Nursing home under fire Special monitors sought to oversee Driftwood Health Care in Santa Cruz and 18 of sister operations in California on grounds of chronic understaffing, inadequate patient protections, inflated consumer ratings and false advertising


CORRECTION: This article has been updated to reflect two corrections. Dr. Karl Steinberg is medical director for Mariner Health’s California properties, not the national organization. In 2010, Mariner and closely related entities paid $14 million to settle a Medicare kickback case. The original article reported a considerably higher figure.

By Royal Calkins

A task force of state and local prosecutors is asking a judge to order special monitors to oversee Driftwood Healthcare nursing home in Santa Cruz and 18 of its sister operations in California on grounds of chronic understaffing, inadequate patient protections, inflated consumer ratings and false advertising.

Monitors would be assigned to nursing homes operated by Mariner Health Care, one of the nation’s largest nursing home chains. In the past two decades, Mariner has been the subject of numerous enforcement actions and lawsuits alleging negligence and wrongful death. Resulting jury awards have totaled at least $2 billion, but most have gone uncollected, according to federal court records.

Mariner and closely related entities also have been forced to pay millions of dollars to settle kickback and Medicare fraud allegations.

The current court action accuses Mariner Health of “siphoning off” money that should have been used to provide adequate staffing at its skilled nursing facilities in California, Driftwood included. It accuses Mariner of “trading people for profits at every turn.”

It was filed in Alameda County by the Santa Cruz District Attorney’s Office, led by Assistant DA Douglas Allen, along with prosecutors in Alameda, Marin and Los Angeles counties and the state Attorney General’s Office. A hearing on the motion for special monitoring is scheduled for Feb. 22.

The Santa Cruz DA’s Office was also involved in earlier litigation that resulted in appointment of a special monitor to oversee operations at the Hearts and Hands nursing home on Soquel Avenue in Santa Cruz. That lawsuit alleged numerous deficiencies, including illegal discharge of patients, and cited a high number of Sheriff’s Department calls to the facility — 123 calls involving violence from 2016 through 2018 along with 55 missing persons calls and 21 calls involving mental health issues.

A DA’s representative said staffing levels improved after appointment of a monitor, paid for by the Hearts and Hands ownership.

The newer litigation against Mariner does not accuse the 92-bed Driftwood operation of any specific wrongdoing but alleges that staffing reports were systematically inflated in order to improve Medicare ratings for all the company’s California facilities. According to the lawsuit, Driftwood and its sister nursing homes in California all boast five-star ratings on the federal Medicare website, which families depend on while choosing facilities.

In one court filing, lawyers for the Mariner facilities wrote that even if the nursing homes provided false information to regulators, federal law prohibits repercussions.

And, the lawyers continued, even if false information led to unearned five-star ratings, promoting the ratings doesn’t amount to false advertising “because CMS (Centers for Medicare and Medicaid Services) did, in fact, rate the subject nursing homes that way.”

In their filings so far, the Mariner lawyers mainly argue that the Alameda County Court does not have jurisdiction over the facilities. Responsibility rests with the state Department of Public Health and the federal Centers for Medicare and Medicaid Services, the defense lawyers argue.

The state Department of Public Health website says Driftwood ranks slightly above average for number of complaints from the public but rates relatively well on deficiencies found when state or federal investigators have visited the 24th Avenue complex.

That website shows that investigators have found a dozen or more deficiencies over the past three years. Perhaps the most serious was a year ago when the state determined Driftwood did not have a complete plan in place for addressing COVID. The state also found that a couple of nursing assistants weren’t wearing masks and that one didn’t wash his or her hands before treating a patient. In May of last year state investigators found that a few staff members and patients weren’t properly masked but no formal citations were issued and no fines were assessed.

I visited Driftwood four times in December and was stopped at the front desk for a COVID check the first time but never again. In the first visit, he was asked for the dates of his COVID vaccinations and his temperature was taken. The next three times, during business hours, no one was at the front desk. I asked a passing staffer about COVID checks and was told, “I guess we’re not doing that anymore.”

A retired registered nurse visiting a patient in December said she also was allowed to enter without any staff interaction although paperwork posted outside the front door said checks were required.


This notice at the front door to Driftwood Health Center in Santa Cruz says the facility was notified Dec. 16 of a new confirmed case of Covid and was adopting additional protocols even though at least two patients had been informed two days earlier that they had tested positive | Photo by Royal Calkins

Driftwood sustained a small COVID outbreak on Dec. 12, resulting in a temporary end to patient visitations. Aggravating the situation for patients, one section of patient rooms that was later declared the COVID wing has been without phone service for patients for several weeks.

Karl Steinberg, medical director of Mariner Health’s California properties, said in a telephone interview that he was not familiar with the current litigation but was surprised that visitors to Driftwood weren’t being checked.

“It is the policy of every nursing home in the country to screen visitors when they come in,” said Steinberg, a physician who practices geriatric medicine in San Diego and has served as a director of several nursing care trade groups.

“That is not acceptable,” he said of Driftwood’s screening performance.

About the phone outage, Steinberg agreed that it’s a problem.

“Lack of phone service, that’s not a small issue,” he said. “Long-term care patients absolutely should be able to communicate with the outside world.”

Steinberg said he would solicit other Mariner officials to respond to questions but there has been no response.

Driftwood employees referred Voices to Mariner Health offices in Hayward and Long Beach but officials there could not be reached to comment about the litigation or COVID protocols. Calls to the company’s legal offices in Atlanta were not returned.

Since the start of the pandemic, Driftwood has been hit fairly hard. The latest report from the state Department of Public Health says that as of last week, Driftwood had reported having had  63 patients with COVID; 17 died. One other Santa Cruz County facility has reported more cases: Pacific Coast Manor in Capitola, slightly larger than Driftwood, has had 78 in all since the start. It has had fewer deaths, though: 14.

Since COVID hit, 40 Driftwood staff members have come down with COVID, a dozen fewer than at Pacific Coast Manor, according to state records.

The state website does not appear to be up to date as it doesn’t list any new cases at Driftwood.

Over the last couple of years, state inspectors have noted a few cases of inadequate wound care at Driftwood and several instances of improperly labeled food and medications. There have been some discrepancies in the inventory of highly regulated methadone doses.

As alarming as the deficiencies might appear, they seem to reflect the norm in U.S. nursing facilities in the COVID era, according to various health officials. In California, staffing shortages and other chronic issues at nursing homes have been severely aggravated by short staffing at the state Department of Public Health, which is responsible for inspecting the facilities. Over the past year, state officials have considered reducing the number of inspections and citations and putting inspectors into more of a consulting and advisory role.

In court filings, the Mariner lawyers argue that the current lawsuit improperly blames wound-care issues on understaffing. The problems are just as likely the cause of poor hospital treatment or other factors, they wrote.

The lawsuit by the state and the California counties doesn’t mention COVID protocols but says Mariner facilities often failed to provide adequate infection controls in general.

It also alleges that Mariner facilities discharged some patients prematurely and illegally, sometimes without any formal discharge plans; failed to report cases of neglect and abuse; provided inadequate wound care, resulting in some avoidable amputations; and failed to protect some patients from sexual abuse.

The current lawsuit contends that Mariner’s five worst California homes are three in Hayward, including one that also carries the Driftwood name, one in Oakland and another in Fremont.

In October, an Alameda County jury reached a $20 million verdict against Mariner and one of the Hayward nursing homes, Parkview, because of chronic understaffing and fraudulent record-keeping.

'Relatives of patients testified that they had not been able to determine whether their family members had tested positive and that they had difficulty contacting the nursing staff at times.'

After a four-month trial, the jurors unanimously agreed that Parkview had demonstrated a pattern of neglect, negligence and violation of patient rights, resulting in at least one wrongful death. In all, before the trial, 111 patients there had contracted COVID and 18 had died, according to news reports on the trial.

Relatives of patients testified that they had not been able to determine whether their family members had tested positive and that they had difficulty contacting the nursing staff at times.

According to a San Jose Mercury News account of the trial, impermissibly low staffing levels at Parkview resulted in inadequate wound care and shortages of linens, towels and diapers, “leaving residents sitting in filth, according to the patients’ families.”

That lawsuit alleged that at least four patients were sexually or physically assaulted by a resident who was allowed to roam freely.

After the verdict, Mariner spokesman Dan Kramer told reporters that the company was reviewing its options, including possible appeal. He also said Mariner was reviewing what he called an unusual decision by the court to combine 10 unrelated plaintiffs’ claims into one lawsuit.

In three years, the Parkview property generated more than $4.1 million in excess profits by maintaining staffing levels significantly lower than standards set by the federal Medicare system, according to an affidavit filed as part of the request for special monitoring. It was prepared by a forensic accountant who qualifies as an expert witness in nursing home finances.

With at least 200 nursing homes in 27 or so states, Mariner is one of the nation’s larger nursing home chains, but meaningful statistics on the operation are hard to come by. Many of its facilities are owned by a holding company, some of which are owned by another holding company. Many Mariner holdings are managed by a closely related company, Sava Senior Services Inc., which leases many of the properties from Mariner. Health care regulators have alleged that nursing home operators often structure their holdings that way in order to shield themselves from liability and to artificially drive up their costs for reimbursement purposes.

In May, a closely related company that manages most of Mariner’s nursing homes, agreed to pay a $11.2 million federal fine to settle allegations that it had routinely billed the Medicare system for medically unnecessary procedures.

A decade ago, the company and some of its principals agreed to pay the federal government $14 million to settle allegations that they had participated in a kickback scheme. They had received $40 million from the Omnicare pharmaceutical company in exchange for placing $50 million in drug orders, according to federal prosecutors. The principals admitted no wrongdoing.

The company’s corporate office appears to double as a lawyer’s office in Atlanta. According to documents in a Mississippi court case, the company’s chief executive officer, Harry Grunstein, paid nothing to obtain controlling interest in Mariner on paper but that the actual owner is New York real estate tycoon Rubin Schron.

Featured image: Driftwood Healthcare Center in Santa Cruz is part of a nursing home chain being sued by the Santa Cruz County District Attorney’s Office and other prosecutors for alleged understaffing, inadequate care and false advertising. | Photo by Royal Calkins

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About Royal Calkins

Contributing writer Royal Calkins has worked for newspapers in Santa Cruz, Monterey and Fresno. He can be reached at

One thought on “Nursing home under fire Special monitors sought to oversee Driftwood Health Care in Santa Cruz and 18 of sister operations in California on grounds of chronic understaffing, inadequate patient protections, inflated consumer ratings and false advertising

  1. First, kudos to. Doug Allen, Santa Cruz County District Attorney, who has actively protected nursing home residents.

    Secondly, kudos to former Long-term Care Ombudsman Coordinator Nikki Loehr, who alerted Allen to the dangerous situation in local nursing homes.

    Thirdly, these conditions exist because the state Department of Public Health has for years refused to adequately protect these vulnerable residents.

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