Sen. Elizabeth Warren (D-Mass.) is fuming over the “inexplicable and unseemly decision” to pay a $5.2 million “retention bonus” to a nursing home industry CEO after more than 2,800 residents died from Covid-19 in the company’s facilities.
In a letter to Genesis HealthCare Inc. released Thursday, Warren said the company approved “exorbitant” bonuses to former CEO George V. Hager Jr. and other top executives after receiving more than $300 million in state and federal Coronavirus Aid, Relief, and Economic Security (CARES) Act funding to help keep the struggling company afloat.
“CARES Act funding should not be used to line the pockets of company executives who fail to address the public health threats from the pandemic, and your company should not be seeking additional public funds while giving departing executives multimillion dollar bonuses,” Warren wrote to company chairman and CEO Robert Fish.
Genesis spokesperson Lori Mayer said the company received Warren’s letter. “We are evaluating the inquiry seriously and look forward to the opportunity to provide more information and context in our response,” she said, adding that the letter relies in part on “inaccurate information published in the media.”
The nation’s largest publicly traded nursing home operator, Genesis is pondering bankruptcy protection. Through the third-quarter of 2020, the company had lost $145 million in revenue—$71 million in the third quarter alone—because of low occupancy caused by the pandemic.
The company is scheduled to begin repaying at least $157 million in Medicare loans in April, and by the end of this year, it must pay back half of $65 million in deferred payroll taxes. The rest is due by the end of 2022.
“Such conditions raise substantial doubt about the company’s ability to continue as a going concern,” company Chief Financial Officer Tom DiVittorio said during a third-quarter earnings call in November.
After Hager was paid the $5.2 million “retention bonus” in October 2020, he announced his retirement earlier this month, according to Warren’s letter. Security and Exchange Commission filings show Hager will also receive an additional $650,000 bonus and a $300,000 consulting contract, Warren’s letter said.
“These extraordinary payments were awarded despite the fact that under his leadership, there were 14,352 confirmed cases of COVID-19 and 2,812 COVID-19 deaths at the more than 350 Genesis facilities spanning 25 states as of December 2020,” said Warren, who sits on the Senate Health, Education, Labor, and Pensions Committee.
“To be clear: the pandemic has killed over 400,000 Americans, and it is possible that even aggressive actions by Mr. Hager and other Genesis executives would not have prevented outbreaks at company facilities,” Warren wrote. “But there is no rationale whatsoever for offering Mr. Hager a multimillion dollar windfall in the wake of these fatalities.”
In addition, Warren cited media reports that said the company also put $2.1 million in a trust that will pay bonuses to seven top company officers.
“I would like an explanation for this unfathomable greed amidst a public health tragedy and economic crisis,” she wrote.
Warren asked the company to provide a detailed list of materials by Feb. 10, that includes: an accounting of Hager’s compensation since January 2020; board minutes relating to discussion of compensation; a list of all state and federal pandemic funding Genesis received; and whether the board knew that Hager would retire two months after receiving a “retention bonus.”