McCaskill close to nursing home owner with troubled track record

On a bright morning in May 2016, U.S. Sen. Claire McCaskill tweeted a photo of a pink cocktail garnished with mint and a slice of melon. In the background, the Lake of the Ozarks shimmered in the sun.

“Watermelon mojito,” McCaskill tweeted. “Lake of the Ozarks. Family. Lucky.”

The lakefront vacation property in Missouri where McCaskill goes to escape the partisan chaos of Capitol Hill is owned by her husband, Joseph Shepard, and Rick DeStefane – a close family friend, a regular campaign donor, and a nursing home executive with a track record of serious safety problems in an industry the senator has vowed to clean up.

The allegations against DeStefane range from health and safety lapses linked to gruesome deaths at his nursing homes to a federal investigation into Medicare fraud, an investigation by McClatchy’s Kansas City Star has found.

Meanwhile, DeStefane has entered into multiple financial relationships with McCaskill’s husband while sending checks to underwrite McCaskill’s political career.

McCaskill maintained close, personal ties to DeStefane as she built a reputation as a watchdog against elder abuse and fraud.

She made a name for herself as state auditor in Missouri by cracking down on the nursing home industry. After her election to the Senate in 2006, she eventually became the top Democrat on the Special Committee on Aging, which oversees the federal agencies responsible for regulating nursing homes and investigating Medicare fraud.

In January, McCaskill joined the powerful Senate Finance Committee, which is responsible for authorizing Medicare and Medicaid spending, the main source of funding for nursing homes.

“Elder abuse and exploitation of any kind is a tragedy,” she said at a Senate hearing she co-chaired in Washington last year, “but it is particularly painful when abuse is being perpetrated by those who have been entrusted to protect the victims.”

Today, McCaskill is fighting to keep her U.S. Senate seat in Missouri, a red-leaning state where President Donald Trump trounced Democrat Hillary Clinton by 19 percentage points in November.

As she prepares for 2018, McCaskill’s campaign has quietly refunded or given to charity contributions from politically controversial donors, including $3,700 from comedian Rosie O’Donnell, who made fun of Trump’s young son Barron, and $2,700 from the political action committee for Pfizer, an opioid maker that McCaskill is investigating, Federal Election Commission records show.

The refund to Pfizer was made to “avoid even the appearance of anything that would intersect with Claire’s investigation into opioid manufacturers,” McCaskill’s campaign told the St. Louis Post-Dispatch, which first reported the transactions.

Even as McCaskill shed those donations, she accepted new ones from DeStefane, who has been a consistent supporter of her campaigns over the years.

Since McCaskill first announced in 2005 she would run for the U.S. Senate, DeStefane has given $14,600 to her campaign committee, the maximum amount allowed.

When counting the dollars he sent to her joint fundraising committees and supportive political action committees, DeStefane’s contribution to McCaskill’s federal campaigns totals $61,200, according to an analysis of election records by The Star and the Center for Responsive Politics, a nonpartisan campaign finance watchdog.

DeStefane’s most recent donation to McCaskill came on June 26. He gave $5,400, the most he’s allowed to give to her campaign committee this election cycle.

Two days later, DeStefane signed an agreement with the federal government to settle allegations that he and his nursing home company, Reliant Care Group, committed Medicare fraud by knowingly submitting false claims for unnecessary physical, speech, and occupational therapy to nursing home residents between Jan. 1, 2008 and June 30, 2014.

Reliant management reportedly pressured therapists to provide services they did not believe were medically necessary and sought inflated reimbursement from Medicare “influenced by its own financial considerations,” according to settlement documents released by the Justice Department.

DeStefane and Reliant agreed to repay the federal government $8.3 million “to avoid the delay, uncertainty, inconvenience and expense of protracted litigation,” the settlement reads. He denied any wrongdoing.

McCaskill would not talk to The Star or McClatchy for this story. Her spokesman, John LaBombard, said the senator was vaguely aware that DeStefane was involved in a civil dispute with the Justice Department through her family friendship with him.

She didn’t know details about the dispute, LaBombard said.

The senator’s personal relationship with DeStefane and her use of their shared vacation property at the lake don’t present any conflict of interest with her work in the Senate, he said.

“It’s obvious from my record that I fight every day for Missourians, including Missouri seniors – and clearly there’s nothing other than what’s best for Missouri that has, or would ever, impact my work in the Senate,” McCaskill said in a written statement to The Star.

McCaskill’s campaign manager, David Kirby, said it wouldn’t be unusual to see a flood of contributions in late June, the end of the financial quarter. Kirby said McCaskill and her staff had no knowledge of the settlement until after the Justice Department announced it on July 5.

DeStefane declined an interview request from The Star. In a written statement, his nursing home company Reliant said DeStefane’s decisions to fund candidates and political action committees over the years “are primarily based on positions and issues of importance in the healthcare sector.”

(DeStefane contributed more than $80,000 to both Democrats and Republicans running in Missouri last year. Democrat Chris Koster got $30,000 from DeStefane in 2016 for his gubernatorial bid. After Koster lost, DeStefane dropped $25,000 into the campaign coffers of the Republican winner, Eric Greitens, a month after Election Day. He also wrote checks to Democratic Senate candidate Jason Kander, Republican House Speaker Todd Richardson and Republican Lt. Gov. Mike Parson, Missouri Ethics Commission records show.)

Nursing home safety

Six months after McCaskill tweeted the photo of the watermelon mojito from the vacation home her family shares with DeStefane, a 45-year-old resident fell to his death from a window at Levering Regional Health Care Center, one of DeStefane’s nursing homes in Hannibal, Mo.

The facility’s staff failed to perform hourly checks on the resident overnight and did not notice he was missing for seven hours, according to a notice of noncompliance issued by the Missouri Department of Health and Senior Services. They discovered his body in an alley at 6 a.m. on November 17, 2016, three stories below his bedroom window.

The resident had used pliers to pry open his window and a television cable to lower himself down, the report found. The cable snapped and he fell to his death.

It was not the first time that a resident had plunged from a third-story window at Levering Regional. Nor would it be the last. On May 17, 2006, a 58-year-old dementia patient broke his hip and ribs in a fall from a cafeteria window. Another 55-year-old Levering resident was injured in a fall from the third floor of the same building on March 20 of this year.

Three people falling out of windows at the same facility is almost impossible to believe, said Eric Carlson, directing attorney with Justice In Aging, a California-based advocacy group.

“You don’t routinely see people falling out of windows. It’s more of a lightning strike kind of thing,” Carlson said. “The first one should have been enough for them to figure out they had some vulnerability and fix it so it doesn’t happen again.”

Reliant admitted that an employee had failed to follow its policies in the fatal fall of the resident in 2016. The facility disciplined the employee and “is deeply sorry for the incident,” the company said.

State reviews found no violations on behalf of the facility in connection with the other incidents in 2006 or 2017, the company said. Reliant added that the facility has taken steps to secure its windows.

DeStefane agreed in May to pay the state $4,000 to settle an allegation that his facility had committed a Class I violation — the most severe kind — by failing to provide protective oversight of the resident who died in 2016. He denied any wrongdoing.

A review of government records by McClatchy’s Washington D.C. bureau and The Star found that nursing homes owned by DeStefane have histories of Medicare payment denials and regulatory fines for the most serious type of health and safety violations federal authorities can impose.

His homes incurred more than $117,200 in federal fines for violations that allegedly harmed or endangered residents during the past three years, the time period for which the U.S. Centers for Medicare and Medicaid Services publicly post nursing home penalties online.

In the same three years, the federal government halted Medicare payments at least three times for alleged violations at nursing homes DeStefane owns.

Reliant or its affiliates also are named as defendants in 11 wrongful death lawsuits in Missouri since 2002. DeStefane is named personally in four of those cases.

Chad Jordon, vice president of the Missouri Coalition for Quality Care, described the conditions at a number of DeStefane’s homes as “egregious.”

Inspection reports and court filings describe urine-and feces-soaked beds and furniture, staff who failed to protect residents from abuse or didn’t properly report a resident’s allegation of sexual assault by a medical technician, and patients who allegedly suffered such severe pressure ulcers that they died or had to endure the amputation of a limb. One nursing home didn’t have a working sprinkler system. Another was cited for not properly monitoring a suicidal patient who staff later found hanged in a bedroom.

Reliant said that there have been “only a handful of times over the last 27 years” that practices by its staff were inconsistent with company policies, and when this occurs, “Reliant has taken responsibility and implemented corrective action to ensure these remain isolated events.” In many cases, the company said, violations were reduced or reversed in the course of the regulatory process.

The facilities Reliant manages “are dedicated to providing quality care in a caring and dignified manner, predominantly to both the frail geriatric population and to those with severe mental illness,” the company said.

“It is important to note,” Reliant added, “that approximately half of Reliant’s patients have intensely chronic and complex mental, behavioral, and medical issues that include” self-mutilation, post-traumatic stress disorder, physically and verbally aggressive personality disorders and criminally violent behaviors.

“While other caregivers in the state may have taken the easy path in rejecting these patients, we believe they are worth treating and saving, and we are the one and only company who takes them,” the company said. “We have a tremendous track record of success and in some cases, our patients have returned to their communities and become productive members of society.”

LaBombard, McCaskill’s spokesman, said neither McCaskill nor her husband is familiar with any of the details about multiple incidents of residents falling out of third-floor windows or any other problems at 23 nursing homes and assisted living facilities DeStefane owns or manages across Missouri.

Together in the Ozarks

Nestled in the hills of Lake Ozark, Mo., is an easy-to-miss private community just off Horseshoe Bend Parkway. It’s on a small peninsula that juts into Lake of the Ozarks where a limited liability company, Black Hawk Partners, owns two waterfront vacation homes. A limited liability corporation, or LLC, insulates its individual members from personal responsibility for the corporation’s debts and liabilities. Owning a residence under an LLC can offer privacy as well as tax and liability benefits.

DeStefane and McCaskill’s husband, Shepard, jointly own Black Hawk Partners. Shepard incorporated the LLC on June 26, 1997, little more than two weeks before he and DeStefane used the company to buy one of the two houses they would eventually own together on the same street, Black Hawk Drive. The market value for that house last year was $426,060, according to Camden County assessment records.

DeStefane deeded the second house to Black Hawk Partners in 2013 after buying it in June 2011. Its market value in 2016 was $171,300.

Shepard and DeStefane also jointly own two jet skis and a 2011 Nissan Armada through Black Hawk Partners, tax and loan filings show.

McCaskill regularly visits the lake property to spend time with her adult children and grandchildren.

It is a vacation house, for purely personal use, said her spokesman, LaBombard. He said the home is not rented out or used for investment purposes.

Property records in Camden County show that Shepard pledged one of the Lake Ozark vacation homes he co-owns with DeStefane as collateral in 2007, and again in 2013, as additional security for a letter of credit related to his affordable housing development business, Sugar Creek Finance Co.

The total amount of the letter of credit was about $17 million in 2014, according to property tax records.

Business Partners

When Shepard and DeStefane formed Black Hawk Partners and bought the first lake house in 1997, the two men already had been in business together nearly a decade. Shepard had yet to meet McCaskill, who was Jackson County prosecutor.

During deposition testimony in 2007 related to a wrongful death lawsuit filed against Reliant in 2003, DeStefane said he had known McCaskill’s husband since 1985. He said that Shepard approached him a few years later with an opportunity to become involved in a management role with his nursing home companies.

DeStefane acknowledged in the deposition that Reliant did not carry professional liability insurance from late 2000 until late in 2006.

He testified that initially the decision not to carry insurance was Shepard’s. DeStefane said Shepard – who was chief executive officer of Reliant in 2000 – had told him that liability insurance premiums were too costly. “The marching orders I got is that we cannot afford liability insurance and we’re going to go forward without it,” DeStefane testified.

Since 2007, Reliant says, the company has carried full liability insurance by an outside carrier.

Shepard and DeStefane were partners in the nursing home business from the late 1980s until Shepard separated himself from Reliant’s operating companies in 2002 and 2003, not long after he married McCaskill. She said at the time she wanted to avoid any conflict of interest.

Shepard still held an interest in partnerships that owned some of the buildings and land that Reliant rented for some of its nursing home properties, however.

LaBombard said Shepard fully divested himself of Reliant’s properties by Jan. 1, 2008, the date the Justice Department’s allegations of fraud begin. On that date, the final transfer of Joseph’s stake in such a partnership was completed, LaBombard said.

He said the senator has never had any business ties to DeStefane and her husband no longer has any connection to Reliant Care, although Shepard and DeStefane remain partners in other business ventures.

Those ventures include three companies that own property and equipment used by a surgical center next door to one of DeStefane’s nursing homes in Moberly, Mo.

Shepard is not involved in the day-to-day operations of the center, LaBombard said.

McCaskill married Shepard on April 27, 2002 in a ceremony at the waterfront vacation home he co-owned with DeStefane. She pledged her marriage wouldn’t halt her efforts to investigate the nursing home industry as state auditor.

“I will continue to work for a major overhaul in the way this industry is run and the way it is funded,” she said in a February 2002 article, two months before her marriage.

“Are his homes run perfectly? I’m sure they are not,” she said of Shepard, who was then CEO of Reliant. “Do I know he wants to give good care? I do. And do I love him? Absolutely.”

McCaskill had conducted about 70 investigations into Missouri’s nursing home industry since her election as auditor in 1998. Some of the audits probed the state’s Medicaid reimbursement system for nursing homes, others looked at problems with staffing at the facilities and lax inspections.

In 2000, she testified before Congress, explaining that Missouri did not have enough inspectors and leveled weak penalties for violations

“It takes years to get sanctions imposed, and when they are, you get pennies on the dollars,” she told the committee.

McCaskill’s efforts, as she pointed out in her memoir “Plenty Ladylike,” led to the passage of a 2003 law reforming Missouri’s nursing homes and strengthening state oversight.

“I was proud of my record as auditor, going after troubled nursing homes and protecting seniors,” McCaskill wrote.

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