The New Jersey Supreme Court will review a trial court’s decision to provide refunds to continuing care retirement community residents who alleged a bait-and-switch scheme by a senior living operator.
Princeton, NJ-based Springpoint Senior Living, formerly Presbyterian Homes & Services, is accused of consumer fraud over allegations that it misrepresented the return of entrance fees once residents leave a CCRC. A lawsuit filed in 2014 alleged violations of the state’s Consumer Fraud Act and the Continuing Care Retirement Community Regulation and Financial Disclosure Act.
A Middlesex County Superior Court Judge denied a motion for partial summary judgment in December, 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.
A Springpoint spokeswoman told McKnight’s Senior Living that the company was “pleased” the high court agreed to hear its pre-trial appeal.
“The issue is whether a particular provision of the Consumer Fraud Act, which allows for the return of money paid by consumers and was adopted as part of a statute prohibiting misrepresentations about food, somehow also applies to contracts at elder care communities,” the spokeswoman said. “Springpoint believes that claims being asserted against it based on this refund provision are not permitted by the statute. The trial judge allowed the claims to proceed.
“Springpoint is hopeful that the Supreme Court will clarify the limited scope of the refund provision and direct that these claims be dismissed.”
Lawsuit 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 care 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 alleges 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 claims that Springpoint failed to alert prospective residents that it was authorized to offer discounts on 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.
Bill addresses CCRC refunds, contract language
A bill was introduced in the New Jersey Senate in February to require CCRCs to return refundable entrance fees to former residents or tier 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.”
