Fred Chapman arrived home Feb. 27 after visiting his son, Zachary Chapman, a long-term acute care patient, at LifeCare Hospital of Fort Worth.
Zachary, 34, has paraplegia and severe brain and spine injuries. He has been a patient at LifeCare since early February.
Chapman went on with this day without any worries. In his mind, tomorrow would be another normal day.
On the morning of Feb. 28, Chapman received a call from his son’s mother, who informed him LifeCare Health would be closing down the Fort Worth hospital because of operational issues. In a matter of days, Chapman would have to find a new long-term care facility for Zachary.
“I’m having a hard time. I’m trying to take care of my son,” said Chapman. “All I can do is just try to keep my head above water and deal with it.”
LifeCare previously told the Report the costs of health care labor, supplies, equipment and pharmaceuticals have outpaced Medicare reimbursements, and patient admission roadblocks from Medicare eligibility guidelines and the Medicare Advantage plans have affected the care provider’s ability to sustain patients at the hospital.
Behind the scenes, LifeCare owes more than $800,000 in legal judgments and delinquent taxes, according to a review of public documents by the Report.
“The hospital’s financial hardship came as a direct result of sudden changes in federal reimbursement plus increasingly restrictive policies by managed care companies,” Kathleen Wallace, CEO of LifeCare, said in a statement. “These restrictive payment policies drastically affected the hospital’s revenue, leading to an unsustainable operational environment.”
Unpaid invoices, delinquent taxes pile up
LifeCare focuses on treating and serving patients who may require long-term acute care. It has a hospital in Plano and, prior to the closing, Fort Worth. LifeCare’s Dallas facility also recently closed. The care provider treats a variety of health conditions, including complex pulmonary diseases, respiratory failure, brain and spinal cord injuries, and joint replacement complications.
A long-term acute care facility is a specialty care hospital designed for patients with serious medical problems that usually require treatment for 20 to 30 days. The Fort Worth hospital featured 45 total patient beds, including 10 ICU beds and 35 telemetry-capable beds.
At the heart of LifeCare’s debts are unpaid invoices from several medical staffing agencies. Since December, at least three agencies have won default judgments in lawsuits against the company. The care provider failed to respond to each lawsuit, prompting the defaults.
The largest judgment, which totals $476,006 before interest, was awarded to HRK Medical Staffing Inc. in December. HRK alleged that LifeCare failed to pay for contracted staffing services from 2020 to 2023, then signed a settlement agreement, only to break the terms of the agreement in October 2023.
In February, Advantage Healthcare Staffing was awarded a $160,777 judgment against LifeCare, and Rhino Medical Services was awarded a $38,434 judgment.
LifeCare also owes $141,579.69 in delinquent taxes on its Fort Worth property, according to Tarrant County tax records reviewed by the Fort Worth Report. LifeCare Health did not issue a statement specifically addressing the legal settlements and taxes.
James Langabeer, professor of health systems analytics with the McWilliams School of Biomedical Informatics at UTHealth Houston, said facilities like LifeCare are at a disadvantage because of their limited patient population.
Since these facilities don’t serve patients with a variety of health conditions, they are often in financial distress. To survive growing costs, smaller-scale facilities and hospitals resort to selling to larger health systems or falling back on cash reserves and reimbursement rates, he said.
“We’re seeing a lot of these types of facilities going away completely,” he said.
In the U.S., the increase in hospital expenses between 2019 and 2022 more than doubled over the increases in Medicare reimbursement for inpatient care during that time frame. Over half of the country’s hospitals ended 2022 operating at a financial loss, according to the American Hospital Association.
Long-term care hospitals operate with high costs because of the nature of the care they provide, Wallace said in a statement.
“These institutions cater to patients with complex health needs, and the cost of providing such care is significant,” she said. “When reimbursement rates are reduced or altered unexpectedly, it has a profound impact on the hospital’s ability to cover operational costs.”
Langabeer said LifeCare Health’s financial status showed signs of struggle.
“(LifeCare) is a very small system that doesn’t have a teaching hospital affiliation and a lack of good relationships with big hospitals,” he said. “Success is based on partnerships, collaborations and having a good name brand in the industry. Looking at my financial database, LifeCare didn’t have cash reserves in the (Fort Worth) facility.”
Former employee, patient allege lack of communication
Deena James, 58, knew she’d be out of a job in a few days, but she couldn’t take the time off. As a certified nurse aide at the Fort Worth hospital, she knew she had patients relying on her while they awaited relocation to other long-term acute facilities in North Texas. Those last days were somber, she said.
“There was a patient here that was on dialysis, and I remember on the last day she started crying,” James said. “She’s on dialysis, dude, and now she has no insurance to pay to keep her alive. Who does that to people?”
James had been notified of Life Care Hospital of Fort Worth’s closure the afternoon of Feb. 27. During those final days, James said she was not able to get in direct contact with leadership at LifeCare. The company wasn’t transparent or effectively communicating with staff and patients, she said.
“People started coming in and moving equipment out while we still had patients in the building,” she said. “They’re coming in and pulling out machines, machines, machines. They started stripping that hospital.”
Even before LifeCare closed the Fort Worth hospital, James had heard whispers about the company’s financial problems.
Since being laid off, James has been searching for a job. She’s currently relying on her last check from LifeCare to keep afloat.
“At this point, I’m just pissed off,” she said. “There’s so many of us looking for jobs. …We’re desperate for jobs. I’m 58 and unemployed, and I’m searching every day. I’m afraid I’m not going to get another job. And so, what do I do, live in my car? I don’t understand why they did this to us.”
Wallace said notices were sent to employees and all concerned as management at LifeCare made the tough decisions to close the facility.
“(LifeCare) is paying all owed wages and accrued paid time off according to the Texas Payday Law,” Wallace said in a statement. “All impacted employees are being evaluated for opportunities within the company and have been provided a listing of other health care entities in the area who have notified us that they have interest in hiring impacted employees.”
In Texas, the Worker Adjustment and Retraining Notification Act, under most circumstances, requires businesses to provide notice 60 days in advance of plant closures or mass layoffs, according to the Texas Workforce Commission.
LifeCare previously did not respond to the Report’s question asking if the care provider notified the Texas Workforce Commission about the company’s plans to close the Fort Worth hospital. The WARN Act is intended to offer protection to workers and their families by helping workers understand their rights and responsibilities.
Chapman has been overwhelmed trying to find another facility in Fort Worth that can take in his son and properly manage his medical needs. LifeCare did not properly inform him and his family about the closure nor give him the proper amount of time to relocate, he said.
“(Zachary) has exhausted his Medicare days. I don’t have any place to bring him,” he said. “This is all out of my wheelhouse. When your loved one gets hurt, no one comes to you and teaches you everything you need to know. … I’m about to pull my hair out.”
LifeCare said it will focus its resources on continuing to serve patients at its Plano campus.
“We understand that this has been a difficult transition for all parties involved, particularly our patients and their families,” Wallace said in a statement. “Our primary goal during this period is to ensure that all patients continue to receive the standard of care they need and deserve.”
Since last speaking with the Report, Chapman’s son, Zachary, has been transferred to LifeCare Hospital of Plano, but the experience has been stressful and expensive.
“I don’t plan on leaving (Zachary) anywhere. I’m staying up there with him until he can come back home,” Chapman said in a text.
David Moreno is the health reporter for the Fort Worth Report. His position is supported by a grant from Texas Health Resources. Contact him at david.moreno@fortworthreport.org or @davidmreports on X.
Emily Wolf is a government accountability reporter for the Fort Worth Report. Contact her at emily.wolf@fortworthreport.org or @_wolfemily
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This article first appeared on Fort Worth Report and is republished here under a Creative Commons license.