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Originally published in Island Ad-Vantages, June 7, 2012
Legal wrangling takes center stage in Penobscot Nursing Home matter

Click here to see the full Penobscot Nursing Home Archive.

by Faith DeAmbrose

Since the Maine Department of Health and Human Services filed a court motion April 6 to close Penobscot Nursing Home and sell its bed rights to First Atlantic Corporation (a company seeking to build a new facility in Bucksport), dozens of legal briefs have been filed from entities on all sides of the issue.

The towns of Penobscot and Blue Hill, which also have support from Sedgwick, Brooklin, Brooksville and Castine, are seeking to gain “Intervener status” that would allow it a voice in the proceedings. Deer Isle’s nonprofit Island Nursing Home also requests standing in the legal process and seeks to purchase up to 20 bed rights should the HHS be granted action to close the home and sell its assets.

To complicate matters further, former owner, Wendell Dennison, who operated Penobscot Nursing Home for decades along with his mother before him, still holds the title to the property and has filed court documents to foreclose on the property for non-payment of the mortgage. Since its private sale in 2006, Dennison has received little of the almost $2 million owed to him.

All motions and legal briefs have been filed in Kennebec Superior Court where a decision will ultimately be made. As of press time, a timetable for reaching such a decision was not available, and it is unclear what bearing all of the filings will have on the process. The first step, said Blue Hill Selectman Jim Schatz, would be for the court to decide which parties have legal standing to intervene.

Penobscot’s town attorney, Jim Modisette, on April 26, filed a “Motion to Intervene” that attempts to gain standing for the towns of Penobscot and Blue Hill (as well as the other Peninsula towns that support the action.)

The motion to intervene was accompanied by a “Reply to Petitioner and Emergency Responder’s Motion,” in response to the Health and Human Services (HHS) initial court filing. The “reply” cites concerns associated with the closure of Penobscot Nursing Home ranging from an increased need for nursing level beds statewide to a concern that the HHS plan to sell the 95 nursing and residential care bed rights to the First Atlantic Corporation for $500,000 is grossly undervalued. The reply states PNH could be upgraded for about $2 million and that both the upgraded PNH and proposed facility in Bucksport could serve a growing elderly population needing care.

That reply filed by Modisette was opposed by HHS in a subsequent filing dated May 1, stating the HHS plan to close the facility and sell the bed rights to FAC is in the best interest of the residents and that the towns had no standing in the matter.

On May 10, Modisette filed an opposition to the HHS opposition arguing that “retaining one of the largest employers [in town], supporting the inhabitants of [area] towns to stay close to their family members who reside at the Penobscot Facility…and stabilizing the economic health of the towns and various businesses that rely on a transact business with the Penobscot Facility” does give it legal standing.

The brief also states “there is no alternative statutory action for the towns to file to stop the closing of the Penobscot Facility or to address the loss to its residents of such closure. Further, no avenue of participation has been provided to the towns to voice its concern on the proposed closure.”

Representing Island Nursing Home, attorney Julius Ciembroniewicz of the law firm Kozak & Gayer, recently filed a second set of legal documents to gain standing, which has also been opposed by HHS. According to those court documents INH believes it should have legally been considered as HHS sought to sell the PNH bed rights, because according to statute (22 MRSA) when closing a nursing facility several factors must be considered including “The rights and best interest of the residents” and “the availability of suitable alternative placements.”

The court documents find that: “…other than the administrative convenience of [HHS and its Emergency Receiver (AKA the “Moving Parties” for purposes of the court)], Moving Parties’ filings are unclear as to why it is in the residents’ best interest that they all be located to an unconstructed, unapproved and potentially inconvenient facility, and why [HHS] has refused to explore INH as a suitable alternative placement for a portion of PNH’s current residents.” (Emphasis in the original).

According to INH Administrator Marc Plourde, who spoke to Penobscot Bay Press on May 22, HHS had never been in contact with INH regarding the status of PNH before its initial suit seeking to close the facility was filed in April.

“In August of last year I wrote a letter to the [HHS] Commissioner stating that we wanted to be active participants in any discussion” involving the possible closure and reallocation of PNH assets, “but I never heard back,” Plourde said.

Plourde said he continued to review the HHS website for information pertaining to PNH or to other projects that could be related and finally saw a Letter of Intent for the proposed First Atlantic facility in Bucksport. The letter, which was dated one year prior to its release on the website, prompted Plourde to write a second letter to HHS in March, he explained. After the second letter, Plourde said he finally heard back from HHS.

First Atlantic, the bed rights, and the proposed Bucksport facility

Under a plan proposed by HHS to close PNH, outlined in the above-mentioned April 6 court filing, the state agency also seeks to sell the bed rights to First Atlantic Corporation for $500,000. Under the plan, “the residents of the Penobscot Facility [would be moved] to the FAC facility in Bucksport when that facility is completed and ready for occupancy, unless the residents identify alternative care and housing arrangements.”

According to information obtained by Penobscot Bay Press, HHS has been working for at least the last year to negotiate the sale of the PNH beds to First Atlantic Corporation without success.

According to HHS spokesperson John Martins, FAC is the only entity that has shown an interest in purchasing the bed rights. Martins said Receivership, which PNH has been in since 2008, is expensive for the state and does not see its work to obtain the beds rights and sell them to FAC as a problem. When asked if HHS would extend that courtesy to other interested parties, Martins said there were not any other interested parties seeking to purchase all of the bed rights.

The First Atlantic Corporation has received a recommendation from HHS reviewers that conditional approval be given by the HHS Commissioner to construct a 61-bed facility in Bucksport from the state under its Certificate of Need process. The condition: “The applicant must present a plan to [Certificate of Need Unit] that identifies MaineCare Resources totaling $2,090,966 and includes at least 6 bed rights prior to the commencement of this project.”

While the legal process, through the plan presented by HHS, seeks to close and reallocate PNH resources to FAC for its proposed Bucksport facility, Phyllis Powell of the HHS Division of Licensing and Regulatory Services said it is not correct to assume FAC could not obtain six additional bed rights from a source other than PNH for its Bucksport Facility to meet the condition set forth in its CON application. She said that the Receivership issue for PNH and the prosed FAC Bucksport facility are “separate actions.”

However, the actions do not seem to be all that separate for entities such as Island Nursing Home and in that vein question HHS actions where First Atlantic Corporation is concerned. According to a court brief filed by INH’s attorney on May 14: “The Moving Parties also ask the Court to assist FAC in obtaining approval of its CON application by ordering that PNH sell all its bed rights to FAC. As an initial matter, it is troubling that the [HHS] is seeking the Court’s assistance on behalf of FAC, given that FAC is an applicant seeking a decision on its CON application pending before the [HHS] CON Unit. It is FAC’s burden to obtain approval of its CON application…it is not the Court’s function to assist with meeting its regulatory burden. Regardless, the Moving Parties have oversimplified the problems facing FAC’s CON application and have presented the Court only one possible way to resolve FAC’s problems in a flawed attempt to show that [INH] is ‘impossible.’”