CapitalSource Owned Four New England Nursing Homes Cited For 100 Health & Safety Violations Over

A 2-Year Period
Before shifting its business model from a Real Estate Investment Trust (REIT) toward more traditional banking over the past several years, CapitalSource owned hundreds of nursing homes across the country. Identifying the specific nursing homes owned by CapitalSource has proven extremely difficult, in-part due to rules requiring REITs to hire third parties to operate the nursing homes on their behalf. Through extensive research over several weeks, we have identified four nursing homes owned by CapitalSource in Connecticut and New Hampshire from mid-2008 until late 2010 or early 2011. Two of those nursing homes currently have the lowest possible rating from Medicare one out of five stars. These two nursing homes both located in Connecticut were also repeatedly cited for up to three times as many health deficiencies as the national average while they were owned by CapitalSource. The other two nursing homes did not receive stellar ratings either. Together, the four homes were cited for a total of 100 health deficiencies over a two year period under CapitalSources ownership from September 2008 to August 2010, including: Hiring employees with a history of abusing residents or failing to report neglect Failing to meet the nutritional needs of residents Failing to protect residents from abuse, physical punishment and separation from others Failing to notify doctors and family members after a resident was injured or another significant change occurred Failing to care for residents in a way that kept or built their dignity and self-respect Failing to properly administer medications Failing to keep residents personal and medical records private and confidential Failing to promptly release the personal funds of numerous residents after their deaths

This document lays out the evidence connecting CapitalSource to the four nursing homes and then explores the negative ratings these nursing homes have received from Medicare and state regulators. The research shines a light on an aspect of CapitalSources business practices that have not been well chronicled before, providing concrete evidence that John Delaneys company owned nursing homes with serious problems that posed a threat to the health and safety

2008-2010: CapitalSource Owned Four New England Nursing Homes Acquired Following The Bankruptcy Of A Company It Had Financed November 2007: Nursing Home Operator Haven Health Care, Which Received Financing From CapitalSource, Declared Bankruptcy
November 2007: Major Nursing Home Chain Haven Healthcare Declared Bankruptcy. The Associated Press reported, Middletown-based Haven Healthcare Corporation filed for voluntary Chapter 11in New Haven bankruptcy court, asking for protection from the tens of millions of dollars it owes creditors while it restructures. [Associated Press, 11/21/07] Haven HealthCares Chief Lender Was CapitalSource. In June 2008, the Hartford Courant reported, Proceeds from the Formation sale are expected to pay off Havens secured creditors namely, its chief lender, CapitalSource Finance but will leave nothing for the dozens of vendors with unsecured debt, court filings indicate. [Hartford Courant, 6/13/08] CapitalSource Underwrote $50 Million Financing Plan To Make Haven Healthcare More Marketable When Its Nursing Homes Were Eventually Sold Off. In January 2008, the Hartford Courant reported, A

federal judge is expected to sign off on a financial plan for Haven Healththat envisions the sale of potentially all of the chains 25 nursing homes by June [2008]. The $50 million loan that is the core of the financial plan will stabilize the embattled chain, making it more marketable to the half-dozen entities that have expressed a strong interest in buying some or all of the homes, Attorney General Richard Blumenthal said after bankruptcy court closed The 50-plus page financial planis expected to be submitted to [U.S. Bankruptcy Judge Albert S.] Dabrowski [Haven Healthcare attorney Alan] Kolod told Dabrowski that the financing scheme underwritten by CapitalSource Finance includes $25.7 million earmarked to pay off secured debt Haven Healthcare owed before filing for bankruptcy protection. [Hartford Courant, 1/24/08]

CapitalSource Acquired Four Of Haven Healthcares Nursing Homes In Connecticut & New Hampshire
June 2008: After A Plan To Sell Off Havens Nursing Homes Failed, A Plan Emerged To Turn Over Ownership Of Nursing Homes Directly To CapitalSource. The Hartford Courant reported, A deal to sell the bankrupt Haven Healthcare nursing-home chain has abruptly collapsed, leaving state officials scrambling to put together a backup plan to turn over the chain to two or three investment firms that would hire new operators to run the homes. Attorney General Richard Blumenthalsaid the backup plan would entail breaking up the chain by turning over the homes to the secured creditors that already finance or hold mortgages on Havens homes Omega Healthcare Investors, CapitalSource Finance and Nationwide Health Properties. [] If the creditors and a bankruptcy court judge approve the plan, the transfer of ownership would be expected to occur in July [2008]. [Hartford Courant, 6/27/08] Under The Plan, CapitalSource Would Receive Three Of Havens Connecticut Nursing Homes. The Hartford Courant reported, [U]nder a plan to be presentedin bankruptcy court nine Haven homes in Connecticut would be turned over to the secured creditors who hold mortgages or provide financing for them. Five of the homes would be transferred to Omega Healthcare Investors, three to CapitalSource Finance and one to Nationwide Health Properties, according to court documents. [] CapitalSource has proposed partnering with Tutera Health Care Services of Kansas City, Mo., to operate its Haven homes, state officials said. [Hartford Courant, 7/1/08]

July 2008: CapitalSource Acquired 3 Haven Health Care Facilities In Connecticut & 1 Facility In New Hampshire. According to a ruling in the U.S. Bankruptcy Court for the District of Connecticut, The Sale Motion proposes to sell substantially all of the assets of certain of the Debtors to certain of those Debtors secured creditors upon their exercise of credit bids (the Proposed Credit Bid Sales). With respect to the Proposed Credit Bid Sales, the Debtors have negotiated modifications to the credit bids received at the time of the June 12 Auction, to wit: [] (c) a credit bid from CapSource of approximately $86,248,082, for all of the Debtors accounts receivable plus Debtors interests in all of the real and personal property at the following four facilities: Haven Health Center [of Cromwell Haven Health Center of East Hartford Haven Health Center of Waterbury Haven Health Center of Derry. [Haven Eldercare, LLC, et al., Debtors, Chapter 11, Jointly Administered under CASE NO. 07-32720 (ASD), Doc. I.D. Nos. 1119, 1120, 1121, United States Bankruptcy Court for the District of Connecticut, New Haven Division, Decided, 7/4/08] Hartford Courant: Federal Bankruptcy Judge Approved The Plan Transferring Ownership Of Three Connecticut Nursing Homes To CapitalSource. The Hartford Courant reported, A federal bankruptcy judge Friday approved a plan to transfer most of the nursing homes in the Haven Healthcare chain to new owners and place four facilities in receivership. [] The plan calls for five of Havens homes to be transferred to Omega Healthcare Investors, three to CapitalSource Finance and one to Nationwide Health Properties. [Hartford Courant, 7/5/08] CapitalSource Took Over Havens Homes In Cromwell, East Hartford And Waterbury. The Hartford Courant reported, CapitalSource, which is taking over Havens homes in Cromwell, East Hartford and Waterbury, plans to partner with Tutera Health Care Services of Kansas City, Mo., to operate its homes, state officials said. [Hartford Courant, 7/8/08]

CapitalSource Formed Limited Liability Companies With Names Corresponding To Each Nursing Home. According to CapitalSources 2010 Annual Report filed with the Securities and Exchange Commission, CapitalSource established subsidiaries called CSE Cromwell (CT) LLC, CSE East Hartford (CT) LLC, CSE Waterbury (CT) LLC and Derry (NH) CSE LLC. All the LLCs are incorporated in Delaware on June 26, 2008. [Securities and Exchange Commission, CapitalSource 2010 Form 10-K, 2/28/11; Delaware Department of State, Division of Corporations, accessed 2/2/12]

July 2008: Tutera Health Care Assisted CapitalSource In Purchasing Four (4) Long Term Care Facilities Located In Connecticut And New Hampshire From Haven Healthcare. According to Tutera Health Services website, In July 2008, Tutera assisted CapitalSource Finance, LLC in purchasing four (4) long term care facilities located in Connecticut and New Hampshire from Havens bankruptcy estate and following such purchase, Tutera thereafter began leasing and operating the facilities. [Tutera Health Care Services website, accessed 1/13/12] CapitalSource Hired Tutera To Operate Its Homes. The Hartford Courant reported, CapitalSource, which is taking over Havens homes in Cromwell, East Hartford and Waterbury, plans to partner with Tutera Health Care Services of Kansas City, Mo., to operate its homes, state officials said. [Hartford Courant, 7/8/08] Long-Term Care Receivership Attorney Michael F. Flanagan Claimed He Assisted Tutera & CapitalSource Buy Four Former Haven Nursing Home Facilities In Connecticut & New Hampshire. According to Attorney Michael F. Flanagans website, Haven Eldercare, LLC and its affiliates filed for chapter 11 relief in November 2007. [] In July 2008, Flanagan assisted Tutera and CapitalSource Finance, LLC in purchasing four (4) long term care facilities located in Connecticut and New Hampshire from Havens bankruptcy estate. [Website of Michael F. Flanagan, LLC, Attorney at Law & Health Care Receivership Services, accessed 1/13/12]

2008-2009: Delaney Acknowledged The Acquisition Of The Nursing Homes, But Gave Mixed Signals On The Deals Fiscal Impact
August 2008: Delaney Claimed CapitalSource Didnt Take A Loss On Haven Healthcare. During an August 2008 earnings conference call, Delaney was asked whether CapitalSource took a loss after Haven Healthcare declared bankruptcy and CapitalSource took over several of its nursing homes. Delaney responded, No, we didnt take a loss on Haven Healthcare and that situation is still resolving itself and we dont anticipate taking a loss. [Fair Disclosure Wire, 8/5/08] February 2009: Delaney Claimed CapitalSources Healthcare Losses Resulted From The Purchase Of Nursing Homes Following The Very Public Bankruptcy Of A Nursing Home Operator In Connecticut. During a February 2009 earnings conference call, Delaney said, The healthcare losses were primarily from one loan, a very public bankruptcy of a nursing home operator in Connecticut, who has brought to life mismanagement and misrepresentation by a former owner. CapitalSource has now been awarded four of those homes by the bankruptcy court and settlement of our claim. We have new operators running those facilities and will sell them over time. [Fair Disclosure Wire, 2/27/09]

September 2008 August 2010: The 4 New England Nursing Homes Owned By CapitalSource Were Cited For 100 Health Deficiencies
2008-2010: CapitalSources Four New England Nursing Homes Were Cited For A Total Of 100 Health Deficiencies. According to Medicares Nursing Home Compare website, from September 1, 2008, to August 31, 2010, a period of two years, the nursing homes owned by CapitalSource in Cromwell, East Hartford, Derry and Waterbury (Buck Hill) were cited for a total of 100 health deficiencies. [Medicare, accessed 2/6/12] Nursing Home Total Number of Health Deficiencies

Aurora Senior Living of East Hartford Aurora Senior Living of Cromwell Aurora Senior Living of Derry Aurora Senior Living of Buck Hill Total:

(09/01/2008 - 08/31/2010) 43 39 11 7 100 [Medicare, accessed 2/6/12]

CapitalSources Cromwell Nursing Home Received The Lowest Possible Rating By Medicare & Was Cited For Nearly Three Times As Many Deficiencies As The National Average Medicare Classifies The Nursing Home CapitalSource Owned In Cromwell As A One-Star Facility, The Lowest Possible Rating
Medicare Gave The Cromwell Nursing Home Formerly Owned By CapitalSource 1 Out Of 5 Stars, The Lowest Possible Rating. According to Medicares Nursing Home Compare website, the Cromwell nursing home formerly owned by CapitalSource receives one out of five stars. According to Medicare, The overall rating is a combination of the health inspection rating, the staffing rating, and the quality measures rating. Analysis was conducted on these three data sources and each of these ratings were combined into one overall rating. When looking at the five-star ratings, more starts are better. Five (5) stars are the most a nursing home can get. One (1) star is the fewest. [Medicare, accessed 2/3/12]

Sept. 2008 Aug. 2009: Health Deficiencies At CapitalSources Cromwell Facility Were More Than Twice The National Average
September 2008 August 2009: CapitalSources Cromwell Nursing Home Was Cited For Nearly Three Times As Many Deficiencies As The National Average. According to Medicares Nursing Home Compare website, between September 1, 2008, and August 31, 2009, the nursing home now known as Aurora Senior Living of Cromwell was cited for 19 total health deficiencies. The national average was 8, and the average in Connecticut was 9: Inspection Results Date of standard health inspection: 02/26/2009 Dates of complaint investigations: 09/01/2008 - 08/31/2009 Total number of health deficiencies for this nursing home: 19 Average number of health deficiencies in Connecticut: 9 Average number of health deficiencies in the United States: 8 Range of health deficiencies in Connecticut: 0 - 42 [Medicare.gov, Nursing Home Compare, Aurora Senior Living of Cromwell, Detailed Results for Inspection on 02/26/2009 and Complaint Reporting Period of 09/01/2008 through 08/31/2009, accessed 2/6/12]

Sept. 2009 Aug. 2010: Total Deficiencies At CapitalSources Cromwell Nursing Home Remained More Than Twice The National Average
September 2009 August 2010: CapitalSources Cromwell Nursing Home Was Cited For Nearly Three Times As Many Deficiencies As The National Average. According to Medicares Nursing Home Compare

website, between September 1, 2009, and August 31, 2010, the nursing home now known as Aurora Senior Living of Cromwell was cited 20 health deficiencies. The national average was 8, and the average in Connecticut was 9: Inspection Results Date of standard health inspection: 03/09/2010 Dates of complaint investigations: 09/01/2009 - 08/31/2010 Total number of health deficiencies for this nursing home: 20 Average number of health deficiencies in Connecticut: 9 Average number of health deficiencies in the United States: 8 Range of health deficiencies in Connecticut: 0 - 42 [Medicare.gov, Nursing Home Compare, Aurora Senior Living of Cromwell, Detailed Results for Inspection on 03/09/2010 and Complaint Reporting Period of 09/01/2009 through 08/31/2010, accessed 2/6/12]

The Worst Problems At CapitalSources Cromwell Nursing Home

CapitalSources Cromwell Nursing Home Was Cited For Failing To Make Sure That Each Residents Nutritional Needs Were Met. According to Medicare, on February 26, 2009, the Cromwell facility was cited for failing to Make sure that each residents nutritional needs were met. This violations Harm Level was rated as a 3 out of 4, with 4 being the highest. [Medicare.gov, Nursing Home Compare, Aurora Senior Living of Cromwell, Detailed Results for Inspection on 02/26/2009 and Complaint Reporting Period of 09/01/2008 through 08/31/2009, accessed 2/6/12] CapitalSources Cromwell Nursing Home Was Cited For Failing To Protect Each Resident From All Abuse, Physical Punishment, And Being Separated From Others. According to Medicare, on February 26, 2009, the Cromwell facility was cited for failing to Protect each resident from all abuse, physical punishment, and being separated from others. This violations Harm Level was rated as a 2 out of 4, with 4 being the highest. [Medicare.gov, Nursing Home Compare, Aurora Senior Living of Cromwell, Detailed Results for Inspection on 02/26/2009 and Complaint Reporting Period of 09/01/2008 through 08/31/2009, accessed 2/6/12] CapitalSources Cromwell Nursing Home Was Cited For Failing To Keep Each Resident Free From Physical Restraints, Unless Needed For Medical Treatment. According to Medicare, on February 26, 2009, the Cromwell facility was cited for failing to Keep each resident free from physical restraints, unless needed for medical treatment. This violations Harm Level was rated as a 2 out of 4, with 4 being the highest. [Medicare.gov, Nursing Home Compare, Aurora Senior Living of Cromwell, Detailed Results for Inspection on 02/26/2009 and Complaint Reporting Period of 09/01/2008 through 08/31/2009, accessed 2/6/12] CapitalSources Cromwell Nursing Home Was Cited For Failing To Ensure Residents Who Cannot Care For Themselves Received Help Bathing & Eating. According to Medicare, on February 26, 2009, the Cromwell facility was cited for failing to Make sure that residents who cannot care for themselves receive help with eating/drinking, grooming and hygiene. This violations Harm Level was rated as a 2 out of 4, with 4 being the highest. [Medicare.gov, Nursing Home Compare, Aurora Senior Living of Cromwell, Detailed Results for Inspection on 02/26/2009 and Complaint Reporting Period of 09/01/2008 through 08/31/2009, accessed 2/6/12] CapitalSources Cromwell Nursing Home Was Cited For Failing To Give Professional Services That Meet A Professional Standard Of Quality. According to Medicare, on February 26, 2009, the Cromwell facility was cited for failing to Give professional services that meet a professional standard of quality. This violations Harm Level was rated as a 2 out of 4, with 4 being the highest. [Medicare.gov, Nursing Home Compare, Aurora Senior Living of Cromwell, Detailed Results for Inspection on 02/26/2009 and Complaint Reporting Period of 09/01/2008 through 08/31/2009, accessed 2/6/12] CapitalSources Cromwell Nursing Home Was Cited For Failing To Immediately Notify Doctors & Family Members After A Resident Was Injured Or Another Significant Change Occurred. According to Medicare, on February 26, 2009, the Cromwell facility was cited for failing to Immediately tell the resident, doctor, and a

family member if: the resident is injured, there is a major change in residents physical/mental health, there is a need to alter treatment significantly, or the resident must be transferred or discharged. This violations Harm Level was rated as a 2 out of 4, with 4 being the highest. [Medicare.gov, Nursing Home Compare, Aurora Senior Living of Cromwell, Detailed Results for Inspection on 02/26/2009 and Complaint Reporting Period of 09/01/2008 through 08/31/2009, accessed 2/6/12] CapitalSources Cromwell Nursing Home Was Cited For Failing To Care For Seniors In A Way That Keeps Or Builds Each Residents Dignity And Self Respect. According to Medicare, on February 26, 2009, the Cromwell facility was cited for failing to Provide care in a way that keeps or builds each residents dignity and self respect. This violations Harm Level was rated as a 2 out of 4, with 4 being the highest. [Medicare.gov, Nursing Home Compare, Aurora Senior Living of Cromwell, Detailed Results for Inspection on 02/26/2009 and Complaint Reporting Period of 09/01/2008 through 08/31/2009, accessed 2/6/12] CapitalSources Cromwell Nursing Home Was Cited For Failing To Properly Administer Medications To Seniors. According to Medicare, on February 26, 2009, the Cromwell facility was cited for failing to 1) Make sure that residents who take drugs are not given too many doses or for too long; 2) make sure that the use of drugs is carefully watched; or 3) stop or change drugs that cause unwanted effects. This violations Harm Level was rated as a 2 out of 4, with 4 being the highest. [Medicare.gov, Nursing Home Compare, Aurora Senior Living of Cromwell, Detailed Results for Inspection on 02/26/2009 and Complaint Reporting Period of 09/01/2008 through 08/31/2009, accessed 2/6/12] CapitalSources Cromwell Nursing Home Was Cited For Failing To Follow All Laws And Professional Standards. According to Medicare, on February 26, 2009, the Cromwell facility was cited for failing to Follow all laws and professional standards. This violations Harm Level was rated as a 2 out of 4, with 4 being the highest. [Medicare.gov, Nursing Home Compare, Aurora Senior Living of Cromwell, Detailed Results for Inspection on 02/26/2009 and Complaint Reporting Period of 09/01/2008 through 08/31/2009, accessed 2/6/12] CapitalSources Cromwell Nursing Home Was Cited For Failing To Maintain A Facility Free Of Dangers That Cause Accidents. On March 9, 2010, the Cromwell facility was cited for failing to Make sure that the nursing home area is free of dangers that cause accidents. This violations Harm Level was rated as a 3 out of 4, with 4 being the highest. [Medicare.gov, Nursing Home Compare, Aurora Senior Living of Cromwell, Detailed Results for Inspection on 03/09/2010 and Complaint Reporting Period of 09/01/2009 through 08/31/2010, accessed 2/6/12]

CapitalSources East Hartford Nursing Home Received The Lowest Possible Rating By Medicare & Was Cited For Twice As Many Deficiencies As The National Average Medicare Classifies The Nursing Home CapitalSource Owned In East Hartford As A One-Star Facility, The Lowest Possible Rating
Medicare Gave The East Hartford Nursing Home Formerly Owned By CapitalSource 1 Out Of 5 Stars, The Lowest Possible Rating. According to Medicares Nursing Home Compare website, the East Hartford nursing home formerly owned by CapitalSource receives one out of five stars. According to Medicare, The overall rating is a combination of the health inspection rating, the staffing rating, and the quality measures rating. Analysis was conducted on these three data sources and each of these ratings were combined into one overall rating. When looking at the five-star ratings, more starts are better. Five (5) stars are the most a nursing home can get. One (1) star is the fewest. [Medicare, accessed 2/3/12]

Sept. 2009 Aug. 2010: Health Deficiencies At CapitalSources East Hartford Nursing Home Were More Than Three Times The National Average

September 2009 August 2010: CapitalSources East Harford Nursing Home Was Cited For More Than Three Times As Many Deficiencies As The National Average. According to Medicares Nursing Home Compare website, between September 1, 2009, and August 31, 2010, the nursing home now known as Aurora Senior Living of East Hartford was cited for 26 total health deficiencies. The national average was 8, and the average in Connecticut was 9: Inspection Results Date of standard health inspection: 08/26/2010 Dates of complaint investigations: 09/01/2009 - 08/31/2010 Total number of health deficiencies for this nursing home: 26 Average number of health deficiencies in Connecticut: 9 Average number of health deficiencies in the United States: 8 Range of health deficiencies in Connecticut: 0 - 42 [Medicare.gov, Nursing Home Compare, Aurora Senior Living of East Hartford, Detailed Results for Inspection on 08/26/2010 and Complaint Reporting Period of 09/01/2009 through 08/31/2010, accessed 2/6/12]

Sept. 2008 Aug. 2009: Health Deficiencies At CapitalSources East Hartford Nursing Home Were About Twice The National Average
September 2008 August 2009: CapitalSources East Hartford Nursing Home Was Cited For More Than Twice As Many Deficiencies As The National Average. According to Medicares Nursing Home Compare website, between September 1, 2008, and August 31, 2009, the nursing home now known as Aurora Senior Living of East Hartford was cited for 17 total health deficiencies. The national average was 8, and the average in Connecticut was 9: Inspection Results Date of standard health inspection: 06/30/2009 Dates of complaint investigations: 09/01/2008 - 08/31/2009 Total number of health deficiencies for this nursing home: 17 Average number of health deficiencies in Connecticut: 9 Average number of health deficiencies in the United States: 8 Range of health deficiencies in Connecticut: 0 - 42 [Medicare.gov, Nursing Home Compare, Aurora Senior Living of East Hartford, Detailed Results for Inspection on 06/30/2009 and Complaint Reporting Period of 09/01/2008 through 08/31/2009, accessed 2/6/12]

The Worst Problems At CapitalSources East Hartford Nursing Home

CapitalSources East Hartford Nursing Home Was Repeatedly Cited For Hiring Employees With A History Of Abusing Seniors Or Failing To Report Neglect Of Its Residents. According to Medicare, on April 9, 2010 and again on August 26, 2010, the East Hartford facility was cited for failing to 1) Hire only people who have no legal history of abusing, neglecting or mistreating residents; or 2) report and investigate any acts or reports of abuse, neglect or mistreatment of residents. This violations Harm Level was rated as a 2 out of 4, with 4 being the highest. [Medicare.gov, Nursing Home Compare, Aurora Senior Living of East Hartford, Detailed Results for Inspection on 08/26/2010 and Complaint Reporting Period of 09/01/2009 through 08/31/2010, accessed 2/6/12] CapitalSources East Hartford Nursing Home Was Cited For Failing To Protect Each Resident From All Abuse, Physical Punishment, And Being Separated From Others. According to Medicare, On June 30, 2009, the East Hartford facility was cited for failing to Protect each resident from all abuse, physical punishment, and being separated from others. This violations Harm Level was rated as a 2 out of 4, with 4 being the highest.

[Medicare.gov, Nursing Home Compare, Aurora Senior Living of East Hartford, Detailed Results for Inspection on 06/30/2009 and Complaint Reporting Period of 09/01/2008 through 08/31/2009, accessed on 2/6/12] CapitalSources East Hartford Nursing Home Was Cited For Failing To Give Each Resident Care And Services To Get Or Keep The Highest Quality Of Life Possible. According to Medicare, on January 6, 2009, the East Hartford facility was cited for failing to Give each resident care and services to get or keep the highest quality of life possible. This violations Harm Level was rated as a 2 out of 4, with 4 being the highest. [Medicare.gov, Nursing Home Compare, Aurora Senior Living of East Hartford, Detailed Results for Inspection on 06/30/2009 and Complaint Reporting Period of 09/01/2008 through 08/31/2009, accessed 2/6/12] CapitalSources East Hartford Nursing Home Was Cited For Failing To Keep Seniors Personal And Medical Records Private And Confidential. According to Medicare, On June 30, 2009, the East Hartford facility was cited for failing to Keep each residents personal and medical records private and confidential. This violations Harm Level was rated as a 2 out of 4, with 4 being the highest. [Medicare.gov, Nursing Home Compare, Aurora Senior Living of East Hartford, Detailed Results for Inspection on 06/30/2009 and Complaint Reporting Period of 09/01/2008 through 08/31/2009, accessed 2/6/12] CapitalSources East Hartford Nursing Home Was Cited For Failing To Care For Seniors In A Way That Keeps Or Builds Each Residents Dignity And Self Respect. According to Medicare, On June 30, 2009, the East Hartford facility was cited for failing to Provide care in a way that keeps or builds each residents dignity and self respect. This violations Harm Level was rated as a 2 out of 4, with 4 being the highest. [Medicare.gov, Nursing Home Compare, Aurora Senior Living of East Hartford, Detailed Results for Inspection on 06/30/2009 and Complaint Reporting Period of 09/01/2008 through 08/31/2009, accessed 2/6/12] CapitalSources East Hartford Nursing Home Was Cited For Failing To Properly Administer Medications To Seniors. According to Medicare, On June 30, 2009, the East Hartford facility was cited for failing to 1) Make sure that residents who take drugs are not given too many doses or for too long; 2) make sure that the use of drugs is carefully watched; or 3) stop or change drugs that cause unwanted effects. This violations Harm Level was rated as a 2 out of 4, with 4 being the highest. [Medicare.gov, Nursing Home Compare, Aurora Senior Living of East Hartford, Detailed Results for Inspection on 06/30/2009 and Complaint Reporting Period of 09/01/2008 through 08/31/2009, accessed 2/6/12] CapitalSources East Hartford Nursing Home Was Cited For Failing To Ensure The Facility Was Free Of Dangers That Cause Accidents. According to Medicare, On June 30, 2009, the East Hartford facility was cited for failing to Make sure that the nursing home area is free of dangers that cause accidents. This violations Harm Level was rated as a 2 out of 4, with 4 being the highest. [Medicare.gov, Nursing Home Compare, Aurora Senior Living of East Hartford, Detailed Results for Inspection on 06/30/2009 and Complaint Reporting Period of 09/01/2008 through 08/31/2009, accessed 2/6/12] CapitalSources East Hartford Nursing Home Was Cited For Failing To Protect Seniors From Mistreatment, Neglect, And/Or Theft Of Personal Property. According to Medicare, on April 9, 2010, the East Hartford facility was cited for failing to Protect residents from mistreatment, neglect, and/or theft of personal property. This violations Harm Level was rated as a 2 out of 4, with 4 being the highest. [Medicare.gov, Nursing Home Compare, Aurora Senior Living of East Hartford, Detailed Results for Inspection on 08/26/2010 and Complaint Reporting Period of 09/01/2009 through 08/31/2010, accessed 2/6/12] CapitalSources East Hartford Nursing Home Was Cited For Failing To Give Each Resident Enough Fluids To Keep Them Healthy And Prevent Dehydration. According to Medicare, on August 26, 2010, the East Hartford facility was cited for failing to Give each resident enough fluids to keep them healthy and prevent dehydration. This violations Harm Level was rated as a 3 out of 4, with 4 being the highest. [Medicare.gov, Nursing Home Compare, Aurora Senior Living of East Hartford, Detailed Results for Inspection on 08/26/2010 and Complaint Reporting Period of 09/01/2009 through 08/31/2010, accessed 2/6/12]

CapitalSources East Hartford Nursing Home Was Cited For Failing To Have Doctors Visit Residents Regularly. According to Medicare, on August 26, 2010, the East Hartford facility was cited for failing to Make sure that doctors visit residents regularly, as required. This violations Harm Level was rated as a 2 out of 4, with 4 being the highest. [Medicare.gov, Nursing Home Compare, Aurora Senior Living of East Hartford, Detailed Results for Inspection on 08/26/2010 and Complaint Reporting Period of 09/01/2009 through 08/31/2010, accessed 2/6/12] CapitalSources East Hartford Nursing Home Was Cited For Failing To Immediately Notify Doctors & Family Members When Seniors Were Injured Or There Was A Major Change In Their Status. According to Medicare, on August 26, 2010, the East Hartford facility was cited for failing to Immediately tell the resident, doctor, and a family member if: the resident is injured, there is a major change in residents physical/mental health, there is a need to alter treatment significantly, or the resident must be transferred or discharged. This violations Harm Level was rated as a 2 out of 4, with 4 being the highest. [Medicare.gov, Nursing Home Compare, Aurora Senior Living of East Hartford, Detailed Results for Inspection on 08/26/2010 and Complaint Reporting Period of 09/01/2009 through 08/31/2010, accessed 2/6/12]

CapitalSources Derry Nursing Home Was Cited For More Deficiencies Than The National Average Sept. 2009 Aug. 2010: Total Number Of Health Deficiencies At Aurora Senior Living Of Derry Was About 1.5x The Average In NH, U.S.
September 2009 August 2010: CapitalSources Derry Nursing Home Was Cited For More Deficiencies Than The National Average. According to Medicares Nursing Home Compare website, between September 1, 2009, and August 31, 2010, the nursing home now known as Aurora Senior Living of Derry was cited for 11 total health deficiencies. The national average was 8, and the average in New Hampshire was 7: Inspection Results Date of standard health inspection: 03/25/2010 Dates of complaint investigations: 09/01/2009 - 08/31/2010 Total number of health deficiencies for this nursing home: 11 Average number of health deficiencies in New Hampshire: 7 Average number of health deficiencies in the United States: 8 Range of health deficiencies in New Hampshire: 0 - 28 [Medicare.gov, Nursing Home Compare, Aurora Senior Living of Derry, Detailed Results for Inspection on 03/25/2010 and Complaint Reporting Period of 09/01/2009 through 08/31/2010, accessed 2/6/12]

The Worst Problems At CapitalSources Derry Nursing Home

2009: CapitalSources Derry Nursing Home Was Cited For Failing To Promptly Release Personal Funds Of 5 Deceased Residents To The Heads Of Their Estates. In compliance with Medicare regulations, New Hampshire health inspectors recorded their findings from a February 6, 2009, survey in a detailed inspection report (form CMS-2567). According to the report: Based on review of the Resident Trust Fund and interview the facility failed to disperse the funds of five out of five deceased residents and give a final accounting of those funds to the residents responsible party or probate jurisdiction administering the residents estate. [Statement of Deficiencies, Form CMS-2567, New Hampshire, 2/6/09] Five Residents Who Died Between August 22, 2008, And November 1, 2008, Still Had A Total Of $2,020.26 In The Resident Trust Fund. According to the CMS-2567 report, Review of the Resident Trust Fund on 2/6/09 at 9:00 a.m. revealed that five residents who had expired 8/22/08 through 11/1/08 had a total of

$2,020.26 still in the Resident Trust Fund. [Statement of Deficiencies, Form CMS-2567, New Hampshire, 2/6/09] Staff Member At Derry Facility Confirmed That Probate Paperwork Had Not Been Filed With The Probate Court Nor Had A Final Accounting Of Funds Been Given To The Heads Of Estates. According to the CMS-2567 report, Interview on 2/6/09 at 9:00 a.m. with Staff A (ADM) confirmed that these five residents still had money totaling $2,020.26 in the Resident Trust Fund as of 2/6/09. Staff A confirmed that probate paperwork had not been filed with the probate court nor had the probate jurisdiction administering the residents estates been given a final accounting of those funds. [Statement of Deficiencies, Form CMS-2567, New Hampshire, 2/6/09]

2010: CapitalSources Derry Nursing Home Was Cited For Failing To Promptly Release Personal Funds Of 6 Deceased Residents To The Heads Of Their Estates. In compliance with Medicare regulations, New Hampshire health inspectors recorded their findings from a March 25, 2010 survey in a detailed inspection report (form CMS-2567). According to the report: Based on the task review of the Resident Trust Fund and interview it was determined that the facility failed to convey resident funds within 30 days to the individual or probate jurisdiction administering the residents estate for 6 deceased residents. [Statement of Deficiencies, Form CMS2567, New Hampshire, 3/25/10] Facility Failed To File Probate Paperwork Within 30 Days Upon Death Of 6 Residents; Paperwork Of Two Residents Was Not Filed Until Almost A Month After Death. In compliance with Medicare regulations, New Hampshire health inspectors recorded their findings from a March 25, 2010 survey in a detailed inspection report (form CMS-2567). According to the report: Review on 3/25/10 of deceased residents accounts revealed that 6 residents probate paperwork had been filed past the 30 day limit. These 6 resident are as follows: Resident #16 died 7/2/09 and probate was filed 8/6/09 which was 5 days late. Resident #17 died 8/2/09 and probate was filed 9/6/09 which was 5 days late. Resident #18 died 8/3/09 and probate was filed 9/16/09 which was 14 days late. Resident #19 died 11/7/09 and probate was filed 12/29/09 which was 22 days late. Resident #20 died 11/21/09 and probate was filed 12/29/09 which was 8 days late. Resident #21 died 1/12/10 and probate was filed 2/23/09 which was 12 days late. Resident #37 died 11/1/09 and probate was filed 12/22/09 which was 22 days late. [Statement of Deficiencies, Form CMS-2567, New Hampshire, 3/25/10]

CapitalSources Derry Nursing Home Was Cited For Failing To Properly Treat Seniors To Prevent New Bed (Pressure) Sores Or Heal Existing Bed Sores. According to Medicare, on September 24, 2009, the Derry facility was cited for failing to Give residents proper treatment to prevent new bed (pressure) sores or heal existing bed sores. This violations Harm Level was rated as a 3 out of 4, with 4 being the highest. [Medicare.gov, Nursing Home Compare, Aurora Senior Living of Derry, Detailed Results for Inspection on 03/25/2010 and Complaint Reporting Period of 09/01/2009 through 08/31/2010, accessed 2/6/12] CapitalSources Derry Nursing Home Was Cited For Failing To Have Proper Medication Available. According to Medicare, on March 25, 2010, the Derry facility was cited for failing to Have drugs and other similar products available, which are needed every day and in emergencies, and give them out properly. This violations Harm Level was rated as a 2 out of 4, with 4 being the highest. [Medicare.gov, Nursing Home Compare, Aurora Senior Living of Derry, Detailed Results for Inspection on 03/25/2010 and Complaint Reporting Period of 09/01/2009 through 08/31/2010, accessed 2/6/12] CapitalSources Derry Nursing Home Was Cited For Failing To Follow Professional Standard Of Practice For The Administration, Transcription &Documentation Of Physician Orders. In compliance with Medicare regulations, New Hampshire health inspectors recorded their findings from a February 6, 2009 survey in a detailed inspection report (form CMS-2567). According to the report: Based on record review and interview the facility failed to follow the professional standard of practice for the administration, transcription, and documentation of physician orders for 3 residents in a standard survey sample of 13. (Resident identifiers are # 7, #11 and #13.). [Statement of Deficiencies, Form CMS-2567, New Hampshire, 2/6/09]

State Regulators Found That One Resident Was Given A Double Dose Of Percocet. In compliance with Medicare regulations, New Hampshire health inspectors recorded their findings from a February 6, 2009 survey in a detailed inspection report (form CMS-2567). According to the report: Review on 2/3/09 of Resident #11s January 2009 MAR revealed an order that states Percocet 5 mg 1 tab PO Q (every) 4 [hours] PRN Pain. Review of the back of Resident #11s MAR and nurses notes revealed that on 1/3/09, 1/7/09 and 1/15/09 two Percocet tablets were given, not one as the order was written. [Statement of Deficiencies, Form CMS-2567, New Hampshire, 2/6/09]

CapitalSources Derry Nursing Home Was Cited For Failing To Provide The Appropriate Assistive Device To Transfer A Resident. In compliance with Medicare regulations, New Hampshire health inspectors recorded their findings from a March 25, 2010 survey in a detailed inspection report (form CMS-2567). According to the report: Based on record review and interview it was determined that the facility failed to provide the appropriate assistive device to transfer one out of sample resident. (Resident identifiers is #15 who was out of sample). [Statement of Deficiencies, Form CMS-2567, New Hampshire, 3/25/10] Employees Ignored The Residents Care Plan, Resulting In An Accident. In compliance with Medicare regulations, New Hampshire health inspectors recorded their findings from a March 25, 2010 survey in a detailed inspection report (form CMS-2567). According to the report: Review on 3/25/10 of Resident #15s record revealed that on 3/15/10 Resident #15 was transferred to the toilet by 2 nursing assistant students when Resident #15s left knee gave out the students lowered Resident #15 to the floor. Review of the LNA cardex it stated STAND/LIFT FOR [TRANSFER] TO TOILET. Review of the facility investigation for Resident #15, revealed that the two students transferred Resident #15 without the use of the stand/lift and also failed to use a gait belt as stated on the incident report. Further review of the care plan states Resident #15 is to be transferred with the use of a walker. After review of the facilitys occurrence report not one of the three assistive devices were provided. [Statement of Deficiencies, Form CMS-2567, New Hampshire, 3/25/10]

State Regulators Cited CapitalSource For Administering Expired Insulin To Patients. In compliance with Medicare regulations, New Hampshire health inspectors recorded their findings from a February 6, 2009 survey in a detailed inspection report (form CMS-2567). According to the report: During the tour of the medication room on 2/6/09 it was identified that a bottle of Novolin insulin had expired on January 28, 2009. Review of the MAR for the time period from 1/29/09 through 2/5/09 indicated that doses from this expired bottle had been administered for resident use on January 29 and 30 and February 1, 3, 4 and 5. [Statement of Deficiencies, Form CMS-2567, New Hampshire, 2/6/09]

CapitalSources Waterbury Nursing Home Was Cited For A Total Of 7 Health Deficiencies
September 2008 August 2010: CapitalSources Waterbury Nursing Home Was Cited For 7 Deficiencies. According to Medicares Nursing Home Compare website, between September 1, 2008, and August 31, 2010, the nursing home now known as Aurora Senior Living of Buck Hill in Waterbury, CT, was cited for a total of 7 health deficiencies. [Medicare.gov, Nursing Home Compare, Aurora Senior Living of Buck Hill: Detailed Results for Inspection on 08/03/2009 and Complaint Reporting Period of 09/01/2008 through 08/31/2009; Detailed Results for Inspection on 10/07/2010 and Complaint Reporting Period of 09/01/2009 through 08/31/2010, accessed 2/6/12]

November 2010 January 2011: CapitalSource Sold Off The Nursing Homes In All Likelihood To Aurora Health Management The Addresses Of CapitalSources New England Nursing Homes Are The Same As The Addresses Of Auroras Nursing Homes
The Four Nursing Homes CapitalSource Acquired From Haven Healthcare Have The Exact Same Addresses As The Four Nursing Homes Currently Owned By Aurora Health Management. Newspaper and electronic

research has revealed that the addresses of the four Haven Healthcare nursing homes acquired by CapitalSource in 2008 share the exact same addresses as the four nursing homes currently owned by Aurora Health Management. Address of Haven Health Care Facility Acquired By CapitalSource 2817 North Main Street Waterbury, CT 06704 Address of Current Aurora Health Management Facility 2817 North Main Street Waterbury, CT 06704

Location

Citation Hartford Courant, 11/26/03

Waterbury, CT

Aurora Health Management, accessed 2/3/12 Hartford Courant, 8/17/05

Cromwell, CT

385 Main Street Cromwell, CT 06416

385 Main Street Cromwell, CT 06416

Aurora Health Management, accessed 2/3/12 Hartford Courant, 4/3/03

East Hartford, CT

51 Applegate Lane East Hartford, CT 06118

51 Applegate Lane East Hartford, CT 06118

Aurora Health Management, accessed 2/3/12 CiteHealth, accessed 2/3/12

Derry, NH

20 Chester Road Derry, NH 03038

20 Chester Road Derry, NH 03038

Aurora Health Management, accessed 2/3/12

CapitalSource Conducted Business With Aurora Around The Time They Sold The Four Former Haven Nursing Homes
November 2010: CapitalSource Provided Over $20 Million In Asset Based & Term Loans To Aurora Health Management. According to the healthcare transactions listed on CapitalSources website, Aurora Health Management: $20,116,000; Asset Based & Term Loans; November 2010. [CapitalSource, accessed 1/9/12]

State Department Of Health Official: Aurora Acquired The Three Connecticut Nursing Homes Between November 2010 & January 2011
Connecticut Department Of Health Official: Aurora Acquired Its Cromwell Facility On November 1, 2010. In an e-mail, Connecticut Department of Health Licensure & Applications Supervisor Rose McClellan wrote that Aurora of Cromwell was purchased by Aurora on November 1, 2010. [Connecticut Department of Health, Facility Licensing & Investigations Section, E-mail from License & Applications Supervisor Rose McLellan, 2/2/12] Connecticut Department Of Health Official: Aurora Acquired Its Waterbury Facility On November 1, 2010. In an e-mail, Connecticut Department of Health Licensure & Applications Supervisor Rose McClellan wrote that Aurora of Waterbury was purchased by Aurora on November 1, 2010. [Connecticut Department of Health, Facility Licensing & Investigations Section, E-mail from License & Applications Supervisor Rose McLellan, 2/2/12] Connecticut Department Of Health Official: Aurora Acquired Its East Hartford Facility On January 1, 2011. In an e-mail, Connecticut Department of Health Licensure & Applications Supervisor Rose McClellan wrote that Aurora of East Hartford was purchased by Aurora on January 1, 2011. [Connecticut Department of Health, Facility Licensing & Investigations Section, E-mail from License & Applications Supervisor Rose McLellan, 2/2/12]

Attorney Involved In The Deal Claimed CapitalSource Sold Off The Four Nursing Homes In December 2010
December 2010: Attorney Involved In CapitalSources Acquisition Of The Four Nursing Homes Claimed CapitalSource Sold The Homes. According to Attorney Michael F. Flanagans website, In July 2008, Flanagan assisted Tutera and CapitalSource Finance, LLC in purchasing four (4) long term care facilities located in Connecticut and New Hampshire from Havens bankruptcy estate and following such purchase, Tutera thereafter began leasing and operating the facilities through December 2010, at which time they were sold by CapitalSource Finance, LLC to an unrelated third party purchaser. [Website of Michael F. Flanagan, LLC, Attorney at Law & Health Care Receivership Services, accessed 1/13/12] Flanagans Firm Specialized In Representing Owners Of Nursing Home Management Companies In Bankruptcy Matters. According to Attorney Michael F. Flanagans website, Michael F. Flanagan is the founder and sole member of Michael F. Flanagan, L.L.C., which is a law firm that specializes in representing owners of long term care facilities and nursing home management companies, as well as long term care lenders in receivership actions, Chapter 11 bankruptcy proceedings, business loan workouts, lending transactions, and related corporate law and health care regulatory matters. [Website of Michael F. Flanagan, LLC, Attorney at Law & Health Care Receivership Services, accessed 1/9/12]