLEMENT AND
l DISMISSAL
and, i
AEE BRIARWOOD CORPORATION and l
JOHN DOES l—i0, E
l
Additional Counterclaim
Defendant.
l
Robert W. Heyert, of full age, being duly sworn upon his oath according to law, deposes
and says:
l. I arn the Vice President and Controller of Healthbridge Management, LLC, a
management company which manages the nine nursing homes that are the subject of the
iosiesm

C se 1:04-cv—00910-Gl\/IS Document 228-2 Filed 07/30/2007 Page 2 of 4
Stipulaticn and Order of Settlement and Dismissal entered in this matter (the “Settlement
Agreement"). The nine nursing homes are operated by subsidiaries of THCI Company, LLC
T ("Tl-lCl"), the Defendant in this matter. As such, I am fully familiar with the facts set forth
herein. I make this Supplemental Affidavit tc alert the Court to further breaches of duty by the
LTC Plaintiffs, which, if not remedied immediately, will result in substantial financial harm to
th New Operators.
2. As set forth in our original application, LTC and the LTC Plaintiffs have not
complied with their obligations under Paragraph 6 of the Settlement Agreement, which requires
LTC and the LTC Plaintiffs to provide Medicare Terminating Cost Reports to THCI for review
and reasonable approval prior to tiling.
3. As stated in my original Affidavit, we had a serious and legitimate concern that
deadlines would be missed by the LTC Plaintiffs failure to tile the Terminating Cost Reports.
4. in view of the failure to timely tile these reports, Medicaid and Medicare can
withhold payments for billings submitted by the New Operators, and those governmental
entities can also levy penalties against the individual facilities for failing to timely tile the
Terminating Cost Reports.
5. lt turns out that our concerns were not misguided.
6. We have learned that the Fiscal intermediary for Medicare is going to suspend
all Medicare payments to 8 of the 9 New Operators, beginning with payments for June, 2007
services, due to the failure by the LTC Plaintiffs to file Terminating Cost Reports for those
facilities.
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7. This suspension of payments will result in a substantial reduction of
approximately $l,33l,694 monthly cash for the 8 New Operators, based on June billings even
though the services which earned the income were provided.
8. Moreover, we have been advised that interest will charged on all payments
received since October l, 2006 by the affected New Operators until those payments have been
returned to Medicare.
9. Our demands to the LTC Plaintiffs to tile the Terminating Cost Reports have
been inet with the excuse that we have not provided them with bad debt logs. First, it should be
noted that bad debt information is not required to tile the cost reports. lt can be supplied at a
later date by tiling an amended cost report. (Section 2176.2 of the CMS Provider
Reimbursement Manual 15-l "Allowabie Direct Administrative Cost incurred After Final cost
Report is tiled" provides guidance for terminating providers related to tiling an amended cost
report for allowable bad debt expense.)
l0. More importantly, however, we do not have access to the patient accounting
if records that are required to prepare the bad debt log information because the LTC Plaintiffs
have removed our access to that information as of approximately October 3 l, 2006. After that
date, the LTC Plaintiffs handled all billing and collecting.
ll. However, we have supplied the relevant remittance information available to us,
as well as other patient documentation in our possession which has been requested by the LTC
Plaintiffs, from which the LTC Plaintiffs can reconstruct the bad debt information.
Accordingly, the LTC Plaintiffs have no excuse to refuse or fail the terminating cost reports.
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C se 1:04-cv-00910-G|\/IS Document 228-2 Filed 07/30/2007 Page 4 of 4
12. The only exception to the above is that the remittance information for 2005 for
the Alabaster, Alabama facility has not yet been located. Remittances for the years 2003 and
2004 have been located and were sent to the LTC Plaintiffs on July l9, 2007. All otber
requested remittances have been supplied.
Robert W. I—leye%
· Sworn to and subscribed before me
this;_0y;° date of July, 2007
s
- JACQUELIN
_ Nntary Public
. LD. #2356427
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