Panel Takes Up Dispute Over Unlicensed Nursing Homes

ATLANTA (CN) — An attorney for one of the nation’s largest commercial real estate brokerage firms asked an 11th Circuit panel Thursday to keep in federal court a conspiracy and fraud class action accusing the company of selling nursing homes with invalid licenses.

Betty Smith, a representative for the estate of Shirley T. Cox, filed a class action complaint against real estate brokerage giant Marcus & Millichap, Inc. and Michael Bokor, an executive working in the senior housing industry, in 2018.

Smith alleged that a class of more than 3,000 members suffered losses in excess of $900 million due to the firm’s participation in a scheme to market and sell 22 skilled nursing facilities in Florida that it knew were operating with invalid licenses.

On Thursday, an attorney arguing on behalf of Marcus & Millichap asked a three-judge 11th Circuit panel in Atlanta to overturn a federal judge’s ruling granting a class motion to remand the complaint to Florida state court.

“There is no evidence to support the actual [Florida] citizenship of the class,” attorney Zachary Madonia of Bradley, Arant, Boult & Cummings said.

In a February 2018 complaint filed in Hillsborough County, the class claimed that the health of the nursing home residents was put at risk due to substandard levels of care. The class also alleged the real estate scheme involved the use of shell companies to evade reporting requirements and receive payments from residents and Medicaid or Medicare despite the facilities’ invalid operating licenses.

The class is comprised of people who resided in the 22 nursing facilities from January 2014 through January 2018.

In an October 2018 ruling, U.S. District Judge William Jung found that a statutory exception to federal jurisdiction was established by the class since two-thirds of its members were Florida citizens at the time the complaint was filed.

Jung ruled that a 2015 nursing home data publication issued by the Centers for Medicare and Medicaid Services and the U.S. Census Bureau’s 2016 American Community Survey contained information demonstrating the high likelihood that class members lived in Florida immediately prior to their admissions to the facilities and were likely to remain in the state afterward.

The judge found that the data provided by the class “is sufficient to attribute citizenship to the putative class in Florida.”

“Defendants’ unsupported argument that the facilities’ residents may likely end up in a Florida skilled nursing facility while vacationing or visiting and, if discharged, may return to some other home state, is unpersuasive,” wrote Jung, who was appointed by President Donald Trump.

Attorney Robert Salyer of Wilkes & McHugh urged the panel Thursday to uphold Jung’s findings, arguing the data submitted by the class was sufficient to prove their majority Florida citizenship.

“The data was like a Farmer’s Almanac. Its facts [were] established by the U.S. government and I would think this court would accept it as such,” Salyer said, referring to the data compiled in the American Community Survey.

“But that data doesn’t speak specifically to citizenship,” noted Senior U.S. District Judge Paul Huck, a Bill Clinton appointee sitting by designation from the Southern District of Florida.

In response to an earlier argument from Madonia that evidence should be collected directly from the class members to gather information about their citizenship, Salyer said the census data may be “circumstantial” but “it’s more reliable.”

“A survey of actual class members would be less reliable than some of the data in evidence here. Even if we send a questionnaire out to 1% of the class members, it will be designed for litigation… There’s no axe being ground when someone provides U.S. census data,” he said.

Huck was joined on the panel by U.S. Circuit Judge Stanley Marcus, a Bill Clinton appointee, and U.S. Circuit Judge Elizabeth Branch, a Trump appointee.

The panel did not indicate when it would reach a decision in the case.

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