NEW BRUNSWICK, N.J. (CN) - A chain of old folks homes defrauded people of hundreds of thousands of dollars by refusing to refund 90 percent of its pricey "entrance fees," as promised, after the residents die, a survivor claims in a class action.
William DeSimone sued Springpoint Senior Living, six of its subsidiaries, and its president Gary Puma, in Middlesex County Court.
On behalf of his mother's estate, DeSimone seeks to represent all residents and families who were deceived about refundable fees.
Springpoint, based in Princeton, N.J., owns and operates five full-service retirement communities, 18 affordable housing communities, and several senior citizen communities. It is a multimillion-dollar enterprise with 3,500 residents and 1,500 employees, according to the lawsuit.
"This class action arises out of a consumer fraud scheme directed at one of New Jersey's most vulnerable populations, its senior citizens," the complaint states. "Since 2007, and perhaps even earlier, defendant Springpoint Senior Living, Inc. ('Springpoint'), formerly known as 'Presbyterian Homes & Services, Inc.', targeted and took advantage of people residing in five New Jersey elderly-only 'continuing care communities' that Springpoint operates through five subsidiary companies it wholly owns and controls. Many of Springpoint's victims were in their seventies and older. At a time in their lives when these men and women should be respected, taken care of and protected, they were instead preyed upon and were taken advantage of by a benevolent appearing, sharply operated non-profit corporation that works with a Wall Street bank and an international real estate conglomerate to victimize susceptible seniors and their families.
"As set out below, Springpoint conceived, and through its operating subsidiaries executed, a classic 'bait-and-switch' scheme that deceives senior citizens and their loved ones out of tens of thousands of dollars per family. The scheme worked like this: senior citizens such as the late Evelyn DeSimone (plaintiff's mother), often assisted by family members (such as the plaintiff and his siblings), after deciding to move from a home or apartment into one of Springpoint's attractively appearing elderly-only continuing care communities and after passing requisite health and psychological entrance exams, were required to pay Springpoint a large 'entrance fee' that ranged from $84,000 to over $700,000 depending on the facility and apartment (called a living accommodation unit) selected. Prior to making that payment senior citizens and their families were told by Springpoint orally, in marketing materials, and, most importantly, in a statutory required disclosure statement that the entrance fee was '90 percent refundable' to the resident's estate or family at the time that the resident either died or moved out of the community. The fraud and unconscionable business practice is that families do not receive a 90 percent refund; instead they get a fraction of that amount. That is because Springpoint's continuing care communities' contracts made the computational basis for the 90 percent refund not what the resident paid as 'entrance fee' upon entering the community, but rather upon the lesser of the entrance fee paid by the resident or the entrance fee paid by the new occupant(s) of the departing resident's living unit. Additionally, Springpoint and its operating subsidiaries also routinely failed to disclose at the time they were collecting these 90 percent refundable entrance fees that they, in order to attract residents, respond to competition and/or respond to adverse real estate market conditions, could and would offer discounts on the entrance fees, lower the unit prices and/or offer other incentives, including lengthy payment deferrals, which could affect the amount and timing of refunds to residents departing from Springpoint's continuing care communities.
"Springpoint's entrance fee discounts and incentives affected adversely the amount of refund plaintiff and others similarly situated received as well as the timing of the payment of the refund that was received. Thus many Springpoint continuing care community residents and/or their families, such as plaintiff and his deceased mother, did not or will not get back 90 percent of the entrance fee as represented. They also were (or may or will be in the future) forced to wait longer to receive their partial 90 percent entrance fee refund back, which is, pursuant to Springpoint's terms, paid without any interest. In Mrs. DeSimone's case, her family received back 20 percent less than they were led to believe they would due to a 20 percent sale Springpoint was running at the time her residential unit was relet in 2009."
DeSimone, of Jamesburg, N.J., says that Springpoint's 90 percent refundable plan played a major role in his decision to move his mother to one of its communities in 2009.
The family paid a $159,000 entrance fee and DeSimone's mother moved into the community, where she lived until she died in April 2010.
After she died, DeSimone received an $80,136.00 refund: 50 percent of the entrance fee he had paid, according to the complaint.
DeSimone says he has not received the rest of the money due under the 90 percent refundable plan.
He claims Springpoint markets its facilities "in a misleading and aggressive manner" and deceives senior citizens about the purported refund of the fees.
Some Springpoint facilities even offer to help sell the residents' homes to have them move to their communities, according to the lawsuit.
DeSimone claims that despite Springpoint's nonprofit status, its officers received more than $11.3 million in compensation between 2009 and 2011.
He seeks class certification, an injunction and compensatory damages for breach of contract, negligent misrepresentation, fraud, and violation of state laws.
DeSimone is represented by Michael Coren with Cohen, Placitella & Roth of Red Bank, N.J.
Named as defendants are Springpoint Senior Living, Springpoint at Monroe, Springpoint at Stonebridge at Montgomery, Springpoint at Crestwood, Springpoint at Meadow Lakes, Springpoint at Monroe Village, Springpoint at Navesink Harbor, and Gary T. Puma.
Springpoint and Puma did not immediately return requests for comment.
Read the Top 8
Sign up for the Top 8, a roundup of the day's top stories delivered directly to your inbox Monday through Friday.