California Attorney General Rob Bonta today conditionally approved the sale of California Nevada Methodist Homes (CNMH), a nonprofit that owns and operates two continuing care retirement communities in California. The conditional approval would allow the retirement communities in Oakland, Alameda County, and Pacific Grove, Monterey County, to come under the ownership of Pacifica Companies LLC (Pacifica). Under California law, any transaction involving the sale or transfer of control of a healthcare facility owned by a nonprofit must secure the approval of the state Attorney General. The conditions Attorney General Bonta approved today ensure access to quality healthcare and will allow current residents to continue receiving care at the facilities while protecting their outstanding entrance fee obligations.
“Our primary responsibility when reviewing healthcare transactions is to protect the people. With our conditional approval today, we ensured that the residents of these retirement communities continue to receive the best possible care and quality of life,” said Attorney General Bonta. “Due to the strong conditions we’ve imposed on the sale of these continuing care retirement communities, the individuals and families living in Oakland and Pacific Grove can remain in the communities they called home and receive uninterrupted health care.”
The two continuing care retirement communities (CCRCs) are Lake Park, which is located in Oakland and includes a 35 licensed-bed skilled nursing facility (SNF), and Forest Hill, which is located in Pacific Grove in Monterey County and includes a 26 licensed-bed SNF. Both facilities also include a Residential Care Facility for the Elderly (RCFE). The proposed $34 million sale is part of CNMH’s chapter 11 bankruptcy proceeding filed March 16, 2021. The Bankruptcy Court has already approved the proposed sale to Pacifica pursuant to an order entered on February 8, 2022.
The expert report identified safety issues at other Pacifica facilities. Between 2017 and 2022, Pacifica’s rate of citations was significantly higher than the average rate for all RCFEs in California. The most troubled Pacifica facilities were in Oakland, Oxnard, and Modesto.
Therefore, as part of his conditional approval, Attorney General Bonta has imposed specific conditions for the sale which would require Pacifica to, among other things:
- Appoint a monitor to ensure resident safety;
- Report semi-annually on safety;
- Preserve access to skilled nursing facility services for the community;
- Consult with a Community Advisory Board on a quarterly basis;
- Pay off debt, including existing bond debt and existing lines of credit;
- Honor residents’ contracts; and
- Ensure that outstanding entrance fee obligations to current residents are paid.
The California Department of Justice’s Healthcare Rights and Access Section (HRA) works proactively to increase and protect the affordability, accessibility, and quality of healthcare in California. HRA’s attorneys monitor and contribute to various areas of the Attorney General’s healthcare work, including nonprofit healthcare transactions; consumer rights; anticompetitive consolidation in the healthcare market; anticompetitive drug pricing; privacy issues; civil rights, such as reproductive rights and LGBTQ healthcare-related rights; and public health work on tobacco, e-cigarettes, and other products.