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October 5, 2012

County seeks Countryside debt in court

By Mark Boshnack
The Daily Star

---- — Delaware County is appealing a state Supreme Court decision on the merits of a case it began earlier this year, in an effort to collect money owed on the sale of its skilled nursing home in 2006 to Leatherstocking Healthcare LLC.

The county transferred the property soon after to its associated company, Leatherstocking Realty Holdings LLC. Delaware County Supreme Court Acting Judge John F. Lambert issued a summary judgment Aug. 30 on a request from both companies.

The action began before the facility filed a closure plan with the state Department of Health, instead of filing a plan to correct issues the agency identified. The facility is scheduled to close Oct. 13.

In his decision, the judge dismissed charges of breach of contract, unjust enrichment and fraud against Leatherstocking Realty, according to an area lawyer that saw the court ruling. The unjust enrichment charge was dismissed against Leatherstocking Healthcare, while the breach of contract and fraud charge against it were allowed to stand. The county filed a notice of appeal Sept. 25 with the Appellate Division of the Supreme Court, Third Department. The county can move forward with the litigation on the charges still remaining or wait for a decision on the appeal. Motions have not yet been filed in that case.

The county is seeking more than $3 million plus interest on the three counts, against the two entities, according to the court filing.

The county initially approved the sale of Countryside, a 199-bed facility, to a private company in March 2005, for $2.7 million.

The board approved a $150,000 concession in August 2006, before the sale was completed that December. The parties agreed March 2009 that $818,847 was still owed and a payment plan was established. It made $247,242 in payments through August 2010, according to the Jan. 13 complaint the county filed in court against the Leatherstocking companies. The county tried unsuccessfully through much of 2011 to collect the delinquent payments, an official previously said. The county Board of Supervisors approved a resolution to begin the lawsuit in Dec. 2011.

Thirty-four residents remain at Countryside, the Department of Health said by email Thursday.

The agency continues to work closely with the facility to ensure residents are relocated to the most appropriate level of care.

Potential buyers have made inquires about Countryside and will be thoroughly vetted by the agency.

Delhi Supervisor Peter Bracci said he did not know the timetable for any further legal action, but the decision allows the county to proceed with the litigation. Representatives from the county attorney’s office could not be reached by phone. The attorney handling the case for Leatherstocking did not return two phone messages. Officials with Leatherstocking have not returned numerous calls or emails including an email sent Thursday. The company’s voicemail was not accepting messages Thursday.

“These things take time,” Bracci said. He is the chairman of the county health committee. “I’m not expecting any immediate relief.” It’s an issue that the county has been working on for a number of years, he said. It held off until January because it did not want to endanger Leatherstocking’s ability to operate.

It the county had moved earlier and the operators decided to close the facility, “people might have speculated we caused it,” he said.

He is interested in finding what lead to the closure. “We don’t know,” he said.

The Board of Supervisors “agonized” over the decision to part with the facility. “Nobody wanted to sell it, but we couldn’t afford to keep it running,” he said. Leatherstocking was chosen by an “informed decision” that included a trip to see the company’s Herkimer facility.

“Nothing can justify what is happening” to the residents who are being moved to other facilities and the approximately 200 staff that will be out of a job, if the closure is completed, Bracci said.

But during the six years that the county has not operated the facility, it has saved taxpayers $30 million, he said.

There were three supervisors who were against the 2005 decision.

One of those was former Masonville Supervisor John Thomas. The board was paying about $400,000 a year to subsidize the facility, he said Thursday. “We certainly owe this much to (seniors) who have paid taxes and supported Delaware County,” he said. He was upset to see the facility closing.

County Board of Supervisors Chairman James Eisel could not be reached at home Thursday for comment. He previously said that when the decision was made “it appeared Leatherstocking was qualified to run a successful operation,” after investigating the purchaser. There was no reason to expect the closure six years later, he said.