DeKalb County files lawsuit against nursing home buyers for dropping out of $8.3M sale

SYCAMORE – DeKalb County has filed a lawsuit seeking to recover more than $8.3 million from the would-be buyers of the DeKalb County Rehabilitation and Nursing Center.

The county alleges the would-be buyers unlawfully walked away from a contracted sale more than a year into the process.

The lawsuit – filed in DeKalb County court Nov. 9 by the State’s Attorney’s office on behalf of the DeKalb County government – alleges the buyers’ failure to see the sale through has caused “substantial financial losses” to the county, which alleges it was “defrauded and manipulated.”

“The County expended time, money and energy to find a solution that would serve its citizens the best, and was assured that doing so would enable the DCRNC to continue to care for DeKalb County residents for many years into the future,” according to the lawsuit. “Unfortunately, the County’s efforts were frustrated by the Defendants in this action, who misrepresented the entities and parties to the sale and for more than a year caused substantial financial losses on the County’s part.”

According to 23rd Circuit Court documents, the lawsuit was filed by DeKalb County Chief Civil Assistant State’s Attorney David Berault of the DeKalb County State’s Attorney’s office. Chief Judge Bradley Waller is expected to hear arguments in the case at 9 a.m. Feb. 1 at the DeKalb County Courthouse in Sycamore.

“The nursing home sale has been a very difficult process. We look forward to ensuring that commitments made to our community are honored,” State’s Attorney Rick Amato said Tuesday.

Berault and County Administrator Brian Gregory did not immediately respond to requests for comment Tuesday.

The lawsuit names the only two companies that bid on the facility – Skokie-based Saba Healthcare and Evanston-based Illuminate HC – and the three limited liability companies that were created for the acquisition as defendants. Individuals Moshe Blonder and Aaron Singer of Saba Healthcare and Avi Zuckerman and Israel Davis of Illuminate HC also are named as defendants in the lawsuit, as well as Landmark Abstract Agency LLC, the buyers’ escrow agent.

“The nursing home sale has been a very difficult process. We look forward to ensuring that commitments made to our community are honored.”

—  DeKalb County State's Attorney Rick Amato

Blonder, Singer and Davis did not respond to comment Tuesday. When reached, Zuckerman declined to comment on the matter without first speaking to his lawyer.

In July 2022, the DeKalb County Board voted to sell the DeKalb County Rehab and Nursing Center, 2600 N. Annie Glidden Road, DeKalb, to Illuminate HC for $8.3 million. At the time, officials said a sale was needed due to the county’s inability to keep the facility financially viable after years of alleged mismanagement, delinquent billing and falling resident numbers created $7 million worth of county debt.

According to the lawsuit, DeKalb County expended time, money and energy to find a way to stem those losses, and was assured selling the longtime county-owned facility would allow the center to continue to operate. According to the lawsuit, however, DeKalb County alleges the defendants misrepresented the entities and parties of the sale.

“Through collaboration and collusion with various business associates, Defendants secretly included as contracting or controlling parties the very bidders that the County had specifically rejected in the bidding process, defaulted under key deadlines under the contracts, and avoided mandated state approval activities, thus leaving the County to absorb millions of dollars in losses,” according to the lawsuit.

In early spring, DeKalb County officials learned both health care companies who’d sought to buy the county’s nursing center had joined forces, intending to collaborate on the facility’s operation once the purchase was finalized.

Attorney Mark Silberman of Benesh Law based in Chicago spoke on behalf of DeKalb Healthcare Holdings LLC at a July 27 Illinois Health Facilities and Services Review Board meeting required for the sale to advance. At that meeting, the state board deferred a decision to October largely because information requested by the board had not been sufficiently provided.

The inclusion of Saba Healthcare – a bidder DeKalb County Board rejected before approving Illuminate HC’s sale offer in July 2022 – came under intense scrutiny at a July 11 public hearing in DeKalb. The public outcry continued at a July Bolingbrook-based meeting where the state board’s deferment put the sale on hold. The buyers were not present at either July meetings. Weeks later, Illuminate HC principal Zuckerman approached DeKalb County with a proposal to remove Saba Healthcare principals from the sale contract and future operations.

That proposal went before the County Board in September and would have prevented the state health board from making a decision on the purchaser’s certificate of need application – one of the final steps that required before the sale could have commenced – at an Oct. 3 meeting.

The board unanimously rejected Zuckerman’s proposal to exclude Saba Healthcare principals from the contract in September. A few days later, county officials said they were informed the prospective buyers, who did not attend the Oct. 3 state board meeting, sought to leave the sale contract.

According to the lawsuit, DeKalb County first advised Illuminate about the need to prepare a certificate of need application on Oct. 18, 2022. The application was filed more than six months later, after alleged repeated attempts by the county to encourage the buyers to submit the form by Feb. 10.

“The Plaintiff [DeKalb County] in this action was undeniably being defrauded and manipulated causing damage to its financial position – all at the whim of Defendant,” according to the lawsuit.

The county also is seeking financial compensation due to the buyers backing out of the deal, according to the lawsuit.

In April, the DeKalb County Board authorized Gregory to sign ancillary sale documents that stipulated that for every month the buyers did not close on a sale deal – an Aug. 1 deadline – the buyers would owe the county government up to $200,000, meant to offset county costs needed monthly to keep the nursing center afloat while the sale was processed.

According to the court filing, the county is now seeking to collect on that stipulation.

County officials and nursing center staff have said, and the lawsuit alleges, the sale contract prevented the facility from inking new deals with insurance providers that could have helped shore up the facility’s financial pressures.

From July to October 2022, the buyer’s lawyers allegedly would often vanish or ignore correspondence necessary to complete the sale, the county alleges in the lawsuit.

“There was a concerted and obvious method engaged by Buyers of pushing issues to the last minute before providing responses or choices to Seller on contract language changes,” according to the lawsuit.

DeKalb County Board Chairwoman Suzanne Willis said she can’t comment on pending legislation but has confidence in the county’s legal team.

“I have full faith in our legal team, they’re doing what they think is right,” Willis said.