Judge rules state can take permanent control of elderly care facilities

A judge has ruled that the state can move to install a permanent receiver to manage three residential care facilities for the elderly, after state officials said their Texas-based owner failed to properly stock food, provide adequate staffing and follow basic business practices.

The state first took over the facilities in November, appointing a temporary receiver to handle the daily operations at Homestead at Pillsbury in St. Albans, Allenwood at Pillsbury and Pillsbury Manor South, both in South Burlington.

The facilities are owned by East Lake Capital Management, a Dallas-based company, and are home to about 200 residents. Andrew White, the owner of the company, appeared during a trial in Washington County Superior Court last month to contest the receivership.

In an order handed down on Friday, Judge Mary Miles Teachout sided with the state in its motion to make the receivership permanent.

Teachout wrote that under East Lake Capital Management, residents at the facilities “no longer lived in a safe protective reliable home where they could trust that they would be properly cared for.”

The judge noted that when the state appointed a temporary receiver on November 7, all three facilities had insufficient food supplies, and two of them — Allenwood and Manor South — had been experiencing severe nursing shortages.

At Allenwood, nurses had been working up to 30 hours of overtime a week, and residents weren’t receiving medications in a timely fashion, according to Teachout.

At all three facilities, staff hadn’t been able to order food for one week, and while no residents went hungry, on November 7, “the state had received no information from Dallas and had no confidence that the food shortage would be averted.”

State officials said the company had also failed to cash rent checks, bill residents and pay vendors, including utilities, on time.

By not carrying out basic business practices and allowing the facilities to see “escalating reductions of services and staff,” Teachout said “the Defendants had put the residents under severe mental stress and harm, resulting in legitimate fears that the Defendants would not be able to care for them and they would need to find another place to live.”

In court, East Lake Capital Management sought to retain control of its facilities, and disputed the state’s characterization of nursing and food shortages at the facilities.

Lisa Shelkrot, an attorney for White, the company’s owner, said she plans on filing a response to the Teachout’s order this week.

She wrote in an email that the response will address the statements of an employee “who sought immunity from the State in exchange for his testimony,” among other things. Shelkrot also noted that the three facilities are owned by nine companies under the East Lake Capital Management umbrella, but only three of them were included in the judge’s ruling.

The three LLCs companies named in the order “contract with locally based employees to service the first 6 companies,” which own the real estate and personal property associated with the residential facilities.

“Perhaps, in an effort to find compromise, the Court granted the State’s motion for a receiver with respect to the entities that provide locally based employees,” Shelkrot wrote.

Attorney General T.J. Donovan, whose office brought the case against the facilities’ owner, was not available to discuss the decision Monday.

He praised the ruling in a statement released Monday afternoon.

“When vulnerable Vermonters are at risk, we are going to step in to protect them,” Donovan said in a statement. “Food security, housing, health — these are non-negotiable. We hope that the Pillsbury facilities will now thrive, going forward.”

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