Attorneys from two of the city’s most prominent law firms are again sparring in court filings over the future of a set of troubled nursing homes.
Recent filings reveal a back-and-forth over documents filed under seal — including those breaking down almost $1 million of payments to a team of Waller Lansden Dortch & Davis lawyers and the receiver overseeing the liquidation of SeniorTrust.
A Friday morning hearing scheduled in Chancery Court will address whether those documents should stay under seal. It also will address a request by Waller’s Paul Davidson and Frances Fenelon to get National Health Investors to give up its liens on the nursing homes, which are located primarily in Missouri and Kansas.
Last week, SeniorTrust sued NHI and National HealthCare Corp., alleging the companies conspired to unfairly control SeniorTrust and sold it to the nonprofit at inflated prices. The move was the latest in a series of cases pitting Davidson and Fenelon against Alex Fardon of Harwell Howard Hyne Gabbert & Manner, who is representing NHI. Three years ago, the attorneys exchanged bitter filings as they worked toward a resolution of a similar case involving Care Foundation of America.
In a recent filing, Fardon picked up that thread and said he has “become increasingly concerned with the lack of accountability, lack of transparency, and lack of progress” in the winding down of SeniorTrust, which was set up by NHI and NHC more than a decade ago. His characterization came a few weeks after Chancellor Ellen Hobbs Lyle called to order receiver Cumberland & Ohio Co. for providing reports that "are cryptic and do not inform the Court as to the Receiver's progress in marshaling assets." (View that order here.)
Among the concerns at NHI is the more than $825,000 — which includes a $150,000 retainer — that SeniorTrust’s receiver has paid a team of Waller Lansden Dortch & Davis attorneys since late last year. On top of that, Fardon points out, Cumberland & Ohio Co. also has been paid more than $133,000 since November.
Those payments have been made, Fardon wrote in a Sept. 5 filing, even though the receiver “took almost eight months just to choose a broker to assist [...] in marketing SeniorTrust’s assets.”
Fardon and NHI want Lyle to set aside her order to seal the documents, saying that the liquidation of a public benefit corporation such as SeniorTrust should not be done in secret.
“NHI cannot fathom a legitimate need for the Receiver’s reporting to the Court on the Receiver’s own activities to be maintained under seal,” Fardon wrote.
NHC, which is being represented by Gary Shockley and Courtney Gilmer of Baker Donelson Bearman Caldwell & Berkowitz, this week filed papers supporting NHI’s push to unseal the filings. In response, Waller’s Paul Davidson said in a Monday filing that NHI, as a secured creditor in the case, has no standing under state law and past rulings to call for the seal to be lifted. Oversight of this case, he argued, falls to the Tennessee Attorney General and to the court.
Davidson also argues that Lyle’s seal does not provide blanket coverage and that the receiver will use it only to protect what it sees as privileged information.
Davidson and his team also have asked the court to force NHI to give up its liens on the nursing homes, which are now being marketed for $26 million. NHI’s liens secure debt of $28.7 million and the company wants the receiver to give it 20 days notice of any agreement to sell the nursing homes. It also wants the court to nix several deal elements Davidson and company want to include in the nursing homes’ sale. (Click here for details.)
In his response Monday, Fardon wrapped up his thoughts in curt language.
“Having waited several months to even start the liquidation process, the Receiver now tries to blame NHI for his failure to timely liquidate the assets at issue,” he wrote. “The truth is that NHI has been advocating a sale of these facilities since before this receivership began.”