A shareholder of Brentwood, TN-based Brookdale Senior Living filed a securities lawsuit in federal court accusing company officials of misconduct in the course of their trying to meet financial targets.
Brian Davis, a current shareholder, claims that top executives and board members of the country’s largest senior living organization allowed multiple violations of Brookdale’s corporate governance policies to go unchecked, causing the company to intentionally underestimate data used for staffing algorithms.
A Brookdale spokesperson said the company would not comment on pending litigation.
The case, Davis v. Baier et al, was filed Thursday in U.S. District Court for the Middle District of Tennessee, brought by Bramlett Law Offices in Nashville, the Brown Law Firm in Oyster Bay, NY, and the Rosen Law Firm of New York on behalf of Davis.
Named as defendants in the case are Brookdale President and CEO Lucinda “Cindy” Baier, former CEO and President T. Andrew “Andy” Smith, Executive Vice President and Chief Financial Officer Steven Swain, Board of Directors Chairman Guy Sansone and board members Marcus Bromley, Frank Bumstead, Rita Johnson-Mills,, Denise Warren and Lee Wielansky. Also listed as defendants are former board members Jackie Clegg, Daniel Decker, Jeffrey Leeds, Mark Parrell, William Petty Jr. and James Seward.
The class action suit, on behalf of purchasers of Brookdale securities between Aug. 10, 2016, and April 29, 2020, seeks to recover damages for Brookdale investors under federal securities laws.
According to the lawsuit, Brookdale officials made false or misleading statements that did not disclose that the organization’s financial performance was sustained by “the company’s purposeful understaffing of its senior living communities.” The suit alleges that the conduct subjected Brookdale to an increased risk of litigation as well as a material negative effect on the company’s financial results and reputation. As a result, the lawsuit alleges, the company’s public statements were “materially false and misleading at all relevant times.”
In April, media outlets reported that a proposed class action had been filed against Brookdale, accusing the company of “chronically insufficient staffing” at its communities in order to meet financial benchmarks. Brookdale’s stock price subsequently fell 56 cents per share, or 15.22%, over the following two trading sessions, according to one of the law firms involved in the class action suit.
That proposed lawsuit accuses Brookdale of misleading residents and families and failing to provide care and services. The suit seeks damages for residents as well as an end to Brookdale’s “unlawful and fraudulent practices.”