Florida regulators are demanding that a brain-injury treatment center with patients from across the U.S. prove that it’s financially viable, as the facility seeks bankruptcy protection.
The Chapter 11 filing Friday by the Florida Institute for Neurologic Rehabilitation Inc. followed Bloomberg News stories about the alleged abuse and neglect of patients by their caregivers at the 200-bed residential facility southeast of Tampa. It’s one of the largest in the country treating people with long-term disabilities brought on by brain trauma.
The filing came hours after Regions Bank sued the institute, known as FINR, in U.S. District Court in Tampa, claiming it’s in default on $31 million in real-estate loans. The lawsuit by the Birmingham, Alabama-based unit of Regions Financial Corp. (RF:US) says FINR stopped paying on the debt in August.
FINR’s owner, Joseph Brennick, said in a statement yesterday that he was “confident” the facility could properly care for the people living there while it undertakes a financial restructuring. Media coverage led to “a significant decline in revenue making FINR unable to meet is financial obligations,” Brennick said in the statement.
Negotiations with Regions Bank are “ongoing and we are making strides to resolve this successfully as we look for a long-term solution,” he said.
After the bank sent FINR a default letter in September, Brennick withdrew at least $466,000 from center coffers, the suit alleges. In addition, FINR has failed to give the government the payroll taxes withheld from employees’ wages and hasn’t paid real estate taxes and routine operating expenses, Regions Bank says in the suit.
Lyndsey Cruley, a spokeswoman for FINR, didn’t respond to requests for comment on the bank’s allegations.
The Florida Agency for Health Care Administration, which licenses the center, ordered FINR on Friday to provide it with detailed financial statements by the close of business Jan. 14. The agency told the company it needs to show that it has sufficient assets and revenues to operate for the next two years, and that it can document its ability to correct its financial instability.
Michelle Dahnke, a spokeswoman for the state agency, declined to comment on the consequences if FINR isn’t able to prove its financial strength.
At least five patients have died from alleged abuse or neglect at FINR since 1998, two in the last two years. Since 2005, the state has received 526 allegations of abuse and neglect, at least 37 of them classified by investigators as verified, meaning they were supported by a “preponderance of credible evidence.” Some of the complaints are still being investigated.
FINR is fighting a Florida regulatory order from August that it must move about 50 patients to other facilities. The Regions Bank complaint alleges the center is in violation of a loan provision that requires it to maintain a minimum daily occupancy of 75 percent of capacity.
Four Chapter 11 petitions were filed in U.S. Bankruptcy Court in Tampa, by FINR and three affiliated corporations. They said in court filings that they estimated they owe between $3 million and $30 million to 103 to 346 creditors and that their assets total $150,000 or less.
The list of creditors includes insurance companies, law firms, medical supply companies, water and electric utilities, the county tax collector and a public relations firm.
In its suit, Regions Bank asks that a court-appointed receiver take control of the center “pending the foreclosure or other disposition of the collateral” for the loans. The bank alleges the current operation of the brain-injury facility “jeopardizes both patient care and Regions’ interest.”
The case is Florida Institute for Neurologic Rehabilitation, 8:13-bk-00102, U.S. Bankruptcy Court, Middle District of Florida (Tampa).
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