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NEWS & FEATURES

Assisted Living Giant Is Focus of Federal Probe

The federal government is investigating the operation of Emeritus, which operates facilities in Orlando, Ocoee, Lake Mary, Apopka, Oviedo and Winter Springs

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Emeritus's rapid growth mirrors that of the assisted living industry as a whole, which now cares for some 750,000 people, increasing numbers of them afflicted with serious health problems, including advanced dementia.

The person with direct knowledge of the investigation said employees had received instructions from a company lawyer about how to deal with the probe.

"First off, you should not feel compelled to provide answers, documents, or information to any government investigator or agent," the attorney  wrote in an email sent last February.  "You may politely decline to answer," the lawyer said, or refer the agents to the company's legal department.

The lawyer did instruct the employee to be truthful if they decided to answer the questions of investigators.

Brian Lee, a consumer advocate with Families for Better Care, a Florida nonprofit group focused on assisted living and nursing homes, said the federal investigation of Emeritus struck him as unusual. Typically, he said, it is state authorities who tackle problems in the industry.

The probe, Lee said, could prove to be "an opportunity to pull back the veil on the problems in assisted living, whether financial or related to care."

Medicaid money accounts for a relatively small portion of Emeritus's business, which is driven chiefly by private paying customers looking for alternatives to formal nursing homes. Still, Medicaid billings total millions for the company each year 2013 in 2012 Emeritus derived 13.9 percent of its total revenue from  Medicaid and Medicare, including funds flowing into a subsidiary nursing firm, according to a filing with the Securities and Exchange Commission.

Lucas, the company spokeswoman, portrayed the company's participation in the Medicaid program as a public service, saying Emeritus is one the few companies that "offer assisted living services to low-income seniors" because of the program's low reimbursement rates.

The Emeritus-Brookdale merger, which is slated to close later this year, will create a mega-operator far larger than any other chain in the assisted living industry. Headquartered in the Nashville suburbs, the combined company will function under the Brookdale brand name and will be run by Brookdale chief executive Andy Smith. Emeritus chief executive Granger Cobb is expected to take a seat on the board and serve as a consultant.

On a conference call announcing the deal, Smith downplayed concerns raised by the ProPublica/"Frontline" series about the treatment of seniors in Emeritus facilities and said he was confident that Emeritus executives were focused on providing "high quality services to all of their residents." Smith said the series had caused a "temporary setback" for Emeritus financially, but that he was confident the company was "getting back to their expected level of growth."

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