By Tina L. Scott
Merrill Foto News Editor
Jalen Maki
Tomahawk Leader Editor
MERRILL – Lincoln County’s sale of Pine Crest Nursing Home in Merrill is off due to a lawsuit filed against the county.
During the Lincoln County Administrative and Legislative (A&L) Committee’s meeting on Tuesday, July 2, Lincoln County Administrative Coordinator Renee Krueger said the nursing facility’s buyers, Merrill Campus LLC and Senior Management Inc., had terminated the Asset Purchase Agreement.
A Friday, June 28 letter to Krueger from the buyers’ attorney, Richard J. Summerfield, said the buyers chose to terminate the agreement due to language in the agreement that states that there “shall not be any lawsuits filed or threatened against the Seller or the Nursing Home Facility that would adversely affect the operation or the financial condition of the Nursing Home Facility; nor shall there by any actions suit, claims or other proceedings, pending or threated or injunctions or ordered entered, pending or threatened against the Seller or the Nursing Home Facility, to restrain or prohibit the consumption of the transaction contemplated hereby.”
The letter references a suit filed in Lincoln County court by Donald J. Dunphy on Thursday, May 16.
Dunphy’s lawsuit
The sale of Pine Crest was approved by the Lincoln County Board of Supervisors in February, with a Sunday, June 30 closing date for the sale implemented as part of the Asset Purchase Agreement.
During its meeting on Tuesday, June 18, the board voted to push the sale closing date back to Monday, Sept. 30, due logistical challenges cited by Krueger and the A&L Committee.
Krueger said during the June meeting that the buyers had also requested an extension of the sale closing date “due to circumstances beyond their control.”
Dunphy, who was elected to the board as District 7 Supervisor in April, said his lawsuit against Lincoln County is not related to the county’s decision to extend the closing date.
In a Complaint filed in May, Dunphy asked the court for a judgment “forbidding Lincoln County and any of its officers from signing a deed transferring the subject properties to the buyer,” the return of the earnest money to the buyer and “an order declaring the Asset Purchase Agreement null and void.”
“I was opposed to the decision to sell Pine Crest from the beginning,” Dunphy said in a recent interview with the Merrill Foto News. “When I ran for (Lincoln) County Board, I told everyone I talked to that I would do my best to reverse that decision. The lawsuit is my vehicle to keep Pine Crest from being sold. My goal is to have the court declare the sales contract null and void.”
The basis for Dunphy’s lawsuit are his allegations that Lincoln County had failed to follow the best practices set forth in a previously-created Lincoln County resolution detailing the best practices to be followed for selling high-value property, and that by failing to do so, this resulted in the county signing an agreement to sell Pine Crest and the county’s Health and Social Services building for less than they are worth.
Dunphy also alleged the Lincoln County Code of Ordinances “vests jurisdiction” of the subject properties in the Lincoln County board’s Forestry Committee.
Lincoln County Corporation Counsel Karry Johnson responded to the allegations in the Complaint with a written Answer filed with the court on Thursday, June 13.
In the Answer, Johnson said the previously-passed resolution provided “suggestions and recommendations for the sale of certain high value property,” however, “the County Board was not required to follow such suggestions or recommendations.”
Johnson’s Answer denied the allegation that the board’s Forestry Committee has jurisdiction over the sale.
Dunphy further alleged that “a substantial consideration in the County’s decision to sell Pine Crest was the operating deficit experienced by the nursing home in the years prior to 2023” and “that an increase to the Medicaid reimbursement rate paid to public nursing homes eliminated Pine Crest’s operating expense deficits beginning in the first quarter of 2023.”
In Johnson’s Answer, she admitted the operating deficit was a factor in the decision to sell Pine Crest, but said the county board considered numerous other factors in reaching their decision, as well.
Johnson also denied the allegation that the increase in the Medicaid reimbursement rate eliminated Pine Crest’s operating expense deficits beginning in first quarter 2023 and refuted Dunphy’s claim that the change in circumstances as a result of the Medicaid reimbursement rate were ignored “because it was focused on selling Pine Crest to the exclusion of all other considerations,” as Dunphy had alleged in his Complaint.
Dunphy made various other allegations in his Complaint, which the county denied in their Answer.
In their Answer, the county also made a motion to dismiss Dunphy’s Complaint on several grounds, including that he had failed to comply with statutory Notice of Claim requirements; had brought a Certiorari Complaint, which is not permissible for review of a resolution passed by a County Board of Supervisors; that the Complaint is barred by the statue of limitations; and that the Complaint was filed outside the time period specified for Certiorari actions, among other reasons.
Dunphy aiming for referendum, community funding support
In the interview with the Foto News, Dunphy said Pine Crest “ended 2023 in the black, and revenues continue to exceed operational expenses this year.”
“These two factors give us some breathing room to consider our options,” he stated.
Dunphy said that if he were to succeed in stopping the sale of Pine Crest, he would “want a referendum to be held asking the voters if they are willing to increase property taxes by $2 million per year for 10 years to keep Pine Crest.”
Dunphy said holding a referendum is “the democratic thing to do,” noting that if a potential referendum were to fail, “we can put our nursing home up for sale, and you will hear no complaints from me.”
Dunphy added that he would seek community support in further funding maintenance at the facility.
“The biggest expense involved in keeping Pine Crest is the deferred maintenance needs of about $12 million,” he stated. “These can and should be addressed systematically at a rate of $1 million per year over the next 10 to 15 years. Some of the required maintenance is more urgent than the rest. We should decide which need has the most urgency and launch a community-wide fund drive do deal with it like we did when the library addition was built. This measure may pay for some urgently-needed maintenance, but, if not, whatever donations come in will help.”
Dunphy said Pine Crest revenues could be increased “even more” by converting one of the facility’s existing wings to a dementia ward, an option presented by the ad hoc committee that was formed in June 2022 and tasked with coming up with options the county could take regarding Pine Crest’s future. The committee ultimately recommended the sale of the facility.
“There is a demand for nursing home beds of this type, and the conversion would require little more than installing a security door,” Dunphy stated in reference to the potential conversion of a Pine Crest wing to a dementia ward.
North Central Health Care (NCHC) administrators and proposed new owners of Pine Crest, Grant and Andrea Thayer, previously said this plan had been in the works.
Next steps
While the continued operation of Pine Crest is included in the county’s budget through the end of 2024, no funds are allocated to the operation or maintenance of the nursing home or the Health and Human Services building for 2025.
As of press time on Monday, July 8, no further action regarding Pine Crest had been taken by the board or any county committees.
The A&L Committee is expected to discuss Pine Crest at a potential special meeting later this month or at its regular August meeting.
As of press time on Monday, July 8, no court dates related to Dunphy’s lawsuit had been scheduled, according to court records.