A provision in state law cited in a class action lawsuit against a continuing care retirement community only applies to food-related fraud and, therefore, cannot be used by residents and families to secure entrance fee refunds, a court ruled Wednesday.
The refund provision in New Jersey’s Consumer Fraud Act is limited in scope and does not entitle the plaintiffs to full refunds of their entrance fees, monthly fees or services provided during their residence in the life plan community, the New Jersey Supreme Court ruled.
Princeton, NJ-based Springpoint Senior Living is accused of consumer fraud over allegations that it misrepresented the return of entrance fees once residents leave a CCRC. The lawsuit, filed in 2014, alleged violations of the state’s Consumer Fraud Act and the Continuing Care Retirement Community Regulation and Financial Disclosure Act. Springpoint asserted that the right to a refund under the state CFA only applies to a portion of the statute involving food served at restaurants, hotels or lunch counters.
“Those allegations [in the class action suit] pertain entirely to misrepresentations about fees charged by a senior living facility,” Justice Douglas M. Fasciale wrote in a unanimous opinion. “None of the plaintiffs’ allegations are related to misrepresentations of food.”
A Middlesex County Superior Court Judge denied a motion for partial summary judgment in December 2022, rejecting Springpoint’s argument that only the state health department had the right to file a lawsuit to obtain a refund of community entry fees. Springpoint appealed the decision to the state’s high court with the hope of clarifying the limited scope of the refund provision.
The New Jersey Supreme Court’s decision reversed the lower court ruling and remanded the case back to the trial court. DeSimone’s attorney told Law.com that class members would continue to pursue entrance fee refunds under the Continuing Care Retirement Community Regulation and Financial Disclosure Act.
A Springpoint Senior Living spokeswoman told McKnight’s Senior Living that it was pleased with the state high court’s unanimous decision.
“The opinion clarifies the narrow scope of the Consumer Fraud Act’s refund remedy in the way that the legislature intended when it passed the law in 1980,” the spokeswoman said. “The well-reasoned decision faithfully adheres to the language and legislative history of the statute and resolves inconsistent interpretations by the lower courts.”
Filed in 2014
William DeSimone filed the lawsuit in 2014 on behalf of his mother’s estate against Springpoint’s New Jersey-based CCRCs at Monroe Village, Springpoint at Montgomery, Springpoint at Crestwood, Springpoint at Meadow Lakes and Springpoint at the Atrium.
According to court documents, Evelyn DeSimone had paid a $159,000 entrance fee for an independent living unit at Monroe Village. Before moving into her unit, however, she fell and broke her hip and was unable to move in. Instead, she remained in the community’s skilled nursing facility, where she lived until she passed away in April 2010.
After her death, according to the lawsuit, her estate received a refund that amounted to 50% of her initial entrance fee, less than the 90% refund that had been anticipated.
The lawsuit alleged that Springpoint orchestrated a “bait and switch” scheme through misleading and deceptive advertising, along with “intentional misrepresentations” by sales personnel and an incomplete and misleading disclosure statement.
The lawsuit also claimed that Springpoint failed to alert prospective residents that it was authorized to offer discounts on the subsequent re-leasing of units or to offer different payment options that effectively could reduce refunds.
The case was dismissed in 2014 for failure to state a claim on which relief can be granted, but it was reinstated in 2015 by an appellate court. The case was certified as a class action in 2021.A bill was introduced in the New Jersey legislature in February 2022 to require CCRCs to return refundable entrance fees to former residents or their estates within a year of the unit being vacated. If passed, the bill also would require that all CCRC agreements “be written in plain English and in language understandable by a layperson.”
