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ATTORNEYS AT LAW
Robert E. Grossman
September ie. 2005 ilijilliiiil ?i’§f“
[email protected]
VIA HAND DELIVERY
The Honorable Gregory M. Sleet
United States District C ourt
District of Delaware
J. Caleb Boggs Federal Building
844 N. King Street
Room 4324, Lockbox 19
Wilmington, DE 19801.
Re: Integrated Health Services ofC`lit`l` Manor, inc. v. Tl·l(`l C`orn;1;rny l..I.C, Index No. 04-
910; THCI Company LLC v. Abe Briarwood Corp., Index 04-367
Dear Judge Sleet:
This law firm is counsel to THCI Company LLC (“THCI") in the above referenced actions. We
write to inform the Court ofthe latest developments that directly affect parties in the above
cases.
As this Court is aware, IHS Long Term Care, Inc. (“I.,TC"), its subsidiaries ("Subsidiaries," and,
collectively with LTC, the "Plaintit`fs"), and Abe Briarwood Corporation, defendant in THCI
Company LLC v. Abe Briarwood Cogp., Index 04-367-* also pending before the Court, are all
purportedly owned or controlled by Mr. Harry Gmnstein. Mr. Grunstein’s financial practices
have been recently brought into the spotlight by United States Senator Mark Pryor {Ark.), who
has requested that the Inspector General of the U.S. Department of Health and Human Services
investigate North American Senior Care ("North American"), another entity purportedly
controlled by Mr. Grunstein. North American is proposing to acquire a large public nursing
home company, Beverly Enterprises, based in Arkansas. Senator Pryor is concerned about North
American’s inability to meet its obligations to creditors and patients.] In addition, Arkansas
State Representative Stephen Bright scheduled a meeting of the House Public Health, Welfare
and Labor Committee to discuss North American’s use of Medicaid and Medicare funds.
Senator Pryor’s and Representative Bright’s concerns stem from the recent acquisition of
Mariner Health, Inc. ("Mariner Health") by National Senior Care, Inc. ("National"), yet another
entity purportedly controlled by Mr. Grunstein, after which National made "a significant
distribution of money to shareholders and is not meeting its financial obligations to creditors
or its obligations to patients."2 In his letter to Inspector General Levinson, Senator Pryor stated
I See Senator Pryor’s letter dated August 26, 2005 to Daniel R. Levinson, Inspector General of the U.S. Department
of Health and Human Services, a copy of which is attached hereto.
*14.
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1 *04- -0091 - S Document 98 Filed 09/16/2005 Pa e 2 of 3
Theci-ftineorable Giiegory lQIQSweet \ , gi If .
Page2 lt ll,\
ATTORNEYS AT LAW
that “[i]n light of these events, I am concerned that there is potential for the [North American]
purchase of [Beverly] to result in significant hardship for many patients.;
Senator Pryor’s concerns are also shared by Mr. David A. Smith, the CEO of PSS World
Medical, Inc. ("PSS"). PSS publicly announced that it has decided not to renew a long-term
distribution agreement between its subsidiary GuIf`South Medical Supply and Beverly citing
concems that after the acquisition of Beverly, North American would be unable to “honor and
abide by past practices with regard to trade and credit terrns."4 These conccms are based on
Mariner’s alleged refusal to pay almost $5 million for goods sold to it by Gulf South Medical
Supply, a subsidiary of PSS, which is the subject of litigation between Gulf South Medical
Supply and Mariner in the Superior Court of Dekalb County, Georgia.5
Mr. Grunstein and his af`filiates’ financial machinations may very well be the reason why
Plaintiffs have failed to pay rent for June, July, August and September 2005, have fallen further
in arrears with respect to real estate taxes, have not vacated the facilities that the Subsidiaries
lease from THCI, and now owe well over $$,000,00000 in rent and other lease-related charges.
Indeed, THCI’s attempts to discover matters relating to Mr. Grunstein’s financial practices have
been ignored by Briarwood.
In light of these developments, we respectfully renew our earlier request for a conference with
the Court to explore all avenues of resolving this matter on an expedited basis.
{ espectfully submitted, _ __
5 a
* * (_` Q , , . 4112 gqlii?
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Robert E. Grossman `
REG/imt
cc. Michael R. Lastowski, Esq.
Richard W. Riley, Esq.
Christopher M. Winter, Esq.
’ rd.
4 "PSS World Medical Decides Not to Renew Long-Terrn Contract with Beverly liiucrprtst.-s." available ut
http://www.nasdaq.con1/aspxcontenttl\IewsStory.a §]'!J
ical%20Inc.&logopat11=%2f1ogos%2fPSSI.GIF&market=NASDAQ-NM&pageName=C0rnpany°»·l¤20News, a copy
of which is attached hereto.
5 See the attached copy of Verified Complaint on Open Account filed in Gulf South Medical Supply, Inc. v. Sava
Senior Care, lnc. f’kfa.f Mariner Health Care, Inc. with the Superior Court of Dekalb County, Georgia in civil action
File No. 05CV8409—5.
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Case 1:04-cv—00910-Gl\/IS Document 98 Filed 09/16/2005 Page 3 of 3
The Honorable Gregory M. Sleet _. _` _
Page3 i{|'.\
ATTORNEYS AT LAW
Duane Morris LLP
1100 North Market Street, Suite 1200
Wilmington, DE 19801-1246
Annes Alter- Esq.
Troutman Sanders LLP
The Chrysler Building
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New York, NY 10174
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