When financial problems threatened food deliveries to the Rocky Hill Manor assisted-living home in Westbrook and phone service to the Gray Manor assisted-living home in Gray, Gerald Frenette, an administrator at the homes, put the bills on his credit card, according to court documents.

Frenette is vice president of operations for Eagle Landing Residential Care LLC, the Connecticut-based owner of seven assisted-living and nursing homes in Maine, including two in Westbrook and one in Gray, that are now under state control because financial problems were causing bills to go unpaid and, according to the Department of Health and Human Services, threatening the welfare of residents in the home.

In an interview Wednesday at Rocky Hill Manor, located on Bridge Street, Frenette said residents didn’t experience a drop in service and were unaware of the financial turmoil at the company. Administrators felt it was their duty to do what they could to keep the financial problems from impacting residents, he said, including finding new vendors when prior vendors would not deliver due to lack of payment.

Keith Moon, the administrator at Rocky Hill Manor, said the home didn’t hear complaints from residents or their families.

“We never went without food or oil,” he said. “None of the residents suffered.”

Documents filed in Kennebec County Superior Court earlier this month, as well as comments by state officials, however, paint a grim picture of the financial situation at the Eagle Landing homes. According to court documents, in late September, the oil tanks at Gray Manor were empty, and Webber Energy was refusing to deliver oil. An assisted-living home in Madison received disconnection notices for electricity and phone service, and a payroll check was returned on Sept. 30 for insufficient funds.

Those problems, and others like them, documented in a petition by the Department of Health and Human Services led a judge to order the seven homes be placed in state receivership.

“We’re not entirely sure how they got to this point,” said Catherine Cobb of the Department of Health and Human Services. “I hope that the receiver can assist us in getting a better picture of the financial situation of the facilities.”

However, Sifwat Ali, Eagle Landing’s chief executive officer, disputed some of the state’s charges and said the situation at the company’s Maine facilities is not nearly as dire as state officials have portrayed.

At no time did the service to residents suffer, Ali said. Reports of patients losing weight due to lack of food are untrue, he said, and the result of poor documentation, not care.

“No resident has been moved out of any facility,” he said. “The residents were not in any danger.”

As evidence of that, Ali said, the state only named the one receiver for seven homes, which include, in addition to Rocky Hill and Gray Manor, Dolley Farm Residential Care in Westbrook, Penobscot Nursing Home and Northern Bay Residential Living Center in Penobscot, Snow Pond Residential Care in Sidney and Somerset Residential Care Facility in Madison.

“Every other employee is the same,” he said. “They are all working as normal.”

All seven facilities are home to 180 people. Rocky Hill Manor has 16 beds, while Dolley Farm has 36 and Gray Manor has 27.

The court appointed Gail Susseville of Auburn, a longtime nursing home administrator and consultant, as receiver. She will spend the next few months trying to unravel the company’s financial situation.

During that time, the homes will remain open while Susseville handles the day-to-day operations, said Cobb. Last week, a Legislative panel approved the allocation of $87,000 to fund the management of the facilities.

The state’s first indication of problems at the facilities came in the spring when Penobscot Nursing Home had a poor federal survey, Cobb said. The facility had fallen behind on payments to vendors and was having problems getting food and supplies delivered, she said. Any income that the facility was receiving was going to the most immediate needs, Cobb said.

Over the course of the year, the problems at the Eagle Landing facilities have mounted, according to court documents. In the last few months, state officials began to worry that residents’ welfare would suffer if they did not intervene, Cobb said.

In late September, just before the state filed its petition for receivership, the propane and oil tanks at Gray Manor were empty, and around $30,000 was owed to Webber Energy. The state immediately authorized payment for fuel, Cobb said. According to the court documents, e-mails from the state to Ali asking about the problem went unanswered.

Due to failure to pay bills, a software company terminated the use of important computer programs at the facilities, and worker’s compensation and liability insurance policies were canceled.

In September, Internet service at Snow Pond was disconnected, and Somerset recently received disconnection notices for electricity and telephone service. The company also owes the state around $400,000 in back taxes and around $793,500 in MaineCare overpayments.

A payroll check for Sept. 30 was returned for insufficient funds, and Eagle Landing does not have enough money to cover payroll for Oct. 17, 24 or 31, court documents said.

Ali held a meeting with staff Sept. 25 to propose reducing all staff and administrative pay by 20 percent, management salaries to $500 a week, and eliminating overtime and the use of accrued flex time.

On more than one occasion, employees at the facilities stepped forward to pay bills when the company could not, according to court documents. The personal credit card of an employee was used to restore Internet service to Snow Pond so the facility could transmit crucial forms, the documents said.

Ali said Wednesday Eagle Landing’s financial problems stem from reduced income due to lack of patients at Penobscot Nursing Home. When the company purchased Penobscot Nursing Home, it inherited a building with structural issues and was unable to house the full number of residents, he said, leading to a loss of around $100,000 a month through eight or nine months.

The state knew all along of the problems at Eagle Landing, Ali said. The receivership is merely part of the process the state must go through in order to resolve the situation, he said. Before the state stepped in, he said he was trying to figure out a solution himself. His attorneys are now working with the state to come up with a solution that puts the facilities back on good financial standing and in the hands of Eagle Landing.

“This is the state’s way of solving the same problem I was trying to solve,” he said.

Richard Erb, director of the Maine Health Care Association, said nursing homes and assisted living facilities are dependent on MaineCare for payment. In general, he said, more than 70 percent of residents at these facilities are receiving MaineCare, the state’s Medicare program for low income residents.

Facilities in southern Maine especially face stiff competition for staff in the service and food industry, and have to pay wages that are higher than the reimbursement rates for services, Erb said.

“That puts a lot of financial pressure on providers because MaineCare hardly ever pays the cost of providing care,” he said, adding that assisted living facilities have not received a MaineCare rate increase in two years.

To offset the losses due to low reimbursements, some facilities affiliate with a church or a hospital in order to gain financial support, or they can attempt to build a population of private pay individuals, Erb said.

With heating and food costs higher than in the past, the financial pressures on these facilities are growing, Erb said.

“It’s very possible we are going to see more of these,” he said.

Elderly homes’ CEO: Residents not in danger

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