Last of four parts
Daniel S. Paglione lived through gun battles with the Japanese navy as a young sailor in World War II. He died, at age 80, after two miserable years at a Bucks County assisted-living facility where he was sometimes left to lie in his own feces, his family says.
Paglione, a diabetic who had Alzheimer's disease, suffered head wounds from repeated falls that his caregivers at Alterra Healthcare Corp. took few if any steps to prevent, the family's lawsuit alleges. Blackened ulcers developed on his heels.
Without admitting wrongdoing, the company settled the case in 2005 for $525,000, court records show.
Like thousands across the country, Paglione's children had put their trust in Alterra, a Wisconsin company that had grown to become the nation's largest operator of assisted-living facilities. In the late 1990s, Alterra boasted 22,000 residents at 475 facilities in 28 states.
But even as it boomed, Alterra was running into trouble. The chain was hit by a stream of lawsuits, a series of state fines and a pair of criminal cases that together pointed to a troubling pattern of harm to Alterra's residents.
Critics call Alterra a case study of how a hodgepodge of state-by-state assisted-living regulations failed to protect people from the perils of an ailing national chain.
"Unfortunately, the Alterra debacle hasn't raised awareness and insight to any national level, so that this same situation couldn't reoccur," said Karen Love, a former assisted-living manager who helped form the Washington-based Consumer Consortium on Assisted Living.
Paglione was one of more than 220 residents across the country who are alleged to have suffered neglect, injuries or death as a result of substandard care at Alterra as company finances deteriorated between 1999 and 2003, according to an Inquirer review of thousands of pages of civil court, insurance and bankruptcy records. That number includes 54 deaths.
Residents were beaten and raped by employees or other residents. They were given the wrong medication or left to lie in their own excrement. Some died of neglect, court and regulatory records show, while others, suffering from dementia, died of cold or heat after Alterra failed to prevent them from wandering off the premises.
"They gave a beautiful story. When you walked in you thought, 'Wow, this is the answer,' " said Kathryn Garner, whose late mother, Mildred, was assaulted and severely wounded by another resident in August 2000 at an Alterra facility in Winston-Salem, N.C.
"It was a mistake I will never forgive myself for."
Alterra filed for bankruptcy in 2003, and in 2005 its homes were absorbed by another assisted-living chain called Brookdale Senior Living.
Mark J. Schulte, cochief executive officer of Chicago-based Brookdale, acknowledged in a recent interview that "tragic incidents" happened at what he called "old Alterra." He said he could not address them. Brookdale is a different company with a different culture, he said.
"These kinds of incidents to me are unacceptable and some of them outrageous, but I can't in 2007 either comment on them or do anything about them," he said.
"I can tell you that we do everything to keep residents safe and make sure bad things don't happen."
Brookdale has been using the Alterra name but will phase it out this year, Schulte said. He said Brookdale's regulatory record these days is "way above average."
Unlike nursing homes, assisted-living facilities are not subject to federal oversight. Licensing standards vary from state to state, and the rules are generally less stringent than those governing skilled-nursing facilities.
Also, it's much harder for consumers to research the history of personal-care homes. In contrast with nursing homes, there is no national clearinghouse of fines and enforcement actions.
To be sure, many Alterra residents had good experiences. And mistakes can happen at any facility that houses disabled elderly people; Alterra is not the only chain that has been the target of lawsuits and regulatory actions.
But in some respects the company's troubles stood out in the industry. Alterra was hit with one of the largest health-department fines in New York state history in 2003. For a time in 2001, New Jersey barred all Alterra facilities from accepting new patients - the only such ban ever in that state.
And in Pennsylvania, an Alterra employee was convicted of murdering William Neff, 83, a World War II combat veteran, who was stomped to death in 2000 after he soiled himself at the Alterra Clare Bridge facility in Lower Makefield Township, the same home where Paglione lived.
In the Neff case, an investigative grand jury publicly criticized Alterra for what it called a failure to screen and monitor its employees. (Neither the corporation nor senior executives were charged.)
That case aside, much of the history of alleged abuse and neglect at Alterra homes has gone unpublicized - buried in state bureaucracy and civil court archives, often shielded by confidentiality agreements that the company required relatives to sign as a condition of settlements.
Paglione's daughter, for example, said she was barred by such an agreement from discussing her case.
The Inquirer was able to review most of the suits only because Alterra filed for bankruptcy protection, and the lawsuits were consolidated into a single case at Wilmington's federal bankruptcy court.
In November, The Inquirer's lawyers won a judge's ruling forcing Alterra to disclose death and injury settlements that were filed under seal there.
According to those records, Alterra reached settlements totaling $15.9 million in 53 residents' injuries or deaths between 1999 and 2003, and set aside another $4.3 million for possible settlement in 20 other cases.
The assisted industry in general - and Alterra in particular - has improved since that period, Schulte said.
"That era of assisted living, there were a lot of incidents," he said. "It wasn't just Alterra. A lot of people got into the assisted-living field very quickly.... They really didn't know what they were doing.... We've learned a lot from that."
Schulte acknowledged, however, that resident harm and regulatory violations continue to be a fact of life at his company and in the industry.
"With a high-risk population like the kind we serve, you have the potential for bad things to happen," he said.
Founded in 1981 by a Wisconsin nursing-home manager, Alterra went public in 1996, during a time of feverish optimism in the assisted-living industry.
With the senior population surging, investors were betting that demand for elder care also would skyrocket.
Like other assisted-living chains, Alterra pitched its facilities as less institutional alternatives to nursing homes, which are intended to house sicker people.
Alterra charged between $3,000 and $6,000 per month. Family members, who liked the clean, well-furnished look of Alterra's newly-built residences, say they believed they were getting something superior to a nursing home.
In fact, while most states require nursing homes to have nurses on staff, there are no such requirements in most states for assisted living. Some Alterra facilities were run by high school graduates with few formal qualifications.
For example, Ann McClintock, who ran the facility where Paglione lived, was a high school dropout who later earned her GED and began with Alterra as a housekeeper. McClintock, who pleaded guilty to neglect, told a Bucks County grand jury she was thrown into her job without proper training.
From 1997 to 2000, Alterra doubled its capacity by buying other chains and building new facilities. In 1998, the company was opening an average of one facility every three days.
That happened to be the only year Alterra made money after it went public.
By 2000, it was clear that the expansion strategy had backfired spectacularly. Demand failed to keep pace with the supply of new beds. The stock price plummeted from a high of $35.25 a share in early 1998 to below $3 in 2000.
Company founder William F. Lasky, who did not respond to repeated requests for comment, resigned as chief executive in September 2000. He was replaced by Steven L. Vick, who also did not respond to phone calls and a letter seeking comment.
Alterra lost $300 million in 2001 and $222 million in 2002. In 2003, it filed for bankruptcy.
As the financial troubles worsened, the company had difficulty retaining staff. Alterra's human-resources chief later told a trade magazine that there was an astounding 145 percent turnover among its 14,000 employees in 2000.
In several lawsuits, families of Alterra residents alleged that Alterra's efforts to save money resulted in substandard care. Alterra has denied that claim.
In 1997, the year after the company went public, 85-year-old Clara Farr wandered away from an Alterra residence in Wisconsin and suffered frostbite. The ex-administrator testified that his corporate bosses ordered him to keep staffing hours down to a level that hampered the home's ability to deliver the best care.
"I felt that we needed additional help, especially from about 7 a.m. to about 11 a.m., with resident care," Ronald Wolf testified. "I just didn't have it in the budget."
One former senior Alterra official said he believes that no one at Alterra ever knowingly made decisions that compromised quality of care.
"There was never a directive that the company was going to skinny down on any quality of care because of lack of funds," said Anthony R. Geonnotti Jr. of Langhorne, who joined Alterra in 1996 and became senior vice president before resigning in September 2002.
Alterra specialized in units designed for people with dementia and Alzheimer's disease - some of the most difficult residents to care for.
Most of the worst cases happened in those units, records show.
Public records describing incidents during that period show that the same types of mishaps occurred repeatedly at Alterra facilities across the country. Alterra did not admit wrongdoing in any of the cases. They included:
Sexual assaults by staff and residents
In August 2003, Alterra agreed to pay $75,000 to settle charges by New York state regulators that it covered up allegations of sexual abuse involving one of its workers.
In July 2002, Alterra paid a $10,000 fine after investigators determined that employees knew about and failed to stop an 84-year-old male resident who sexually assaulted at least four female residents at a home in New Philadelphia, Ohio.
In 2000, at an Alterra facility in State College, a male resident repeatedly assaulted female residents and Alterra employees did not report the assaults to police or to state regulators, according to court testimony.
Residents who wandered off and died
In February 2003, an Alterra resident with Alzheimer's crawled out an open window, walked into rush-hour traffic and was struck fatally by a car outside Fort Worth. Alterra paid $32,000 to the Texas Attorney General's Office and $565,000 to settle the family's wrongful-death lawsuit.
In July 2002, a resident wandered away from an Alterra facility near Orlando, Fla., and drowned in a pond. Although a door alarm sounded, staff ordered no head counts of the patients, and did not call police, records show.
Also in 2002, an 84-year-old woman wandered into the outside courtyard of a home in Tulsa and froze to death. It was at least the third incident since 1999 where an Alterra resident wandered into a courtyard and died, according to public records and news reports.
In May 2000, an Alterra facility was fined $10,000 by Kansas regulators after a resident suffocated while stuck in the guardrails of a bed.
In 1998, an Alterra resident died in Florida after she was found "hanging upside down from the footboard area of her bed, with her head swollen, and her leg caught in the bed rail or footboard of the bed, a position she had been left in for six to eight hours," according to a lawsuit.
There were dozens of other incidents, records show. An internal Alterra document dated April 2000, and covering 1998 to 2000, listed 159 open claims, including 11 marked by Alterra as resulting in "death," four cases of "abuse," nine "assaults" and nine "elopements," the industry term for people who wander away from the home.
In the case of Mildred Garner, the elderly woman assaulted in North Carolina, the family's lawsuit says Alterra's records show that they had for weeks observed dangerous behavior by her attacker, an 84-year-old Alzheimer's patient.
Twice, he tried to hit staff members, and he was quoted as telling a resident he "might have to kill someone."
After the attack, Alterra employees put her to bed instead of taking her to the hospital, and she was later found in a pool of her own urine, records show. The next day, she was diagnosed with a fractured hip. She never fully recovered, and died two years later, her daughter said.
Because of the bankruptcy, Kathryn Garner, who paid $6,000 a month to Alterra, has little chance of recovering anything from her lawsuit, her lawyer said.
"They kind of treat this as, 'Oh well, it's the price of doing business,' " Kathryn Garner said. "Well, my mother was a human being who suffered, who had feelings and couldn't communicate. She couldn't even yell for help."
Some state regulators and local prosecutors sought to change Alterra's conduct, but their reach was limited.
In February 2002, the district attorney in Centre County charged Alterra as a corporation with criminal neglect in the deaths of three residents with severe bedsores. The company denied wrongdoing and the charges were thrown out in a preliminary hearing.
New Jersey banned admissions at all 12 Alterra facilities in the state in June 2001, citing "widespread deficiencies" that were "placing residents at risk for serious harm." It was the first and only time the state had taken that action against a chain, officials said. A few months later, New Jersey lifted the ban after the facilities promised to improve.
In March 2000, the Minnesota attorney general won a settlement after leveling civil consumer-fraud charges against an Alterra facility near Minneapolis where both employees and relatives of residents reported understaffing and neglect.
Alterra promised to improve care, to change its advertising, and to hire an independent monitor. But the agreement only applied to one Alterra facility in Minnesota.
Then as now, there was no government agency that had the power to force company-wide changes in national assisted-living chains.
State regulators have inconsistent standards and no way of coordinating enforcement beyond their borders.
Some consumer groups have urged Congress to consider federal rules for assisted living, and the Senate Special Committee on Aging held a hearing on the subject in April 2001. But Washington has been reluctant to create a new regulatory scheme for an industry that, unlike nursing homes, is not funded with federal dollars.
"The argument was, there is very little federal money going into assisted living, so there's no hook for federal regulation," said Catherine Hawes, professor of health policy studies at Texas A&M University.
One leading state regulator believes some national enforcement scheme is inevitable.
"There's no question that if the federal government doesn't step in, we're going to have states that continue to loosely regulate assisted living, and people are going to get killed or injured as a result," said Rick Harris, Alabama's top regulator and a former head of a national group of state elder-care officials.
Harris was speaking about the industry in general, not Alterra specifically.
Federal regulation is not a panacea, he added. But he believes the status quo isn't working, at a time when the need for senior care is poised to explode in the next few years as Baby Boomers reach retirement age.
"The bottom line is, the pressure is on assisted-living facilities to accept residents that are really beyond their ability to take care of," he said.
A lawyer for the Neff family, though, notes that federal regulations haven't stopped elder abuse in nursing homes.
"Institutional neglect and abuse will end only when the highest level of managerial officials of those corporations face criminal punishment" for allowing it, said attorney Ronald N. Lebovits, who often represents victims of such abuse.
Because there is no national database for assisted-living regulatory violations, it is difficult to compare today's Alterra with the past, or with other chains.
Since Brookdale took over, Schulte said, the company's regulatory record has been better than most of its competitors.
These days, he said, the company has preemployment screening and criminal background checks, employee-training programs, an employee-integrity hotline and sophisticated software to track incidents.
"That kind of thing was not being done," years ago, he said.
There have still been violations cited at some Alterra homes.
At Alterra's home in Westampton, Burlington County, regulators in the fall of 2005 found a resident with a broken arm who had suffered repeated falls, some of which had not been recorded, and a resident with skin tears who was not being treated.
Alterra submitted a plan of correction, and the state required the company to hire an independent nurse to monitor compliance.
On Jan. 29, an 80-year-old woman fell and died at Alterra's Wynwood facility in North Wales, Montgomery County. That death is under investigation by Pennsylvania regulators; Schulte declined to comment on the death, or any specific incidents.
Acting Montgomery County Coroner Jeanne Ottinger said the cause of death was heart disease, but that fractures to the woman's elbow and hip had contributed to her death, along with diabetes and emphysema. "She appeared well cared for," said Ottinger.
Last March, a relative or friend of a resident of the North Wales facility wrote a letter of complaint to state regulators. The name of the complainant was blacked out in the copy released by the welfare department.
"Food portions have been drastically cut. Meager lunches," the letter said. "All you see are people sitting around, sleeping, a very dead atmosphere. I am torn between anger and being taken advantage of.
"Of course, I have told friends about Alterra and now tell them what is really going on and would NEVER EVER recommend it."
Schulte would not comment on that letter, but made it clear that he considers such opinions rare. He noted that fees for most assisted-living homes, like Brookdale's, are paid by the residents or their families.
"The consumer, if they thought this was so risky, they would vote with their feet and we wouldn't be able to attract residents," he said.
More than 220 residents nationwide are alleged to have suffered neglect, injuries or death as a result of Alterra's substandard care between 1999 and 2003.
54 of those claims alleged wrongful death.
Settlements totaling $15.9 million were reached in 53 cases of resident injury or death. Another $4.3 million is set aside for possible settlement in 20 other cases.
The actual amount plaintiffs stand to receive will vary depending on insurance coverage. On claims covering periods when Alterra lacked insurance, plaintiffs will recover only a small percentage of the dollar figure of their settlement.s.
Alterra admitted no wrongdoing in the cases.
SOURCE: Federal bankruptcy court filings