One hundred employees will lose their jobs and 84 people will have to find somewhere else to live after a judge on Thursday (March 14) approved a request from Spectrum Healthcare to shut down Hilltop Health Center on Ford Street in Ansonia.
No fewer than seven lawyers weighed in on different sides of the argument during an hour-long proceeding at U.S. Bankruptcy Court in Hartford.
But in the end Judge Albert Dabrowski sided with attorneys representing Spectrum and its creditors, who said closing Hilltop was the only way to ensure the other four nursing homes under its management — including Birmingham Health in Derby — could emerge from bankruptcy intact.
Deborah Chernoff, a spokeswoman for SEIU District 1199, the union representing about half the facility’s employees, lamented the ruling Thursday and said there is not much the union can do to prevent the closure at this point.
“Next steps would be to negotiate severance with Spectrum and to make sure that the layoffs when they begin are done properly by seniority within job classification as in the contract,” Chernoff wrote in an e-mail Thursday afternoon.
It is unclear how soon the nursing home’s 84 residents will have to move. The process will be overseen by a number of state agencies and a special ombudsman.
David Dearborn, a spokesman for the state’s Department of Social Services, said that Hilltop could be closed within months.
In a brief statement to Ansonia Aldermen March 12, Mayor James Della Volpe, citing a letter from Spectrum, said the facility could close May 10. Press play to watch the mayor’s statement.
Meanwhile, Chernoff said bankruptcy proceedings don’t necessarily take human beings into consideration.
“Bankruptcy law is focused on the business and satisfying creditor; patients, communities and workers are not that law’s priority,” she said. “I know Senator Crisco put out a press release and he’s doing what he can but the state doesn’t have much sway over federal law.”
It Has To Close
Elizabeth Austin, a lawyer representing Spectrum, told Judge Dabrowski that her clients “worked very hard” to negotiate a lease for Hilltop Health center with its landlord, but reached an impasse.
Austin said that closing Hilltop, while “incredibly unfortunate” for the people who live and work there, had to happen to keep Spetrum’s four other nursing homes in business.
“We cannot continue to operate at the substantial loss that Waterbridge is experiencing under the current terms of the lease,” Austin said (Waterbridge is how Spectrum refers to Hilltop Health Center in bankruptcy filings). “Unfortunately it’s necessary to close.”
Austin also said the closure has to come sooner rather than later, or else “It’s very likely the other homes would not be able to emerge from bankruptcy.”
That’s because, Austin said, Hilltop continuing to operate at a loss would eventually send Spectrum into receivership.
She said the cost of that process would gobble up Hilltop’s accounts receivable, which total $1.4 million and will be used as collateral by Spectrum to finance its emergence from bankruptcy.
No, It Doesn’t
Kevin Creane, a lawyer representing the unionized workers at the facility, called Austin’s arguments “speculative.”
“Your honor, it’s just simply not true what the debtors are asserting in this case, that they have no choice but to close the home,” he said. “The doom and gloom scenario that’s being portrayed for you here, your honor, is speculative.”
He urged the court to consider the people who live in the nursing home and the people who work there.
“What is absolute is, if you grant this motion today, 85 residents are going to lose their homes and 100 employees will lose their jobs,” he said. “That, we know. And a community will suffer because of the loss of those jobs and the loss that a nursing home is.”
Creane pointed out that state lawmakers have passed a raft of laws governing how nursing homes are licensed, overseen, and, when need be, closed.
That process involves applying to the Department of Social Services for a “certificate of need,” demonstrating that a nursing home is no longer viable. Next, a public hearing is held.
Spectrum’s request to Judge Dabrowski sought a waiver to those requirements.
Creane asked the judge to let that approach play out, because “Those affected by the process have the ability to become involved in the process.”
“The nursing home industry is unique and significant,” Creane said, adding that if Hilltop is closed, “Many of the elderly residents would have to travel from their community to a place they haven’t gone to before.”
“When purchasers buy nursing homes in Connecticut, your honor, they understand it’s not a widget factory,” Creane added later. “You can’t buy the facility, then decide you’re not making money, then just go ahead and close. When you purchase a nursing home, you can’t just close it. You have to get approval from the state to do that.”
A federal trustee in the case, Abigail Hausberg, asked Judge Dabrowski to postpone his ruling to give more time for Hilltop’s employees and residents “to analyze their rights and remedies.”
Yes, It Does
Henry Salton, a lawyer from the attorney general’s office at Thursday’s hearing on behalf of the Department of Social Services, said the state did not object to Spectrum closing Hilltop because the facility would likely end up closing even if Judge Dabrowski denied Spectrum’s request.
Austin said that if their request to close Hilltop was granted, there would still be “strict oversight” of the process by the state’s Department of Public Health and a special ombudsman appointed in the case.
She also said that trying to extend Spectrum’s lease was a non-starter.
“They want the building back, dark,” Austin said of Spectrum’s landlord. “It’s going to go dark.”
“We don’t do this lightly, but we do need to close,” she added.
Stephen Kindseth, a lawyer representing Spectrum’s unsecured creditors, argued that the judge was obligated to grant Spectrum’s request as long as it was a proper exercise of business judgement, even though “reasonable minds may disagree.”
In the end, Judge Dabrowski agreed.
“For the reasons essentially outlined by Ms. Austin and for the procedural standards articulated by Mr. Kindseth, the court believes that the motion should be granted,” he said without elaboration.