Next Step nursing homes put in receivership for millions in unpaid rent, fees

Nearly a dozen Massachusetts nursing homes have been placed in the control of an independent receiver because they are millions of dollars in debt, new court filings show.

Next Step Healthcare’s landlord took the chain to court last month to recoup almost $15 million in unpaid rent and related fees, mainly from 2022 and 2023. A separate lender said in legal filings that Next Step owed it more than $3 million.

The landlord is a group of companies affiliated with a real estate trust called Cuarzo Healthcare. In court filings, the group said that Next Step was in “dire financial condition” and “there is significant risk of danger to residents in the form of diminished care.”

A Middlesex County judge granted Cuarzo’s request to appoint a receiver last week. A temporary management company took control of the nursing homes on Thursday.

Advocates for nursing home residents aren’t necessarily alarmed by the court-appointed receivership, which is designed to keep the nursing homes running while the legal dispute over Next Step’s debt continues. But the advocates see it as a significant step that should capture the attention of state regulators. 

“It warrants close monitoring,” said Paul Lanzikos, co-founder of Dignity Alliance Massachusetts, a coalition of senior and disability advocacy organizations.

Next Step owns 14 nursing homes across Massachusetts. Of those, 11 are now in receivership. A Next Step facility on the South Coast, Fall River Healthcare, is not among the facilities under receivership. It was added to a federal list of facilities with serious, repeated problems, The Light previously reported, but was taken off the list in late January, according to Next Step. 

State and federal authorities have repeatedly targeted the Next Step chain in recent years, citing it for failing to prevent abuse and providing substandard care, and accusing it of withholding wages from workers. Last year, a New Bedford Light analysis found that most Next Step facilities were below state staffing benchmarks more than a year after the chain reached a settlement with state prosecutors to resolve allegations that it put residents at risk by deliberately understaffing its facilities.

More than 1,000 people live in Next Step’s nursing homes.

Next Step’s financial challenges

Cuarzo’s court filings paint a picture of Next Step as a struggling business that can’t pay its bills or provide safe care for residents.

The landlord pointed to an independent audit of the Next Step’s finances for 2024, performed by the accounting firm Plante Moran, as evidence of the company’s “extreme financial distress and insolvency.” The audit found there was “substantial doubt” that the company could continue to operate, and that its financial obligations exceeded its assets by a 2-to-1 ratio.

Next Step had not paid rent during eight months and had only made partial payments during 16 months since 2022, according to Cuarzo’s complaint filed in court. The incomplete payments mainly are from 2022 and 2023. On average, Next Step has paid its rent 28 days late, the complaint said. 

The unpaid rent and interest added up to more than $13 million, according to the complaint. Cuarzo said it was also owed nearly $2 million in payments related to a 2021 deferred rent agreement.

Cuarzo pointed to Next Step’s low health inspection ratings, showing an “abysmal operating record.” Some inspections resulted in violations for putting residents in “immediate jeopardy” — a resident at Norwood Healthcare went missing for nine days, and nurses failed to provide CPR as required for a Plymouth Harborside Healthcare resident who stopped breathing.

Three of the nursing homes involved in the lawsuit, according to the complaint, have been candidates for the federal “Special Focus Facility” program, which concentrates extra enforcement on a select group of nursing homes with serious, continued problems. They are Plymouth Harborside Healthcare, Norwood Healthcare, and West Newton Healthcare.

Fall River Healthcare, another Next Step facility outside the lawsuit, was deemed a Special Focus Facility in late 2024. The nursing home graduated from the program in late January, a Next Step representative told The Light in an email. They did not immediately respond to The Light’s request for documentation. Fall River Healthcare still appears on the latest Special Focus Facility list, dated November 2025.

Representatives for the group of landlord companies did not respond to requests for comment.

The nursing home chain disputed Cuarzo’s characterization in court filings. Next Step described its financial condition and operations as “stable and improving.” It said it struggled to pay its rent from 2020 to 2023 because of the pandemic, but had been paying in full since 2023.

Next Step had asked the court to delay proceedings to start an emergency receivership so the chain could have more time to negotiate with its landlord. Without that delay, the company said it was “greatly concerned that there will be a breakdown of patient care,” which would “unnecessarily put at risk the health and safety of hundreds of nursing home residents.” The motion did not go into detail about how receivership proceedings would affect care.

Next Step did not make any company representatives available for an interview for this story. In a written statement sent to The Light, a spokesperson described the lawsuit as a “dispute with its landlord over rent relief provided several years ago during the COVID-era for 11 of its facilities” without going into detail.

The statement said the chain is working with the receiver to continue caring for residents. Contrary to the concerns the company raised in court filings, the statement said operations at the facilities “are in no way affected by the landlord’s actions.”

Next Step nursing homes transition to temporary management

The receiver, Michael Flanagan, is a Kansas City lawyer who has performed hundreds of receiverships for long-term care facilities across the country. He now has full control of the 11 Next Step facilities’ assets.

In a phone interview, Flanagan said the receivership is designed to keep the nursing homes running until Cuarzo can resolve its dispute with Next Step. That could include cutting ties and bringing in a new permanent operator.

The receiver has hired iCare Health Network, a nursing home chain and management company based in Connecticut, to oversee the day-to-day operations at the 11 facilities.

David Skoczulek, iCare’s vice president of business development and communications, told The Light the transition is going smoothly. He said the network sent 22 representatives to the Next Step nursing homes last week and they had a “good experience” meeting with the existing staff.

The network has bought nursing homes out of receivership in the past. It specializes in turning around distressed facilities, and would try to address the poor performance that Next Step’s facilities have been cited for, Skoczulek said.

“We will be approaching this receivership with all of our assets and all of our skillset,” he said. “We want to make sure we are immediately addressing those issues.”

iCare runs 12 of its own nursing homes in New England, including 10 in Connecticut, one in Vermont, and one in Massachusetts. The chain has three stars on Medicare’s five-star scale, in line with the national average.

Lanzikos, the advocate with Massachusetts Dignity Alliance, said his group is familiar with iCare and considers the chain a “mixed bag.”

“There’s a couple facilities that they run very, very well, and there’s a couple facilities that have significant problems,” he said.

Medicare ratings for iCare’s individual facilities range from two to five stars. Three of its Connecticut facilities have been flagged for abuse — recent inspections documented physical altercations between residents.

State health officials gave a severe citation to MissionCare at Holyoke, the network’s one facility in Massachusetts, last year. A resident died there after choking on a peanut butter and jelly sandwich, according to inspection records. The resident’s medical file said they had trouble swallowing and were not supposed to eat alone. The next inspection at the Holyoke nursing home cited it for more mistakes that could lead to choking. 

“Resident safety and dignity are non-negotiable priorities,” Skoczulek said in a written statement responding to the inspection results. At the three facilities with abuse flags, iCare has retrained staff, revised its policies, and improved oversight, the statement said.

After the death at the Holyoke facility, iCare conducted an internal review and added new food safety protocols, he said.

“The death of any resident is tragic, and our thoughts remain with that family,” he said. 

The next scheduled hearing in the receivership case is a status conference in April.

Email Grace Ferguson at gferguson@newbedfordlight.org

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