Three years ago, Long Island resident Benjamin Landa and a group of downstate partners came close to buying seven nursing homes, including five of the Buffalo area's top-rated facilities.
But the deal fell apart, and Landa is now suing the McGuire Group, the suburban Buffalo company that refused to sell him the homes.
Landa alleged in his 2016 lawsuit that F. James McGuire, chief executive officer of the family-owned facilities, backed out of the $45 million deal that year, in part because Landa is "an orthodox Jew from New York."
The McGuire Group, which operates five nursing homes in Erie and Niagara counties, succeeded in having the allegation of anti-Semitism removed from the pending lawsuit. But a State Supreme Court judge in Brooklyn allowed Landa to continue his allegation of "unjust enrichment" against McGuire and the company.
The lawsuit says the McGuire Group backed out of a deal to sell Autumn View Health Care in Hamburg; Garden Gate Health Care in Cheektowaga; Harris Hill Nursing Facility in Lancaster; North Gate Health Care in Wheatfield; Seneca Health Care in West Seneca; Brookhaven Health Care in East Patchogue; and Autumn Woods Residential Health in Warren, Mich.
Five of the six nursing homes in New York state are rated as five-star facilities, or "far above average," the best designation given by the federal Centers for Medicare and Medicaid Services.
The lawsuit was filed in 2016 during a time when out-of-region investors have been buying up Buffalo-area nursing homes. In the past 11 years, downstate residents have purchased 16 of the 47 nursing homes in Erie and Niagara counties.
Benjamin Landa's wife, Judy, has an ownership interest in four of those nursing homes. Two of the facilities rated "far below average," the lowest designation awarded by the federal centers, and two are rated "below average."
In his suit, Benjamin Landa alleges McGuire misled him into believing he would be able to buy the nursing homes if Landa found a buyer for the McGuire Group's pharmacy, which supplied medications to its nursing homes. The pharmacy was sold, Landa said, but McGuire backed out of selling the nursing homes.
In an interview, McGuire cited "unresolved issues after tiring months of negotiations" for the decision not to sell to Landa.
McGuire did not explain in legal papers why he did not sell the nursing homes to Landa and his partners. But in a counter-claim, he alleged Landa breached a confidentiality clause during the negotiations and caused some key McGuire employees to resign.
Instead of selling to Landa's group, the McGuire Group in 2016 sold a 19.8 percent ownership stake in its nursing homes to VestraCare, a New York City area firm.
Why did McGuire consider selling the nursing homes in the first place?
"We have as many as 14 partners among our group of nursing homes, many of whom are of retirement age. Some of my older siblings are in their sixties and some of our partners were interested in liquidity and diversification," McGuire said. "It is an incredibly challenging business and not all partners have the same tolerance for the challenges."
Story topics: Nursing Homes