Life-care facility sued for refunds

Posted Saturday, Mar. 30, 2013  comments  Print Reprints

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FORT WORTH -- Swept away by glitzy marketing that touted an upscale senior community under construction near the Cultural District, Anne Whealy thought she had found the perfect place for her 96-year-old mother, Ruby.

"I expected the Stayton to be like a first-class cruise ship," Ruby Whealy said.

But soon after she moved into a deluxe two-bedroom apartment at the Stayton on Nov. 2, 2011, Whealy began to wonder whether it was the right place for her.

She says she discovered jewelry and clothing missing from her room. At night, she woke to find unauthorized personnel in her room, she said.

The Stayton's operators say they have a security system to protect residents, but a stressed Ruby Whealy decided to move out, her daughter said. She left on Aug. 7.

"I can't believe I let her move in there," said Anne Whealy, a patent agent in Fort Worth. "We did this. We drank the Kool-Aid."

The Whealys are suing the Stayton's nonprofit owners, Dallas-based Senior Quality Lifestyles Corp., saying they were misled about the quality of the Stayton's environment and the financial security of Ruby Whealy's investment in the property.

The lawsuit alleges that funds that were supposed to stay at the Stayton are being used to boost other Senior Quality Lifestyles projects. The Whealys are seeking to recover tens of thousands of dollars they say were not refunded.

The Stayton is part of a growing industry of upscale "continuing-care" facilities, which charge affluent clients hundreds of thousands of dollars in upfront deposits and then monthly fees to provide care for life.

The Stayton's statements to residents are accurate and thorough and comply with all state laws, said James Berglund, attorney for Senior Quality Lifestyles. The operators strictly adhere to the conditions of a "life-care" contract that residents sign before they move in, which stipulates rights and duties, including the terms of a resident's deposit, he said.

What's more, the law does not require that residents receive investment documents that are provided to bondholders, such as feasibility studies, often created years before construction.

Berglund said the claims by the Whealys "represent a fundamental misunderstanding of SQLC's financial structure and commitments."

The Whealys' allegations echo the substance of a lawsuit filed four months ago by the law firm that is representing Ruby Whealy.

In December, Fort Worth attorney Dusty Fillmore filed a whistle-blower claim of financial impropriety against Senior Quality Lifestyles on behalf of the company's former vice president for development, David Brown.

Brown alleged that the nonprofit had violated promises made to seniors that their funds would be used to operate the individual communities where they lived. In addition to the Stayton, Senior Quality Lifestyles operates communities in Houston, Corpus Christi, Austin and Dallas.

Brown said he was fired after he alerted the nonprofit's board of directors that President and CEO Charles Brewer was planning to divert local funds to boost an ailing project in another state, in which Brewer had a personal investment interest.

Senior Quality Lifestyles has called Brown a "disgruntled former employee who was terminated for cause." The company's marketing brochures, "do not restrict or regulate a location where funds may or may not be invested," Berglund said.

After Whealy's lawsuit was filed, Berglund said it was "just the latest attempt by Mr. Brown's attorney to resolve the original claim by actively soliciting SQLC's residents, filing further litigation and seeking further media attention."

Ruby Whealy was one of the first residents to move into the Stayton's opulent apartments after it opened in October 2011. Before that, she and Anne Whealy had visited Edgemere, the Stayton's counterpart in Dallas.

"We were impressed by the beauty and elegance of Edgemere,'' Ruby Whealy said. "I expected the Stayton to be the same -- you know, nicely appointed, excellent service.

"They were asking enough for it."

The Stayton's target market is "the Fort Worth elite," her suit says. At the facility, luxury abounds, including valet parking, lush gardens and opulent furnishings. The Stayton has 181 independent living units, seven catered-living units, 42 assisted-living units, 20 memory-support units and a nursing facility with 46 nursing beds, bond documents say.

Anne Whealy said she was sold by the glitzy marketing materials.

"You don't look in Consumer Reports for a Lamborghini," she said. "You already know it's a Lamborghini."

About 745,000 Americans live in upscale "continuing-care" retirement communities, which have independent living, assisted living and skilled nursing centers under the same roof. The concept has been around for decades, the Stayton's operators said.

Ruby Whealy signed a "life care" contract at the Stayton that required a $575,000 deposit, the suit says. The contract also required payment of $4,095 a month in service fees.

In exchange, the Stayton would then take care of Ruby Whealy's healthcare and other needs until death. After she dies, her contract required that 90 percent of her deposit be refunded to her estate or to a designee.

Senior Quality Lifestyles employs a "multi-faceted marketing strategy" to lure seniors, said Fillmore, Ruby Whealy's attorney.

To make for an easy move, the company sends real estate agents to sell a client's house and hook the client up with movers, he said.

"They have a moving concierge that comes over to your house and measures the furniture and helps you place it in your apartment," Fillmore said. "But then you realize you don't own anything, you have no voice, no real power and they have your money."

After Ruby Whealy moved out, the Stayton refunded 90 percent of her deposit, Anne Whealy said. The Whealys are seeking damages, including a full refund of at least $90,000 of the remainder of the deposit and service fees, the suit says.

The Stayton was financed with tax-exempt bonds approved by the Tarrant County Cultural and Education Finance Facilities Corp., an arm of the Tarrant County commissioners.

Yamil Berard, 817-390-7705

Twitter: @yberard

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