A longstanding dispute between a REIT, a healthcare corporation, two nonprofits and the Tennessee attorney general which has been the subject of litigation has been resolved that will ultimately result in approximately $40 million for charitable purposes within the state.
In 2000, National Health Investors, a healthcare real estate investment trust specializing in financing healthcare real estate by purchase and leaseback transactions, RIDEA transactions and by mortgage loans, helped establish the 501(c)(3) nonprofit corporations SeniorTrust and ElderTrust.
Between 2001 and 2004, NHI sold a group of nursing facilities in
In 2007, National HealthCare Corporation acquired the lease of a long-term care facility in Chattanooga known as Standifer Place from SeniorTrust.
But Tennessee Attorney General Bob Cooper disputed the financial terms on which NHI had sold and financed the purchase of the facilities to the nonprofit as well as how NHC acquired the lease for their property. Cooper asked the Davidson County Chancery Court to place both of these nonprofits in receivership and to file suit against National Health Investors and National HealthCare Corporation.
The Receiver for both SeniorTrust and ElderTrust claimed that the financial terms of the various transactions with NHI and NHC were unfair to the nonprofits. Both NHI and NHC, based in Murfreesboro, Tenn., disputed this claim.
As part of the negotiated resolution, NHI will discount amounts it claims remain due from SeniorTrust and ElderTrust. Subsequently, the nonprofits will pay those discounted amounts and NHI will acquire ElderTrust’s nursing facilities in Massachusetts and New Hampshire.
NHC has managed the nursing facilities owned by SeniorTrust and ElderTrust since the facilities were acquired by NHI. Through the resolution, NHC paid additional amounts to resolve the Receiver’s claims. The corporation also has agreed to lease from NHI the seven nursing facilities in Massachusetts and New Hampshire which were formerly owned by ElderTrust.
The Office of the Tennessee Attorney General, which oversees state nonprofits, expressed satisfaction with the settlement of these disputes, which is subject to approval by the court in which the receiverships are pending.
“We believe this settlement is in the best interest of the public and upholds the appropriate use of Tennessee charities,” said Attorney General Bob Cooper. “The Court will ultimately determine how these funds can be used for charitable purposes, and the Office of the Attorney General will seek and welcome public input in that process.”
