Big trouble in Texas.

Fort Worth-based Sensitive Care, a once thriving chain of 13 nursing homes, was ordered into bankruptcy in late March at the request of creditors who claim the defunct chain's owners owe them about $12 million. Big troubles are also brewing for at least one other Texas nursing home chain.

Sensitive Care's woes escalated last year when the federal government alleged that the chain had provided more than $5 million worth of unnecessary Medicare services to residents at inflated prices. The Texas Department of Human Services (DHS) seized control of the facilities on January 27, 1999, two days after the Medicare program halted the facilities' payments.

The firm's cash flow problems, which included bounced checks to 500 employees and $14 million worth of unpaid vendor bills, drove DHS to place a group of trustees in charge of the nursing homes. "Our goal was to stabilize the facilities and do an orderly closure if other operators could not be found by the owners," says Jim Lehrman, DHS associate commissioner for long term care regulatory. DHS has since closed three of the homes.

In another case, Texas Attorney General John Cornyn recently filed suit against the state's largest nursing home chain, Texas Health Enterprises (THE), for a March 7 fall linked to a resident's death. The suit alleges an elderly female resident suffered a traumatic head injury while being improperly transferred from her bed to a broken wheelchair by a nursing assistant who then fell on her.

The suit brings to 16 the number of active cases brought by the state against THE, which reportedly owes more than $3 million in fines to the DHS. The chain also has been sued several times by residents' families, including a lawsuit involving the rape of a paralyzed female patient by an employee.

Sensitive Care's problems are costly for the state, which has paid $1.1 million in back payments to employees and almost another $1 million in state trust fund money. To help cover the expenses, HCFA has given Texas a $1.1 million advance on future Medicare claims. To protect the state in the future, Texas lawmakers are entertaining several bills that would raise the state trust fund to $10 million over several years and require audits of financial statements submitted by facilities. Lehrman reports.