CCRC Residents Sue Community for Financial Practices
Vi at Palo Alto residents filed a class action lawsuit in federal court Wednesday alleging the continuing care retirement center funneled $190 million in refundable entrance fees to its corporate parent with no assurances they would be returned.
CC-Palo Alto is now running a deficit of $300 million as a result of “up-streaming” the fees and owes more than $450 million to 500 residents, according to the complaint.
The complaint, which is believed to be the first of its kind challenging a continuing care retirement center’s financial practices, also accuses CC-Palo Alto of inflating monthly fees through bogus charges.
For instance, the entity allegedly passed on additional taxes the Santa Clara County Assessor’s Office ordered it to pay in 2011 for transferring fees out of state. The fees were dubbed “entrepreneurial profit.”
The suit also claims residents are footing the full premium for earthquake insurance. The contracts they signed, however, only require them to pay for “furniture, fixtures and equipment,” not exterior damage, according to the complaint. And since 2006, residents have allegedly paid millions of dollars for national marketing costs that were not spelled out in their agreements.