Cold Spring Hills center says it won't immediately evacuate residents, pledges to bring future plans to bankruptcy judge

Cash-strapped Cold Spring Hills Center for Nursing & Rehabilitation will not move forward with the immediate evacuation of its more than 300 largely elderly and disabled residents and the termination of its 500 employees, a nursing home attorney said Friday during the facility's initial appearance on a federal bankruptcy petition.

The announcement comes one day after Cold Spring Hills, Long Island's second-largest nursing home, filed for Chapter 11 bankruptcy protection and only weeks after it disclosed plans to begin discharging or transferring its residents to other senior care facilities and to lay off its workforce.

On Dec. 20, a Nassau judge issued a temporary restraining order, sought by the state attorney general's office, blocking the layoffs and evacuations through at least Jan. 6.

In federal bankruptcy court in White Plains on Friday, Schuyler Carroll, an attorney for Cold Spring Hills, said the Woodbury nursing home will seek other options to settle its more than $50 million in debts before reconsidering its plan to close the facility. Any future plan to evacuate residents or to terminate staff would first be brought to the bankruptcy court, Carroll said.

"We are not seeking to implement the closure plan," Carroll told U.S. Bankruptcy Judge Sean H. Lane, who must approve the ultimate resolution of the case. "We are not seeking, today at least, to transfer or to sell the operations or any assets either. We are at the early stages of the case and we are working to determine what our best alternatives are."

With the nursing home's agreement to halt any immediate evacuation plans, the hearing scheduled for Monday in Mineola before state Supreme Court Justice Lisa Cairo on extending the temporary restraining order was adjourned until Jan. 22, records show.

Assistant Deputy Attorney General Paul Mahoney argued Friday that Cold Spring Hills used the threat of evacuating its 318 residents to pressure the state Health Department to approve an application by Eliezer Jay Zelman to become the nursing home's temporary receiver. Zelman, who owns several nursing homes elsewhere in New York, would then take over all operations, including paying staff. 

"They probably had no intention of carrying it out, because they knew it would kill people," Mahoney said. "But they announced it to put pressure on the Department of Health and the court. Their planning was straight out of Charles Dickens ... to close the facility and discharge the residents illegally on Christmas Eve and the first day of Hanukkah."

The bankruptcy filing comes as nursing home magnate Bent Philipson, the facility’s primary owner, and his son, Avi Philipson, the business' managing member, have struggled to meet Cold Spring Hills’ $1.4 million weekly payroll and to pay its creditors.

The bankruptcy petition indicates that Cold Spring Hills owes money to more than 330 creditors, with liabilities estimated at between $50 million and $100 million.

For example, court filings show Cold Spring Hills owes more than $20 million to vendors and suppliers; in excess of $15 million in benefits and pension contributions to its unionized employees represented by SEIU, Local 1199 — an amount the nursing home says are in dispute; and another $3.7 million to American Health Benefit Trust, an insurance services provider. Another $22 million is owed to the building's landlord, Cold Spring Realty Acquisition LLC, an entity owned by Bent Philipson, the petition states.

On Friday, Lane granted several initial motions sought by Cold Spring Hills.

They include an initial round of borrowing, through an approved financing agreement, to help the nursing home meet its payroll over the next several weeks. Additional motions allow Cold Spring Hills to continue using its existing bank accounts and to maintain all employee obligations, including salaries and benefits.

Lane also agreed to appoint a "patient care ombudsman" who can review patient records but declined to immediately select that individual.

Cold Spring Hills has been in financial peril for years, records show, largely stemming from a December 2022 lawsuit filed by the attorney general's office, charging the nursing home neglected resident care and skirted state laws through a fraudulent business setup designed to enrich its owners.

As the case proceeded, the 588-bed nursing home saw its resident population significantly decline while many longtime staffers departed.

In April, Cairo imposed a $2 million penalty as part of the lawsuit's resolution and appointed Lisa Wickens-Alteri as the nursing home’s independent health monitor.

Cold Spring Hills then proposed a plan with the state Health Department for closing the facility. But after state regulators said the nursing home failed to finalize the plan, the document was "considered withdrawn."

The nursing home has since filed an application with the Health Department for Zelman to become the facility’s temporary receiver in advance of potentially taking over as the business’ new owner. The department has yet make a decision on Zelman's application.

Cold Spring Hills is scheduled to return to bankruptcy court on Jan. 14.

By Robert Brodsky

robert.brodsky@newsday.com@BrodskyRobert

Robert Brodsky is a breaking news reporter who has worked at Newsday since 2011. He is a Queens College and American University alum.