BRIUS HEALTHCARE’S INSIDER TRANSACTIONS

How California’s Largest Nursing Home Chain Funnels Millions to Insider Companies

A report by the National Union of Healthcare Workers [Link]

In June of 2017, California legislators approved a state audit

SUMMARY to examine the impact and appropriateness of Brius’ financial
As CEO of California’s largest nursing home company, Shlomo transactions with firms controlled by Rechnitz. The audit is
Rechnitz has a duty to provide competent, compassionate scheduled to be completed in 2018.
care to thousands of frail seniors. But an investigation into his
This report describes the key findings of an investigation
firm’s financial dealings reveals that he may be profiting at their
by the National Union of Healthcare Workers (NUHW) into
expense by steering millions of dollars in taxpayer funds to a
Brius’ related-party transactions and its corporate structure. It
web of companies he created to service his nursing homes.
also offers several recommendations to policymakers and the
Rechnitz, a Los Angeles billionaire, owns Brius Healthcare, a public aimed at improving the transparency of nursing home
firm that operates approximately 80 for-profit nursing homes companies’ financial transactions.
in California and receives about 80 percent of its funding
through Medicare and Medicaid, which is known as “Medi-Cal”
in California. In 2015, Brius homes purchased $67 million in I. INTRODUCTION
goods and services from more than 65 companies controlled by To compile this report, NUHW reviewed thousands of pages
Rechnitz and his relatives. of Brius documents filed with the California Department of
These sorts of transactions are not uncommon among major Public Health (CDPH), the California Office of Statewide Health
nursing home chains, although Rechnitz appears to have Planning and Development (OSHPD) and the California Sec-
engineered novel arrangements to siphon money from his retary of State including annual cost reports, lease agreements,
facilities, leaving them with fewer funds to care for their incorporation records, licensure applications, citations and
residents. One firm he created charged his homes $3.5 million deficiencies. In addition, researchers reviewed court documents
in 2015 to offer financial advice and have him review their and purchased a database of state disclosure reports filed by
monthly profit-and-loss statements, public records show. Other California nursing homes in 2015, the most recent year for
firms appear to exist solely as paper landlords that charge his which data is available.1 The data revealed:
nursing homes above-market rents. • In 2015, Brius nursing homes paid $67 million to 65
At the same companies controlled by Brius CEO Shlomo Rechnitz and
Supporting documents can be found at time that his family members, according to OSHPD records.2 About
[Link]/brius-insider-transactions Rechnitz two-thirds of the payments were delivered to “insider”
has used companies serving as landlords to the nursing homes.
these Brius homes also paid Rechnitz-controlled companies
transactions to move money out of his nursing homes, Brius millions of dollars for financial consulting, medical sup-
has found itself repeatedly in the crosshairs of state and federal plies, “nutrition shakes,” loan repayments and other goods
regulators for providing substandard care. Last year, the and services.
California Department of Public Health refused to allow Brius
• Overall, Brius nursing homes paid rental prices that were
to take over five nursing homes, citing the fact that it had been
36.6 percent higher per nursing home bed than non-Brius
cited for 386 serious patient care violations over the previous
for-profit nursing homes operating in the same county
three years.
during 2015. Altogether, Rechnitz’ companies stood to

National Union of Healthcare Workers • August 2017

 gain as much as $12 million from the inflated rents that In 2015, 65 Brius nursing homes rented their facilities from
otherwise could have been spent on patient care, accord- firms controlled by Rechnitz, according to government records.
ing to NUHW estimates. This figure may understate the number of such transactions
as some Brius facilities failed to report their transactions, an
• In 2015, Brius nursing homes reported owing $23.2
NUHW investigation found.
million in debt to companies controlled by Rechnitz.
However, state reporting rules do not require the homes Rechnitz’ stewardship
to disclose whether interest rates and other lending costs of the 54-bed San
were consistent with fair market rates. Rafael Healthcare &
Wellness Center in
Even after steering money to “insider” companies, Brius nurs-
Marin County illus-
ing homes nonetheless recorded profits nearly twice as high
trates how these rental
as the average for-profit California nursing home. In 2015,
arrangements can drain
Brius facilities reported an average profit margin of 6.1 percent
vital patient-care funds
compared to 3.7 percent for California’s remaining for-profit
from Brius nursing
nursing homes, according to OSHPD.3
homes. The home paid
In 2015, the taxpayer-funded Medicare and Medicaid programs $152,535 a year in rent
paid Brius $507 million to care for elderly and disabled resi- before Brius took con-
dents in the company’s approximately 80 California nursing trol. In 2012, as Brius prepared to begin operating the facility,
homes.4 That accounted for 80 percent of the firm’s revenue. Rechnitz set up a middleman property firm to lease the facility
from its longtime independent owner and then sublease it to
The siphoning of scarce healthcare dollars through overpriced
Brius. According to copies of the lease agreements, the middle-
related-party transactions can leave nursing homes with fewer
man firm, Eretz San Rafael Properties, paid $259,200 a year in
resources to care for its residents. According to a 2015 Sacra-
rent to the owner, and then subleased the facility to the Brius
mento Bee investigation, Brius nursing homes scored below
nursing home for $388,800 – a 50 percent markup. Rechnitz’
statewide averages on 35 of 46 quality-of-care indicators such
firm is not responsible for performing any services in exchange
as staffing levels, complaints and deficiencies.5
for its 50 percent surcharge, according to the lease agreements.
Government oversight agencies have cited Brius nursing homes This business arrangement appears to grant Rechnitz’ middle-
for hundreds of state and federal violations including failing man firm the $129,600 markup as pure profit.11
to staff facilities with sufficient nursing personnel to care for
The sublease agreement speaks volumes about Brius’ insider
residents.6 Understaffing can lead to pressure sores, resident
transactions. To execute the agreement, Rechnitz signed the
falls and even deaths – violations for which Brius has been
repeatedly fined by government investigators.7 According to
the Bee’s investigation, Brius nursing homes “were tagged with
nearly triple as many serious deficiencies per 1,000 beds as the
statewide average in 2014.”8 That year, California Attorney Gen-
eral Kamala Harris called Brius CEO Shlomo Rechnitz a “serial
violator” of California nursing home laws in an emergency
motion that sought to block the company from acquiring more
than a dozen nursing homes.9
While other large nursing home companies also contract with
related-party companies for services and supplies, Rechnitz
appears to have orchestrated unprecedented arrangements to
extract money from his facilities. The following sections pro-
vide details about some of Brius’ “insider” transactions. sublease on behalf of both the nursing home and the middle-
man firm that charged the 50 percent rental surcharge. No one
else signed the document.
II. RENT GOUGING
In 2014, Rechnitz purchased the
In 2015, Brius nursing homes paid San Rafael property from its long-
$46.3 million in rent-related costs to time owner. Operating as the direct
property firms controlled by Rechnitz landlord, Rechnitz continued to
and his relatives, according to annual increase his nursing home’s rent
reports filed with state oversight agen- sharply. As of 2016, the facility’s
cies.10 In many cases, Rechnitz owns rent had nearly tripled to $421,177
the properties outright and charges since Brius took over in 2012, ac-
his nursing homes above-market rent, cording to state records.12
according to lease documents. When
Rechnitz does not own the underlying As Rechnitz extracted hundreds of
property, he often creates firms that thousands of dollars from San Ra-
serve as an intermediary or “middle- fael Healthcare & Wellness Center
man” between the property owner and through inflated rents, state investi-
the nursing home. These firms rent the gators cited the facility for provid-
property from the owner at a market rate and then sublease ing substandard care to the facility’s
it to the nursing home at inflated prices. The net result is that elderly and disabled residents. For
nursing homes have less money to care for residents as money instance, in June of 2017, government investigators fined the
is diverted into other companies controlled by Rechnitz. nursing home $15,000 for violating California’s minimum staff-
ing requirements for nursing personnel.13 In addition to under-

2 National Union of Healthcare Workers • August 2017

staffing violations, the facility lacks In order to evaluate whether Brius nursing homes paid inflated
basic supplies. Over the past two rents to other Rechnitz-controlled firms, NUHW compared
years, the California Department their rental rates with those paid by non-Brius for-profit nurs-
of Public Health cited San Rafael ing homes operating in the same county. This analysis, utilizing
Healthcare & Wellness Center for government data covering more than 600 California facilities,
stocking its kitchen with expired found that Brius nursing homes paid rental rates that were 36.6
food and requiring caregivers to percent higher, on average, than those of the non-Brius nursing
use paper towels to dry residents homes in the same county during 2015, the most recent year for
because the facility lacked sufficient which data is available.21 That rental mark-up is equivalent to
numbers of towels and washcloths. about $12 million per year that Rechnitz appears to be diverting
The federal government’s Center from Brius homes through inflated rents, according to NUHW’s
for Medicare & Medicaid Services estimates.
has assigned the facility its lowest
possible overall quality rating.14
III. CEO AND FINANCIAL CONSULTANT
Rechnitz has employed his leasing
arrangements across California, although perhaps nowhere In 2015, 76 Brius nursing homes paid a combined $3.5 million
more blatantly than in Humboldt County, where he has imple- to Boardwalk West Financial Services, LLC, a Los Angeles-based
mented a middleman leasing arrangement at all of the county’s company owned by Rechnitz.22 In a 2013 deposition, Rechnitz
nursing homes.15 Rental costs at the 99-bed Eureka Rehabil- testified he was the firm’s only employee and that his job was to
itation & Wellness Center, for example, nearly tripled after spend 20 hours a week providing financial advice and consult-
Brius took over in 2011. Specifically, the facility reported its ing services to Brius nursing homes, which included reviewing
lease costs jumping from $333,530 in 2010 to $827,751 in 2012, each nursing home’s “profit & loss” statements once a month.23
according to state data.16 The facility, and others controlled by CEOs typically review their companies’ financial statements as a
Rechnitz in the same county, now pay higher rental rates than routine part of their job. In this case, however, Rechnitz appears
many nursing homes in San Francisco and Los Angeles. to have outsourced this core business function to himself, for
While Rechnitz deprived the Eureka which he is collecting millions of dollars a year in consulting
facility of vital resources by impos- fees from Brius nursing homes. Considering that many Brius’
ing sky-high rents, its patient care homes pay inflated rent to companies Rechnitz controls, it is
record floundered. In February 2017, reasonable to question what benefit his financial counseling
the California Department of Public provides to Brius’ nursing homes.
Health fined the facility $160,000 NUHW has not obtained copies of any contracts between
for eight “Class A” citations, the Boardwalk West Financial Services and Brius nursing homes,
second-highest level of violation which would indicate whether Rechnitz signed these agree-
available to state regulators. Accord- ments on behalf of both parties as he did in the property rental
ing to government investigators, the agreements discussed above.
facility required nursing assistants
to care for up to three times more
patients than they could reasonably
IV. INTERNAL BANKING SYSTEM
handle. This understaffing contrib- Rechnitz also appears to own and operate an internal banking
uted to multiple falls by residents, system that extends millions of dollars of loans and credit to
resulting in injuries including a bro- Brius nursing homes, according to government records. In
ken arm, a broken nose, a broken neck and a fractured pelvis.17 2015, 61 Brius nursing homes reported owing $23.3 million in
Residents also reported sitting in soiled clothes after waiting net debt to “insider” companies controlled by Rechnitz.24 These
more than 30 minutes for staff to answer their calls to assist companies include YTR Capital, LLC and SR Capital, LLC, the
them to the bathroom.18 In March of 2017, the nursing home latter of which operates a luxury private jet used by Rechnitz
was sued separately by two families whose loved ones died due and his family, according to records from the Federal Aviation
to allegedly substandard care, including one resident who died Administration.25
after developing a fist-sized pressure sore on his tailbone that
penetrated to the bone and became infected.19 Monterey Healthcare & Wellness Center’s Payments to
Related-Party Businesses in 2015
Rechnitz has also employed his rent inflation arrangement in
Southern California, where Brius in 2014 took over more than ACCOUNT TITLE RELATED PARTY SERVICE OR TRANSACTION
SUPPLY AMOUNT
a dozen nursing homes previously run by Country Villa Health
Services. When Rechnitz took control, he immediately inserted Administration Boardwalk Administrative $42,000
middleman property firms that marked up the rents at nearly Financial Svcs, LLC Services
all of the homes, including East Terrace Rehabilitation and
Skilled Nursing Twin Med, LLC Routine $81,516
Wellness Center. At this 99-bed facility in Los Angeles, Rechnitz
Care Supplies
used a middleman firm, East Terrace-Let, LLC, to lease the fa-
cility from the property owner for $513,708 a year, lease records Leases and Eretz Monterey Building Lease $714,436
show. Rechnitz then subleased the facility to the nursing home Rentals Properties LLC
for $653,400, allowing the middleman to earn a mark-up of
Interest-Other SR Capital/ Interest $530, 382
$139,692 during just the first year of the arrangement. As in the YTR Capital
two previous examples, Rechnitz signed the sublease agree-
ment on behalf of both parties to the agreement, the middle- TOTAL: $1,368,334
man and the subtenant.20 Source: OSHPD, “Long-Term Care Facility Integrated Disclosure and Medi-Cal Cost Report”
for Monterey Healthcare & Wellness Center, Reporting Period 01/01/2015 to 12/31/2015.

3 National Union of Healthcare Workers • August 2017

Government records examined by NUHW do not specify the 4. Require nursing homes to file annually with state regula-
terms of the loans extended by Rechnitz’ firms to his nursing tors their contracts to purchase goods and services from
homes. Consequently, NUHW has not determined whether related parties.
they are consistent with market rates.
5. Require nursing homes to submit to state regulators an
The records, however, do indicate that loan repayments can annual financial statement from each related party that
take a heavy toll on individual Brius nursing homes. For exam- supplies them more than $50,000 per year in goods and
ple, Brius’ Monterey Healthcare & Wellness Center in Rose- services. In 2014, the State of Connecticut enacted such a
mead, Calif. reported paying $530,382 in “interest” payments to requirement.29
SR Capital and YTR Capital during its 2015 reporting period.26
At the end of 2015, the 96-bed nursing home reported owing
$5.6 million to the two firms.27

V. ONE ADDRESS, MULTIPLE BUSINESSES

Shlomo Rechnitz and his relatives own and operate numerous
other businesses that sell goods and services to Brius nursing
homes. Many of these firms are headquartered at the same Los
Angeles address.28 Most are structured as privately held limited
liability corporations, which are required to disclose only limit-
ed information to the public regarding their finances, structure
and operations. Therefore, it is difficult to determine if they are
charging fair market prices for goods and services sold to Brius
homes.
One of these businesses is RDS Design, a Los Angeles design
and construction company owned by Rechnitz’ son in law,
Pesach Aaron Chayn. In 2015, Brius nursing homes paid $2.2
million to RDS Design. During the same year, Brius nursing
homes paid $9.9 million to TwinMed, a medical supply compa-
ny founded by Rechnitz and his twin brother, Steve Rechnitz.

VI. CONCLUSION
Although journalists and regulators have tracked the expansion
of Shlomo Rechnitz’ nursing home empire, little attention has
focused on Rechnitz’ creation of a parallel set of supply compa-
nies: an opaque network of dozens of interlocking businesses
that in 2015 alone received a staggering $67 million in pay-
ments from Brius nursing homes.
Nursing homes, including those run by Rechnitz, are primarily
operated with taxpayer funds through the Medicaid and Medi-
care programs. Californians who put their loved ones in nurs-
ing homes expect the operators to provide quality care, not to
devise transactions that divert public funds from patient care.
With a state audit of Brius soon to get underway, NUHW offers
the following recommendations to improve the transparency of
nursing home companies’ financial operations:
1. Improve state data collection forms. In some instances,
for example, Brius facilities appear to have performed The National Union of
more insider transactions than can be listed on the limited Healthcare Workers is
number of lines available in state reporting forms. Con-
a democratic, worker-
sequently, it is possible that the public may not know the
full scope of these transactions.
led union dedicated to
improving the lives of
2. Require state regulators to determine whether nursing caregivers and patients. Our mission is to hold healthcare
homes are paying fair market prices for services and
corporations accountable to the public, to establish better
goods provided by related companies and/or compel
working conditions and higher standards of care, and to give our
nursing home CEOs to personally sign annual disclosure
reports pledging that such goods and services were pur- members a stronger voice in the workplace.
chased from related parties at fair market rates.
Approximately 200 NUHW members work at two Brius nursing
3. Require nursing homes to disclose the interest rates and homes in Marin County, California, where they seek improved
other terms of loans and credit provided by related com- standards for residents and caregivers as part of their ongoing
panies.
collective-bargaining negotiations with Brius officials.

4 National Union of Healthcare Workers • August 2017

 minimum staffing requirements of 3.2 Nursing Hours Per Patient
NOTES Day (NHPPD) in facilities owned, managed, or operated, either
1. Office of Statewide Health Planning and Development directly or indirectly, by the applicant [Shlomo Rechnitz] for the
(OSHPD). Custom Data File containing 2015 “Long-Term Care past three years.” Subsequently, in February 2017, CDPH cited
Facility Integrated Disclosure and Medi-Cal Cost Reports” for Brius’ Eureka Rehabilitation & Wellness Center for eight “Class A”
California’s Skilled Nursing Facilities. Nov. 2016. In November citations for multiple violations, including its “fail[ure] to ensure
2016, NUHW purchased from OSHPD a custom data file adequate nursing staff to provide quality care, which caused harm
in Excel format containing 2015 “Long-Term Care Facility to their residents as evidenced by...” Additionally, in June of 2017,
Integrated Disclosure and Medi-Cal Cost Reports” for all of CDPH imposed a $15,000 fine and an administrative penalty on
California nursing homes. This electronic file contains the data Brius’ San Rafael Healthcare & Wellness Center in San Rafael,
fields displayed in the facility-specific PDF reports of the same Calif. for violating California’s minimum staffing requirements
title available on OSHPD’s “System for Integrated Electronic for nursing personnel. See Note 7 for more details.
Reporting and Auditing” (SIERA) disclosure site at [Link]
7. (1) CDPH. “Nursing Hours Per Patient Day
[Link]/[Link]. NUHW used this Excel
Administrative Penalty Notice” delivered to San Rafael Healthcare
file to analyze Brius’ related-party transactions on a company-
& Wellness Centre, LP. Penalty Number 110013245. 8 Jun. 2017.
wide basis.
The agency imposed a $15,000 fine and an administrative penalty
2. OSHPD. “Long-Term Care Facility Integrated on Brius’ San Rafael facility for violating California’s minimum
Disclosure and Medi-Cal Cost Reports” for Brius nursing homes. staffing requirements for nursing personnel; (2) CDPH.
See Section 3.1 “Related Persons and Organizations and Other “Citation Number 11-2707-0012902-F” for Eureka Rehabilitation
Information.” OSHPD’s “Accounting and Reporting Manual for & Wellness Center. 28 Feb. 2017. CDPH cited Brius’ Eureka
California Long-Term Care Facilities” (Second Edition) defines Rehabilitation and Wellness Center for eight “Class A” citations,
“related parties” as those characterized by common ownership each of which carries a $20,000 penalty. CDPH cited the facility
or control. The manual states: “Common ownership arises when for “fail[ure] to ensure adequate nursing staff to provide quality
an individual, individuals, or an organization, holds significant care, which caused harm to their residents as evidenced by…” (p.
ownership or equity in both the facility and the organization 2 and p. 31) The 32-page citation goes on to describe more than
serving the facility. The term ‘control’ means that an individual 25 falls by seven residents, resulting in three residents suffering
or an organization has power to influence or direct the fractures (pelvis, nose, and neck), two residents being admitted to
actions or policies of both a facility and a related organization acute-care hospitals, and a laceration to the side of one resident’s
to a significant extent. Disclosure of material related party head requiring eight staples. Investigators discovered that the
transactions is required.” (See Item 1132 in “Accounting Principles facility assigned more than three times as many patients to
and Concepts.”) Certified Nursing Assistants than they could reasonably handle.

3. OSHPD. “2015 LTC Facility Annual Financial Pivot 8. Lundstrom, Marjie. “FBI raids Riverside nursing home.”
Profile.” The term “average profit margin” refers to “Total Profit Sacramento Bee. 24 Oct. 2015. [Link]
Margin.” Reports are available online at OSHPD’s website at investigations/nursing-homes/[Link]
[Link]
9. California Attorney General’s Office. In re: Plaza
4. Despite being California’s largest nursing home Healthcare Center, LLC. 8:14-bk-11335-CB. United States
company, Brius does not publish a list of its nursing homes. Bankruptcy Court, Central District of California, Santa Ana
NUHW developed a list of the company’s California nursing Division. 28 Aug. 2014.
homes by reviewing multiple sources: (1) “Change of Ownership”
10. OSHPD. Custom Data File containing 2015 “Long-Term
(CHOW) files obtained from the Centralized Applications Unit of
Care Facility Integrated Disclosure and Medi-Cal Cost Reports”
the California Department of Public Health (CDPH); (2) “Long-
for California’s Skilled Nursing Facilities. November 2016.
Term Care Facility Integrated Disclosure and Medi-Cal Cost
Reports” obtained from OSHPD; (3) “Nursing Home Compare”
11. (1) “Lease” between Joseph Augello Credit Exemption
website published by the Centers for Medicare and Medicaid
Trust et al (“Landlord”) and Eretz San Rafael Properties, LLC
Services (CMS); (4) California licensure records contained in
(“Tenant”). 7 Aug. 2012. Shlomo Rechnitz signed this agreement
facility files managed by CDPH’s Licensing & Certification
on behalf of Eretz San Rafael Properties, LLC; and (2) “Sublease
Division; and (5) a publicly available list of Brius nursing homes
Agreement” between Eretz San Rafael Properties, LLC
assembled by the Sacramento Bee as part of its three-part
(“Sublessor”) and San Rafael Healthcare & Wellness Centre, LP
investigative series on California nursing homes published on
(“Subtenant”). Effective Date of 1 Nov. 2012. NUHW obtained a
11/8/2014, 11/9/2014, and 11/10/2014. Through this effort, NUHW
copy of these agreements from CDPH’s Licensing & Certification
determined that during 2015 Brius and/or Shlomo Rechnitz
Division.
owned, operated or managed 80 skilled nursing facilities in
California. 12. OSHPD. “Long-Term Care Facility Integrated Disclosure
and Medi-Cal Cost Report” for San Rafael Healthcare & Wellness
5. Lundstrom, Marjie. “Unmasked: How California’s largest
Center. Reporting period 7/1/2015-6/30/2016. See Sections 3.1
nursing home chains perform.” Sacramento Bee. 8 Nov. 2014.
and 8(1).
[Link]
13. CDPH. “Nursing Hours Per Patient Day Administrative
6. CDPH. “Notice of Denial of Application” to Shlomo
Penalty Notice” delivered to San Rafael Healthcare & Wellness
Rechnitz for Anaheim Point Healthcare & Wellness Centre, LP.
Centre, LP. Penalty Number 110013245. 8 Jun. 2017.
8 Jul. 2016. P. 20. This 22-page document includes the following
statement: “Finally, CDPH’s review revealed 13 administrative 14. Nursing Home Compare Website. “Nursing Home
penalties for failure to comply with the legislatively mandated

5 National Union of Healthcare Workers • August 2017

Profile” for San Rafael Healthcare & Wellness Center, LP. Center Column DX (“EXP_LEASE”) of the data file. Each facility’s bed
for Medicare & Medicaid Services. June 2017. Accessed on 27 Jun. size was taken from Column V (“BED_AVG”). NUHW computed
2017. [Link] the same figure (ie, “Annual Lease Expense per Average Bed”) for
html#prof Tab=0&ID=055331&loc=SAN%20RAFAEL%2C%20 each non-Brius for-profit nursing home operating in counties
CA&lat=37.9735346&lng=-122.5310874&name=San%20 in which Brius facilities also operated during 2015. NUHW then
Rafael%20healthcare&Distn=0.3 calculated average figures in each county for Brius and non-
Brius facilities. NUHW included in its analysis only those nursing
15. (1) “Master Lease and Security Agreement between SHG homes that reported data to OSHPD for 365 days during the
Resources, LP, as Lessor, and Eureka-LET, LP as Lessee, Dated reporting period. The OSHPD data is available at [Link]
as of March 3, 2011.” 3 Mar. 2011. Shlomo Rechnitz signed this [Link]/HID/[Link]#Trends
86-page agreement on behalf of Eureka-LET, LP; (2) “Sublease
Agreement” between Eureka-LET, LP (“Sublessor”) and Eureka 22. OSHPD. Custom Data File containing 2015 “Long-Term
Rehabilitation & Wellness Center, LP (“Subtenant”). 3 Mar. 2010. Care Facility Integrated Disclosure and Medi-Cal Cost Reports”
Shlomo Rechnitz signed the latter agreement on behalf of both for California’s Skilled Nursing Facilities. November 2016. See
Eureka-LET, LP and Eureka Rehabilitation & Wellness Center, Note 1 for more details on this data source.
LP. According to Exhibit H of the Master Lease, Shlomo Rechnitz
is a 99.9% owner of Eureka-LET, LP (the “middleman”), while 23. “Deposition of Shlomo Rechnitz” in Samuel Nevarrez vs
Shlomo Rechnitz and his wife Tamar Rechnitz are 99% and 1% San Marino Skilled Nursing and Wellness Centre, LLC et al. Los
owners, respectively, of Eureka-LET LP’s general partner, Eureka- Angeles County Superior Court. Case No. BC491081. Deposition
LET GP, LLC. NUHW obtained a copy of these agreements from taken on 24 Jan. 2013. See pp. 68-69.
CDPH’s Licensing & Certification Division.
24. OSHPD. Custom Data File containing 2015 “Long-Term
16. OSHPD. “Long-Term Care Facility Integrated Disclosure Care Facility Integrated Disclosure and Medi-Cal Cost Reports”
and Medi-Cal Cost Reports” for Eureka Rehabilitation and for California’s Skilled Nursing Facilities. Nov. 2016.
Wellness Center. Reporting periods covering 01/01/2010-
12/31/2010 and 11/01/2011-10/31/2012. For each report, see 25. NUHW. “Misplaced Priorities at 40,000 Feet.” Feb.
Section 8(1) Line 160. Available at [Link] 2017. This report documents Shlomo Rechnitz’ purchase of a
[Link] Gulfstream G-IV intercontinental jet for $8 million. Records
obtained from the Federal Aviation Administration, including a
17. CDPH. “Citation Number 11-2707-0012902-F” for “Loan and Security Agreement by and between Compass Bank
Eureka Rehabilitation & Wellness Center. 28 Feb. 2017. For and SR Administrative Services, LLC” dated 17 Sep. 2013, describe
example, see p. 2 and p. 31, which state: “The facility failed to SR Capital, LLC’s role in operating the jet. The report and source
ensure adequate nursing staff to provide quality care, which documents are available at [Link]
caused harm to their residents as evidenced by… Resident 2 had
five falls during a one-month period… Resident 5 had six falls…” 26. OSHPD. “Long-Term Care Facility Integrated
Disclosure and Medi-Cal Cost Reports” for Monterey Healthcare
18. CDPH. “Citation Number 11-2707-0012902-F” for and Wellness Center. Reporting period covering 01/01/2015-
Eureka Rehabilitation & Wellness Center. 28 Feb. 2017. See also 12/31/2015. See Section 3.1(A).
the additional seven citations issued by CDPH on 28 Feb. 2017
against Eureka Rehabilitation & Wellness Center, each of which 27. OSHPD. “Long-Term Care Facility Integrated
also carried a $20,000 fine: Citation Numbers 11-2707-0012903-F; Disclosure and Medi-Cal Cost Reports” for Monterey Healthcare
11-2707-0012904-F; 11-2707-0012905-F; 11-2707-0012991-F; 11- and Wellness Center. Reporting period covering 01/01/2015-
2707-0012997-F; 11-2707-0012998-F; and 11-2707-0012999-F. 12/31/2015. See Section 3.1(B).

19. (1) “Theresa Kruger vs Eureka Rehabilitation & Wellness 28. Many of the firms that compose Brius as well as
Center et al.” Humboldt County Superior Court. Case No. others that engage in related-party transactions indicate that
DR170144. Filed 10 Mar. 2017; (2) “Sherri McKenna as personal they operate from the same “Principal Office” at 5900 Wilshire
representative of the Estate of Alan Dewey, Decedent vs Eureka Blvd in Los Angeles, Calif., according to their “Statements of
Rehabilitation & Wellness Center et al.” Humboldt County Information” (Form LLC-12 and Form LP-2) submitted to the
Superior Court. Case No. DR170143. Filed 10 Mar. 2017. California Secretary of State. Many also identify Shlomo Rechnitz
as their manager. For example, all of the following firms report
20. (1) “Lease between 2415 S. Western Avenue, LLC 5900 Wilshire Blvd as their Principal Office on their “Statements
(‘Landlord’) and East Terrace-LET, LLC (‘Tenant’).” Executed and of Information:” SYTR Real Estate Holdings, LLC; Boardwalk
effective 31 Oct. 2014. Shlomo Rechnitz signed this agreement West Financial Services, LLC; SR Capital, LLC; YTR Capital,
on behalf of East Terrace-LET, LLC; (2) “Sublease Agreement” LLC; Eureka-LET, LP; Eureka Rehabilitation & Wellness Center,
between East Terrace-LET, LLC (“Sublessor”) and East Terrace LP; Eretz San Rafael Properties, LLC; San Rafael Healthcare &
Rehabilitation & Wellness Centre, LP (“Subtenant”). 31 Oct. 2014. Wellness Center, LP; East Terrace-Let, LLC; and East Terrace
Shlomo Rechnitz signed this agreement on behalf of both East Wellness GP, LLC.
Terrace-LET, LLC and East Terrace Rehabilitation & Wellness
Centre, LP. 29. “Public Act No. 14-55: An Act Improving Transparency of
Nursing Home Operations,” Signed by Connecticut Gov. Daniel P.
21. OSHPD. “LTC Facilities Annual Financial Pivot Profile.” Malloy on 30 May 2014. [Link]
Report period ended in 1/1/15-12/31/15. To perform its analysis, malloy/2014.05.30_Bill_Notification_9.pdf
NUHW computed an “Annual Lease Expense per Average Bed”
for each Brius nursing home during the 2015 reporting period.
Each facility’s annual lease expense amount was taken from

6 National Union of Healthcare Workers • August 2017