A class-action lawsuit filed in 2013 against a senior living operator alleging consumer fraud over refunds to continuing care retirement community residents can move forward after a New Jersey judge denied a motion to dismiss the case.
Middlesex County Superior Court Judge Ana Viscomi denied a motion for partial summary judgment by Princeton, NJ-based Springpoint Senior Living on Dec. 9 in a lawsuit filed against the operator by current and former residents at five properties.
Viscomi rejected Springpoint’s argument that only the state Department of Health has the right to file a suit to obtain a refund of community entry fees. Springpoint asserted that the right to a refund under the New Jersey Consumer Fraud Act only applies to a portion of the statute involving food served at restaurants, hotels or lunch counters.
The court found that the state Consumer Fraud Act provides for refunds of entry fees paid by class members who died or moved out of CCRCs.
Julia K. Zauner, Springpoint vice president of marketing and communications, told McKnight’s Senior Living that the company “respectfully disagrees with the ruling.”
“The Consumer Fraud Act refund provision was passed as part of the Truth-in-Menu Act in 1980,” Zauner said. “The appellate division and other trial courts have found in several unpublished opinions that the language and the legislative history of the refund provision show that, and was intended to apply only to misrepresentations involving good products.
“The trial court acknowledged those authorities, but considered itself bound by some unfortunate dicta in Supreme Court decisions addressing other issues.”
Lawsuit claims company orchestrated ‘bait and switch’ scheme
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.
Evelyn DeSimone had paid a $159,000 entrance fee for an independent living unit at Monroe Village. Before moving into her unit, 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, her estate received a refund that amounted to 50% of her initial entrance fee — less than the anticipated 90% refund.
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 could effectively 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 introduced to address CCRC refunds
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.”
