Acquisitions and Sales
Duane Morris' post-acute group has extensive experience in the acquisitions and sales of nursing homes, assisted living residences and other long term care facilities. We find that a key goal is to first define with our client what it is that they desire from the transaction, and we then work assiduously to seek the maximum long-term benefit out of the transaction based on that goal. We represent either the buyers or sellers of facilities, and we're often involved in helping our clients find funding.
From the seller's perspective, we will develop the letter of intent, if desired, contracts and negotiating terms, and help guide the seller through these steps. We will study and explain the regulatory impact and requirements of the transaction. We also understand the various factors that buyers use to assess transactions including:
- the price they want to pay
- financing and available routes for funding
- the contract terms to be negotiated
- the cost and difficulty of preparing and filing the necessary regulatory documents
- any regulatory or enforcement actions that may be pending against individuals or the facility
We have represented borrowers from all types of lenders including: REITs, commercial banks and FHA-insured lenders. Our clients benefit from our direct experience in having represented both sides of the negotiating table.
Besides our depth of knowledge in having conducted dozens of nursing home, assisted living and home care transactions, our experience with state regulators also provides added value to our clients. A number of our attorneys are former regulators themselves, and we have extensive experience working with the regulators of some of the most populous states including New York, Pennsylvania, Florida, Illinois and others. Our skill in understanding regulatory requirements facilitates the business negotiation because we know what, historically, has and has not been acceptable to the regulators, and can help our clients avoid problem areas.
The typical negotiation requires experienced legal counsel at every stage:
- Letters of intent
- Formal agreements (from our long history in this area, we have dealt with almost every situation)
- Other corporate specialty areas (Duane Morris has experienced lawyers with securities and tax backgrounds for quick and competent turnaround of documents)
- Real estate considerations (we are adept at the real estate aspects of these deals including existing leases that need to be examined or renegotiated)
- Regulatory approvals, where required
- Licensing opinions for lenders
Development and Financing of New Facilities
Duane Morris attorneys have represented developers, owners and operators of both proprietary and nonprofit senior care providers, including nursing homes, assisted living facilities, CCRCs/life care communities and independent living facilities. Our experience includes tax-exempt bond financing, including both qualified 501(c)(3) bonds and qualified residential rental facilities. In this regard, we have served as bond, underwriter, trustee and borrower's counsel. Many of these transactions include "taxable tails" and multiple series of subordinate debt.
Members of our Post-acute Care Group work closely with the firm's Affordable Housing Group on senior housing projects involving both 4 percent and 9 percent low income housing tax credits. The firm represented the first developer in New Jersey to combine 4 percent low income housing tax credits with bond financing of an assisted living facility. These projects usually include multiple sources of "soft" debt, and Duane Morris lawyers are skilled in ensuring that the requirements of all programs are satisfied.
Other financing experience with post-acute facilities includes conventional debt and equity transactions.
To be successful, all these facilities must meet both state and federal regulatory requirements. Some states require certificates of need and most also require licensing to operate the facilities. Duane Morris attorneys have experience in obtaining and maintaining licenses and regulatory approvals in more than half the states in the country. Many of these facilities also participate in Medicare and/or Medicaid, and members of the group are proficient in understanding the relevant conditions of participation. Any facility participating in a federal health care program must also comply with the federal Anti-Kickback and Stark statutes, and many states have similar statutes. Duane Morris attorneys have significant experience in structuring contractual and investment relationships that conform to these requirements.
Duane Morris attorneys assist our clients with a multitude of regulatory activities that rely on an experienced and practical legal perspective. To aid good corporate oversight, we counsel our clients on risk management programs, especially regarding regulatory issues. We help create or review all manner of agreements with vendors, suppliers and independent contractors. We are skilled at understanding the contractual issues that may result from the Medicare Part D program. For nonprofit providers, we help embed practices to meet with the IRS good governance regulations and state-designated charity care policies. We also have assisted our clients in a wide variety of reimbursement matters.
We routinely advise post-acute care providers on matters relating to compliance with the myriad regulatory requirements affecting their day-to-day operations, whether it be HIPAA, the Deficit Reduction Act, the Anti-Kickback Law, the Stark self-referral law, the False Claims Act, or comparable state laws that present risk for civil or criminal liability. Our advice includes analysis of contractual relationships with ancillary services providers; development of corporate compliance plans to prevent, detect and correct internal compliance problems; and assistance in implementation of corporate compliance plans, including staff training and development of internal audits. Our objective in counseling our clients is to find practical, common-sense ways to meet compliance obligations, in whatever arena.
Fraud and Abuse
The firm's lawyers have extensive experience in representing post-acute care provider clients, as well as their ancillary service contractors, who are under investigation by government agencies. Our representations include encounters with the state Medicaid Fraud Control Units and other divisions of state attorneys general offices as well as the U.S. Department of Health & Human Services, Office of Inspector General and the U.S. Department of Justice.
We have negotiated settlements of government investigations that minimize the financial impact on our clients and we have negotiated and counseled on fulfilling obligations under corporate integrity agreements. We also have handled Medicaid and Medicare audits, including carrier and fiscal intermediary matters, frequently analyzing whether the situation warrants repayment of funds. We often handle internal investigations of client matters, to maximize privilege and confidentiality considerations. We have successfully negotiated with federal and state agencies for voluntary refunds. Our representations have allowed our clients to minimize the negative impact of government enforcement activity.
Beyond corporate compliance, Duane Morris attorneys are also adept at representing clients through those issues that may result from court or agency actions. Whenever a government agency conducts a survey or investigation, there are elaborate procedures that define "deficiencies." We handle numerous matters in this area of the law and have former federal and state prosecutors in our practice group. We are experienced at informal dispute resolution methods, as well as evidentiary hearings with federal and state agencies. We have assisted our clients in working through involuntary transfer and discharge proceedings, and federal/state quality of care surveys and enforcement actions. We have represented numerous clients where government agencies have imposed a denial of payment or made immediate jeopardy findings.
When a client is found to be deficient, we can assist it through all stages of response. First, we often attempt an informal dispute resolution. Second, we can challenge the agency's finding through various avenues. If the matter continues, we can take our client's case to a formal hearing, which is structured very much like a typical bench trial, with the state department of public health or Centers for Medicare and Medicaid Services, requiring the client to have a seasoned advocate.
Other areas of classic litigation where we have represented clients are though allegations of abuse or neglect which can result in civil, administrative and criminal litigation. It is important for clients to understand that while the vast majority of agency surveys do not result in adverse findings, each survey has the potential to end up in civil or criminal court. Our combination of regulatory and litigation experience assists our clients in finding the most advantageous path.
Another area of potential litigation where we support our clients is through qui tam or whistle-blower matters. Because the long-term care industry is so reliant on government reimbursement, the failure to heal a resident can be considered "fraud" and thus expose owners and operators to federal and state whistle-blower statutes. We have also represented numerous licensed administrators and other health care professionals in related situations.
Duane Morris' post-acute care group includes attorneys with specialized skill sets to represent clients. From a licensed pharmacist/attorney to former state and federal prosecutors and regulators, we understand and guide our clients on preventative actions to avoid litigation, and we have the in-house depth to respond should litigation result.
Skilled nursing facilities derive their revenues principally from government agencies with typically 85-95 percent of their revenues coming from Medicare and Medicaid reimbursements. We have substantial experience with the federal Medicare administration agency, CMS. Our firm has former federal attorneys with experience in advocating in and out of litigation and state program reviews, with direct experience in reimbursement matters in some of the largest states: New York, Illinois, Pennsylvania and Florida. With constant downward pressure on reimbursements, facilities need skilled advocates who can successfully challenge adverse decisions. Our comprehensive experience is also well-matched with our national coverage. With one of the largest healthcare practices in the country, we often call on attorneys from our various offices to work through local issues for national players.
We speak regularly on post-acute reimbursement issues at state and national conferences, and have articulated a number of the trends that owners and operators face including the pressure from state and federal agencies to reduce reimbursement and other program or state revenue issues. We also work hard to anticipate legislative changes. Our clients receive notices on pending legislation through our circulated national and state publications.
Certificate of Need and Change of Ownership
State regulatory approval is typically required for a new healthcare facility. At least half of the states demand such approvals, whether an organization is building a new facility or acquiring an existing one. We are accomplished in guiding clients through the certificate of need (CON) or change of ownership process and can respond to a regulator's review factors including:
- Is the facility necessary?
- Is the proposed management group competent?
- Is the organization financially viable?
For CON matters, as well as change of ownership matters, applications for nursing homes, assisted living facilities and home care agencies typically are submitted to the state health departments for approvals. We have close working relationships with these agencies in multiple states, including New York, Illinois, Maryland, Pennsylvania, Massachusetts, Florida and others.
We can assist our clients through the standard application process including:
- Preparation of the applications, including designing programmatic and demographic narratives
- Developing answers that satisfy the agency's review factors (need, character and competence, and financial stability)
- Negotiating when necessary
Our goal is to obtain the approval for our client in the shortest time possible. Among our attorneys are former state officials who know what state regulators require and, just as important, how regulators prefer to work through these applications.
Employment Law Matters
We have numerous attorneys at Duane Morris with in-depth and ongoing experience in addressing employment law issues for health care providers in general and for the post-acute care industry in particular. We are skilled at guiding our clients through the protocols to follow in the advent of union-organizing, for example. We also handle numerous and frequent matters involving best practices in terminating staff within the existing and sometimes conflicting regulations, and the threat of qui tam actions.
To help prepare our clients in advance of employment-related problems, we provide employment manuals and training processes, as well advice on best practices in following the regulations regarding criminal background checks and other federal and state laws. We have handled cases for our clients before state departments of human rights, the EEOC and in federal courts. When a lawsuit is threatened against one of our clients, we have the capacity to involve a combined team of lawyers with both wide-ranging regulatory and employment law backgrounds.
For Additional Information
For more information, please contact Susan V. Kayser, Donald R. Auten, David E. Loder or any the practice members referenced in the Attorney Listing.