A trail of blood and brains led nursing home staff in Houston to a room where a mentally ill resident had beaten his two roommates to death.

A 45-year-old man who had been missing for hours at his Kentucky nursing home was found dead in a stairwell, his wheelchair on top of his chest.

And residents were left for hours in dirty diapers, clothes and sheets as they waited for help at seven New Mexico nursing facilities, the state’s attorney general alleges.

A stream of documented complaints from three separate states flows back to one nursing home operator: Preferred Care of Plano, which filed for bankruptcy in November.

As a reason for its financial troubles, the company has cited more than 160 “predatory” lawsuits.

When contacted by The Dallas Morning News, Preferred Care's bankruptcy lawyer, Stephen McCartin, reiterated that point.

“It is in the best interest of citizens to have tort reform. That clearly reduces contingency-fee, ambulance-chasing lawsuits. It absolutely does have an effect,” he said Wednesday.

From 2014 to 2016, the amount Preferred Care paid in legal fees jumped fivefold to $10 million, which limits its ability to spend money on patient care, its attorneys told a bankruptcy judge in December.

While the company portrays itself as a victim of a tort system run amok, The News' review of state and federal inspection reports and dozens of lawsuits found that Preferred Care locations in Texas and other states have a poor track record that includes neglect, injury and death.

In the three main states where it operates — Texas, Kentucky and New Mexico — an unusually large percentage of its homes have poor ratings, based on federal inspection data.

State health departments, lawyers and the hundreds of families they represent say that the company is using bankruptcy as a way to escape the consequences of a long-standing pattern of substandard care.

“If their quality of care were higher, they wouldn’t be getting sued,” said Dallas lawyer Gabriel Canto, who represents the family of a patient who died after falling twice in the same day at a Preferred Care nursing home in Tarrant County.

Lawyers for some of the families that settled with Preferred Care said their clients could not comment because they had signed confidentiality deals. Others simply declined to comment.

The bankruptcy leaves the scores of pending cases against Preferred Care in limbo as Chapter 11 legal wrangling plays out in a Fort Worth court.

The company strongly defends its operations.

“We stand by the quality of care that we provide and our dedicated employees that provide this care. The health, safety, and welfare of our residents will always be our primary concern,” said Robert Riek, a lawyer for Preferred Care, in an emailed statement.

Who is Preferred Care?

Preferred Care was incorporated in 1992 by Thomas Scott, a Collin County businessman, records show. Today it’s a web of corporations that includes technology services, rehabilitation services and nursing homes linked to Scott.

The company maintains a low profile. But with annual revenue estimated at $750 million, it is one of the country’s largest senior care providers, with more than 100 skilled nursing, assisted and independent living centers in 12 states, including 38 locations across Texas.

1 / 5A building where the offices of Preferred Care, Inc. is located at 5500 W. Plano Parkway, in Plano, Texas on Wednesday, Nov. 29, 2017. (Rose Baca / Staff Photographer) 2 / 5A building where the offices of Preferred Care Partners Management Group Consulting, LLC is located at 5420 W. Plano Parkway, in Plano, Texas on Wednesday, Nov. 29, 2017. (Rose Baca / Staff Photographer) 3 / 5Two buildings next to each other house the offices of Preferred Care Partners Management Group Consulting, LLC (left) at 5420 W. Plano Parkway, and Preferred Care, Inc. (right) at 5500 W. Plano Parkway, in Plano, Texas on Wednesday, Nov. 29, 2017. (Rose Baca / Staff Photographer) 4 / 5A sign in the lobby of Preferred Care at 5500 W. Plano Parkway, Plano TX.(Sabriya Rice) 5 / 5A 2014 photo of Casa Real nursing home in in Santa Fe, N.M. The New Mexico Attorney General sued the Preferred Care chain that year, alleging substandard care at seven nursing homes, including Casa Real. (Clyde Mueller / AP)

The Preferred Care Group and its associated companies operate from two buildings that sit side by side in an upscale area on West Plano Parkway.

In one building is Preferred Care Partners Management Group, which filed for bankruptcy in November. Next door is Preferred Care Inc. (which also filed for bankruptcy in November), as well several affiliated entities listed on a directory in the lobby, to include Preferred Care Partners, Pinnacle Health Management and Pincomputing.

Scott and his wife live on a 155-acre property in Celina that's valued at $3.7 million, records show. Scott owns several other properties in Collin and Grayson counties, as well as a home in Fort Lauderdale, property records show. For years, his company Preferred Care Inc. has sponsored a charity golf tournament benefiting the American Red Cross of North Texas.

Scott, 62, declined multiple requests for comment.

Lawyers for the company say the facilities are well run and point to the fact that homes in the Preferred Care brand have been allowed to remain open, even after health inspectors identified quality and safety deficiencies. “We’re heavily regulated and heavily supervised,” McCartin, said in bankruptcy court. “They did not say, ‘You need to go out of business,’” he argued.

Riek said that these lawsuits are ultimately hurting the bottom line.

“The [bankruptcy] filings were the result of financial drains resulting from a significant amount of lawsuits from predatory personal injury lawyers,” he said in an email. “These filings will allow us to redirect these funds used to battle these predatory law firms back into the facilities for resident care.”

What happened at Preferred Care

The Preferred Care group underwent a large-scale acquisition spree between 2004 and 2012.

It grew from 14 facilities to about 74, with locations in Texas, Florida, Kansas, Iowa, Arizona, Mississippi, Nevada, Louisiana, Colorado and Oklahoma. That number grew again about five years ago, when the company added facilities in Kentucky and New Mexico.

This amount of ownership turnover is rarely good for patients because it rarely leads to better quality, according to a 2016 study funded by the National Institute on Aging that looked at nursing home mergers and acquisitions. Well after new chains scoop up poorly performing homes, major problems persist, the study said.

Preferred Care inherited 21 nursing homes in Kentucky from another chain, Extendicare, in 2012. In court, McCartin said Extendicare had undergone an “avalanche of litigation” before it gave the homes to Preferred Care.

Preferred Care filed for Chapter 11 bankruptcy last year in U.S. District Court for the Northern District of Texas. It happened just months after a Kentucky jury issued a $28 million judgment in favor of a nursing home resident whose injuries were allegedly hidden from his family.

The facilities in the Preferred Care network have also come under scrutiny by state and federal regulators.

Its 12 nursing homes in New Mexico have had more than 700 violations, nearly three times the state average, and faced $700,000 in fines since 2014 for issues such as overmedicating patients, insufficient staffing and not addressing complaints, Victoria Nugent, a lawyer for the state, said in bankruptcy court.

Health inspectors find deficiencies in most nursing homes at some point.

But those with chronic, serious problems are sometimes designated a “special focus facility,” considered to be among the country’s worst by the Centers for Medicare and Medicaid Services.

They get inspected more often (about twice a year instead of annually) and risk losing federal dollars if they don't get better. Two of Preferred Care's nursing homes - one in New Mexico and one in Kentucky - were put on that list last year, though both are showing improvements, according to federal records.

That federal agency also rates nursing homes on a scale of one to five stars based on inspections, staffing levels and measures that evaluate, for example, how frequently patients fall, get hospitalized or see their health conditions worsen. Almost a third of Preferred Care's Texas locations get the lowest rating, compared with about one quarter of all other nursing homes in Texas.

Record of problems

Several cases uncovered by The News include patient deaths.

Septic shock from a severe infection caused organ failure in a 50-year old woman who died in 2013 after staying at the DeSoto Nursing and Rehabilitation Center, about a half-hour south of Dallas. That case filed in Dallas County was settled out of court in 2014 for an undisclosed amount to the family.

After nursing home staff in DeSoto dropped a 70-year-old man in the shower, he stopped breathing and had to be rushed to the emergency room. He never recovered and died two months later, according to a lawsuit filed last year by the family. The nursing home said in court filings that it did nothing wrong, but regulators fined the nursing home $117,975 over the incident, records show. The case is still pending in Dallas County.

The resident in Houston’s Lexington Place Nursing and Rehabilitation facility had a known history of mental illness before he fatally beat his two roommates in 2014 with a wheelchair armrest, leaving a trail of blood and brains behind him, a lawsuit by the victims’ families alleged. Staff didn’t see or hear the deadly assault, and video cameras in the room didn’t work, according to the lawsuit.

The nursing home administrator told inspectors the facility had done nothing wrong and could not have prevented the deaths, state records show. Still, regulators cited Lexington Place - which is now called Brookhollow Heights - for failing to protect the two residents who died.

The nursing home settled the lawsuit last year for an undisclosed amount.

After other problems occurred later that year — including a convicted sexual predator who abused two fellow residents - regulators fined the nursing home nearly $240,000, inspection records show.

The state tried to deny its license renewal in 2016 but then agreed to let it stay open after the home pledged to make improvements, according to state records. The facility has had no violations since fall 2016.

In Kentucky, where a resident was found dead in the stairwell at Woodcrest Nursing and Rehabilitation Center, his family and the nursing home agreed in October to settle for an undisclosed amount.

New Mexico’s attorney general sued the Preferred Care chain in 2014, claiming chronic understaffing at seven nursing homes. Residents sat in their own feces or urine and developed dangerous bed sores as they waited for help, the lawsuit claims.

Preferred Care has denied the allegations and called them wild and untrue. They've also said the New Mexico attorney general took the case after being lobbied by plaintiffs' lawyers who stood to make money by helping to push the case.

What's next in the case

While the $28.5 million Kentucky judgment may have made a hefty dent in the company’s bottom line, many cases against Preferred Care settle out of court for less.

And at least 33 states have imposed caps on the amount of money patients can collect in malpractice lawsuits, which may make it harder for people with legitimate claims to seek justice.

In Texas, where there are about 20 pending lawsuits against Preferred Care homes (compared to 27 in New Mexico and 97 in Kentucky, as of November) the cap on damages for pain and suffering is limited to $250,000. In Kentucky, there is no limit.

"If their quality of care were higher, they wouldn't be getting sued." - Dallas plaintiffs' lawyer Gabriel Canto

After the bankruptcy filing, some plaintiffs attorneys changed their strategy. They removed the Preferred Care name from the cases and instead are suing the individual facilities.

But the facilities themselves have limited funds, often because nursing homes are more frequently operated by several legal entities, each with limited responsibility.

In fact, nursing home structures were described as being complicated by design, helping to shield parent companies from potentially costly lawsuits, in a 2009 report from the Department of Health and Human Services. That report found that since 2000, the corporate structures in Texas had become so complex that about 11 percent had ownership stakes that ran at least five levels deep.

"We stand by the quality of care . . . The health, safety, and welfare of our residents will always be our primary concern."- Robert Riek, Preferred Care lawyer

“As a potential consumer, I’d want to know who owns the place and who’s holding the ball if something goes wrong,” said study author David Grabowski, a professor of health care policy at Harvard Medical School whose research focuses on nursing home mergers and acquisitions.

“Unfortunately, that data is not widely available.”

As the Preferred Care bankruptcy moves forward, the company is facing additional oversight.

In December, attorneys asked the Texas judge to require the company to pay for an ombudsman, an individual appointed to monitor care on behalf of patients at medical facilities that have filed for bankruptcy.

“These are not facilities that have a clean track record. These are facilities that have issues,” Elizabeth Ziegler Young said during a hearing in Fort Worth. She’s an attorney from the Department of Justice who deals with the the administration of bankruptcy cases.

The judge agreed. He pointed to the multitude of allegations of inadequate care and the unique vulnerability of patients with limited physical and mental ability in senior care facilities, among other factors.

The company intends to move forward with its plan to restructure, which includes selling all 33 homes in New Mexico and Kentucky. Homes in Texas will remain open and are not affected by the bankruptcy, Riek said.

“We’re passing the baton,” McCartin, a company lawyer, told the bankruptcy court judge. It’s only keeping the doors open at locations it plans to sell to protect patients until new owners can take over, he said.

Preferred Care lawyers also say the company should be applauded for not just walking away.

“We’re often the only game in town,” McCartin said.