good morning gentleman thank you for appearing in this unusual setting as we've told everybody yet we realize you're all in the we think we're all in the east in we would those of us who are not there wish we were in new orleans and hopefully we will be back pretty soon in any case we have a couple of special rules for this kind of hearing well one of them is not a full it's ordinary we're not allowing video or audio recordings or photographs a hearing we would ask you please turn off any mute any cell phones that you have so we were not interrupt and then  fraud on a cold rainy and therefore the fraud committed by the sellers the person centered service plans and you'll hear a lot about those this the p c s fees were false when the cole created them before the diligence when false information was provided to the bars as to the residence at rosewood three and false when the closing occurred and each of those steps in a colon tended to and did commit fraud the p c s fees that not have to be created during the time the bars were purchasing the property because the representations and the warranties stated that all health care laws were complied with despite nicol knowing that they were not the actions regarding maurice and joyce haney as to cedar crest and the hiring of nurses is also such a completely straightforward aryans were needed and cedar crest cedar crest residents by nature are memory care residents and cannot administer their own medications so aryans are required by law to supervise the lp ends at that facility  not to mention that the actions at cedar crest also highlight basically the running of rosewood as a memory care unit in other words rose rosewood was not supposed to have a patients that could  not administer their own medications and in rosewood was had thirty dollars to forty dollars of those type residence so it was being run and run as a memory care unit and that sort of compounds the issue with the staffing and goes along with the cedar cr judge hanna correctly stated the root of the buyer's argument is the non qualifying residence the p c s keys failed to adequately a den of whether those residents understood their medications and the judge even pointed out in which case in our in our other appropriately licensed staff would be needed however judge hanna misapplied the buyer's allegations when he analyze the buyer's argument on the non qualifying residence and the false  piece the p c s fees are important not only because they were fraudulent completed after the fraudulent p c s fees did not have to be falsely completed during the time that the bars were potential bars as judge hannah a grasp of on the fact that nicole hanny had fraudulent completed the p c s fees is a fact alleged that becomes important because the seller's contract really the a p a was signed on march st two thousand and sixteen in this representation and warranty was made then due diligence occurred and a call was placed in charge of sending the due diligence material sends over on behalf of the corporation he sends over the rosewood manual and the rosewood manual says only residents in rosewood are those who could administer their medications so in other words l p s and aryans are not needed and this was just absolutely not true he knew this because he fraudulent completed the p c s fees and further had been confronted by a non nurse workers who were uncomfortable getting meds to the residents that were not able to  profits go up because the payroll is less in bars or a lot of on this during the due diligence period to prepare their pro forma us and reach a purchase price had sellers been following their own  the administration of medications if you're right it can mean different things but as far as for example at rosewood if a patient cannot know what the medication is know what i to him because i'm telling you to administer those medications to those patients even though they are on incapable of knowing what those are where did the medication prescriptions come from medication prescriptions would have come from the doctor for that patient and you saying there was not a single staff person at rosewood that was a medical person there were no l sixty eight dollars there are also supposed to be every every quarter of the year are supposed to be updated and that is also not had not been done your honor the administration of the medication is going to be one of them and the preparation of the p c s fees when they were done how they were done wall so be part of the testimony but the allegations that were asserted is that  call falsely prepared us knew that he did not have staff at that facility because during the due diligence and this is to your question your own during the due diligence on ask therefore he did you're not going to have the l p s and aryans on the rest of the due diligence and the staffing materials ever were provided during the due diligence period so that it comes down to the question of at trial is there a misleading aspect to the due diligence all throughout this entire process could i ask what was the basis of the arbitration award the arbitration award was for some of the vacation and sick time true up to up amount that was what the that was what the judge felt i mean the arbitrator felt could be arbitrated and then he severed the misrepresentation and contracts will fraud claims to come to you guys because the amount of that exceeded the holdback amount of six hundred and sixty thousand dollars so he felt he didn't have the authority to make that arbitration  well in the due diligence wasn't your client basically given free run of the facility for about eight months meaning couldn't your clients and walk nina presumably they were knowledgeable buyers and it w to the prior question whenever you're being whatever fraud is being committed and you're being given materials that are on their face extremely clear well like well obviously if it's during the period of due diligence your client if your client have the right to examine the status of the places during due diligence and and certainly had a period of eight months i'm just asking to go into that facility and my argument to that is they were provided materials that on the face did not rise to the issue of checking out the facilities to that degree on the on the stamps of the patient of the timing of the preparations of the p c s peace and requirements for fraud or misrepresentation suppression our mission of true information now the simple definition of our mission is clearly implying that if you're going to suppress a fact it is a fact that has already occurred and you're either hiding it suppressing it or you are you're admitting it clearly the timing issue a seized upon by a magistrate judge hannah is not the apical time period here because the fraud occurred during the entire interactions among ma client because he jumped to the conclusion that the p c espy's were created and that action time point he found that now called a document fraud and then he uses that basis for the finding that if you can't if to call to not commit fraud and the sellers did not commit fraud so you count compound at the issue as to the sellers they allegations are clear direct and sustained just because the fraud is is so direct so not your claim there turns on an interpretation of the relevance that he does it not yes your own yet you contend that the lp ns could not a minister medication without an aryan being on staff right that is correct your honor it also also hinges upon that much there is allegations that ma client spoke with the department of i'm sorry the sellers spoke with the department of health and hospitals and were told that an r n was needed at cedar crest well but the statute says medications shall be administered by an individual who is currently honor i agree with your your reading of that but an aria they could have hired just an r n at an exorbitant price more so than an lpn and the aryan could give that medication but they could not on the statute i am your honor i'm just saying that the statute says that if an aryan can give the medication or an lpn could give the medication but under the entire if the doctor wrote for two years saying it's not possible for the doctor to write the prescription and the lp hands it is meant to dispense the prescriptions that is correct your honor that is based upon the allegation that that florida lat enjoy seine spoke to the department of health and hospitals and during that conversation they were told under the current law of louisiana and title sixty eight dollars and revised statutes that an aryan was needed at that facility to administer the medications are they elfie and supervise them and you found that faith or intentional misconduct negligent misrepresentation of breach of contract or whatever buyers want to call their claim are none of these things and so these claims have to be arbitrated the bars argue their basis is that the arbitrator dismissed only claims involving fraud as if this was somehow different from fraud claims at best this is a semantic difference they base their argument on order eight by the arbitrator but the nature of the fraud claim or even the fraud claim went before the arbitrator of that matter that that order dealt with attorney's fees order by did deal with the fraud claim and the arbitrator expressly dismissed a fraud claim or intentional misrepresentation buyer's argument is irrelevant anyway because regardless of whatever the arbitrator dismissed negligent misrepresentation claims could only be brought in the arbitration and so the trial court correctly ruled that the only claims in this proceeding her for a lot as to rosewood as a trial court recognized even if a resident couldn't self administer the regulations don't require an a r c p assisted living facility to administer medications at all it's a voluntary choice of an r c p whether to do that and there's numerous other options that are available they can contract with a rd party to do it they can require the resident to contract with a rd party to do it they can terminate the resident or in this case they could have transferred the resident to cedar crest which which did have the ends so once they bought rosewood the buyers were free provide administration of medications or not and he chose to do so here but this was their business decision not a regulatory requirement and bars don't dispute this anymore instead now what they're arguing is that the problem really wasn't the lack of nurses to administer medications the problem is simply that there  were residents that needed nurses or medications and that sellers were administering them using non nurses and they're saying now that this is really the complaint the thing that they're complaining about but that's not true they problem with the facilities was that was it that they were understaffed sixty two when they made count their damages are restart their damages for their count once they said the cost of the missing nervous nurses was five million six hundred thousand dollars of the total purchase price for cylinders of sixteen million dollars they said the cost of the missing nerve says was the problem and that their financial problems their claim was directly caused by the increases in their c staff paragraph seventy eight their damages and this is in count two the damages were due to the increased staff a policy of the nurses their claim is not based on some abstract violation of the regulations but on the requirement to hire nurses but there was no such requirement and the addition there pleading fall far short of the standard required by rule ninety which of course requires stating the claim was particulary detailing who what where why when how as a trial court noted the allegations and in the disney case that was  court the allegations must be sufficient to generate a strong inference of fraudulent intent at the theory of thing to accuse someone of fraud and the law requires plaintiffs to back up such claims with facts from the out cannot make that decision their staff can't make that decision dollars or buyers in that case couldn't make that decision without the resident physician determination that they're incapable of self administering the resident has the right to  of they didn't have to hire ariana's they didn't have to hire l p s to bring rosewood into compliance if they could've taken other steps to do so and i wonder why why is that argument that point you're making why does that speak to the sort of measure of damages the degree of damages and not the existence of damages because if there are no damages there's no standing there's no claim there's or there has to be  no damages on that when the reason they suffered any harm as a result of ministration of medications or nurses is due to their own voluntary business decision there's no claim for s and on top of that they grossly failed to supply because they would view it as assuming that any development did materially assuming that your client did materially represent rose was compliant status i think colonial of what are your damages because they received something other than what they bargained for when if there is no harm from that than then there is no he's now alleging that the p c s keys were fraudulent that would mean that they violated that role right and did that alleged yes but he has to plead facts under rule nine b to get to that point and he hasn't done it to take the steps necessary to modify the p c s beat because under six thousand eight hundred and forty three b so the determination of the need for step of ministration of medication will be made by the residents position after course why this p t s d was so important but there is no allegation regarding what the p t s speed actually required by this council mentioned it a while ago but there's no pleading regarding what was in it and this fails to  and if they missed it you know that that on them this fails to meet the reasonable reliance requirement of a cross claim that their reliance have to be reasonable reliance on the supposedly lpn the only time regulations mention supervision by an r n is in the specific context of intravenous therapy that kind of administration of medications and so the exception proves the rule there be no need to specify such a   so buyers are apparently arguing that a duty for supervision has to be inferred but with this detailed and comprehensive set of regulations a judicial insertion of such requirement into that regime is not arias on one staff if you can check the change of the complaint it was originally filed so that which subsequently got filed in the briefing what you'll notice from something years that he was there at rose would state never came down for one to see the s e p p c s to excuse me on them that there was incorrect but at that point the call would go to the or the patient's family and he would tell them they can arrange for a rd party or they can't do that you can move to seat across or you can move to another facility in understand as all of us know that's dealt with elderly family members it's a fluid situation so one day a patient might be able to do it the next week in may not only let me ask what is the nature of the patients at rosewood in cedar crest are they medicare medicaid are they are they well the upper end people interests of living at the lower end or the the average neighbors they're all private pay so i would say that's the oper that i'm not be they got a gal who what when where who are these people when did they say at what time frame are we talking about but i also suggest to you that that's not for all it mike if that's true and i would just say that that is  haney will testify be arrested that is true it will be to cross examine these people but if it is that may have been bad management for twenty years at rosewood but that's not fraud if that was going on and that's either one if it violated a regulation that she was complicit with well it would fall into regulation that may be an issue that rose would would have had with the state of louisiana but that would have been a regulatory violation i i can't words if nicole his percentage of the money if that hadn't been delivered he had no standing to sue colonial and say you can pay me my money he's not a part of the contra but i understand what you're saying there's when when the entities that were part of the contract said that they had materially complied with all the laws and they believe that they have and we believe they have if he's telling people that is that a compliance with the law i with our doctors to say what we can and can't do about know this then get in or diction and all but you know we all have our rights to do what we can do obviously the call he was there to protect these people from a situation that would go south for  above what did nicole haney do when he was confronted at rosewood by those non nursing staff who are scared to death that they were violating the law by giving medications to patients who did not know what those medications were what did nicole do in that situation nicole said give it to them or you're fard if that's not fraud that i don't know what is now let's look at the two facilities rosewood and cedar crest what happened in were in the context of is there an r in an lpn need ok what happen at cedar crest cedar crest is rolling along with an lpn and joyce haney and lloyd to latin meet with the department of health and hospitals and they're told no you can't just have l p m's they're given out medications you have to have an r in supervising them they didn't hire an aryan to do so that is internet itself fraud now go back to what's happening at ro rosewood has not either lp in r r in you you heard mr marino say no there were any l p s running around rosewood then they say all of what could be done after they buy this facility that they have been fraudulently given in the transaction and there's thirty or forty residents in that facility they don't know their medications and we know that was true before the sell the claim is clearly possible and yet we have not yet heard the testimony on this and i've been to many of the trial well where when the testimony comes out it's pretty darn clear what was going on and from the allegations of  incorrect i don't have the exact paragraph just the paragraph talk about nicole haney completing them falsely and the reason we know that they were completed falsely goes along with the requirement that i think a judge davis pointed out that our model been judge jones that those things had to be updated every every quarter and not you know all of a sudden thirty or forty patients don't the sellers were running rosewood as if it was a memory care center they had patients in there that were not capable of not going back to him that raises issues as to damages and enough i think judge will it hit the issue on damages day one when we determined that there were thirty or forty patients in there all of those could have meant move been you know thrown out what does that do your reputation what does that do to your revenues so you have suddenly thirty or forty vacancies but that goes to damages that goes to how we were harmed not the fact that we were harmed so i think that the  pleading if you read that in context of what we discussed today that there is a plausible claim and the testimony before the trial court will come out as to exactly the fraudulent actions of the call joyce and mo and we've got to remember this is allegations against all three this is not just allegations against against one of these but it was all done