Dunphy sues Lincoln County to try to stop sale of Pine Crest Nursing Home

Pine Crest Nursing Home in Merrill. Tina L. Scott photo.


On May 16, 2024, Donald Dunphy, District 7 Lincoln County Supervisor (elected in April of this year), filed a lawsuit against Lincoln County seeking an injunction to halt the sale of Pine Crest Nursing Home that was at that time set to close the end of June. Earlier this month, on June 18, the Lincoln County Board approved a resolution moving the Pine Crest sale closing date from June 30 to Sept. 30 of this year for logistical reasons. Dunphy said his lawsuit against the County is not related to Lincoln County‘s decision to extend the closing date for the sale of Pine Crest.
In the Complaint filed May 16, Dunphy asked the Court for a judgment “forbidding Lincoln County and any of its officers from signing a deed transferring the subject properties to the buyer,” the return of the earnest money to the buyer, and “an order declaring the Asset Purchase Agreement null and void.”
“I was opposed to the decision to sell Pine Crest from the beginning,” Dunphy said in a recent interview. “When I ran for [Lincoln] County Board, I told everyone I talked to that I would do my best to reverse that decision. The lawsuit is my vehicle to keep Pine Crest from being sold. My goal is to have the court declare the sales contract null and void.”
The basis for Dunphy’s lawsuit are his allegations that Lincoln County had failed to follow the best practices set forth in a previously created Lincoln County resolution detailing the best practices to be followed for selling high value property, and that by failing to do so, this resulted in the County signing an agreement to sell Pine Crest Nursing Home and the Health and Social Services building for less than they are worth. He also alleged the Lincoln County Code of Ordinances “vests jurisdiction” of the subject properties in the Lincoln County Board’s Forestry Committee.
Lincoln County Corporation Counsel Kerry Johnson responded to the allegations in the Complaint with a written Answer filed with the court on June 13. In that response, she said the previously passed resolution provided “suggestions and recommendations for the sale of certain high value property,” however, “the County Board was not required to follow such suggestions or recommendations.” Johnson’s Answer denied the allegation that the Board’s Forestry Committee has jurisdiction over the sale.
Dunphy further alleged that “a substantial consideration in the County’s decision to sell Pine Crest was the operating deficit experienced by the nursing home in the years prior to 2023.” And “that an increase to the Medicaid reimbursement rate paid to public nursing homes eliminated Pine Crest’s operating expense deficits beginning in the first quarter of 2023.” In Johnson’s Answer, she admitted the operating deficit was a factor in the decision to sell Pine Crest but said the County Board considered numerous other factors in reaching their decision, as well. She denied the allegation that the increase in the Medicaid reimbursement rate eliminated Pine Crest’s operating expense deficits beginning in first quarter 2023 and that the change in circumstances as a result of the Medicaid reimbursement rate were ignored “because it was focused on selling Pine Crest to the exclusion of all other considerations,” as Dunphy had alleged in his Complaint.
Dunphy made various other allegations in his Complaint which the County denied in their Answer, as well.
In their June 13 Answer, the County also made a motion to dismiss Dunphy’s Complaint on several grounds, including that he had failed to comply with statutory Notice of Claim requirements, had brought a Certiorari Complaint which is not permissible for review of a resolution passed by a County Board of Supervisors, that the Complaint is barred by the statue of limitations, and that the Complaint was filed outside the time period specified for Certiorari actions, among other reasons.
A hearing date has not yet been set on the motion for dismissal.
On June 4, Dunphy also filed an official Notice of Motion and Motion for Temporary Injunction barring the sale of Pine Crest Nursing Home.
Due to a conflict of interest in having a Lincoln County Judge handle this matter, though it is required to be filed in Lincoln County, in May Dunphy also filed a Notice of Motion to have the matter assigned to an out-of-county judge, and Judge LaMont K. Jacobson of Marathon County was assigned the case. Johnson subsequently filed a request for substitution of the judge to be Scott M. Corbett but that Application and Order for Specific Judicial Assignment was declined.
Dunphy’s proposed Order for Temporary Injunction was also declined at the June 25 hearing last week. According to Dunphy, it was declined “because it called for Judge Jacobson’s signature.”
“I am waiting for a new Judge to be assigned,” he said.
No additional hearings on the matter are currently scheduled on the court calendar.

Dunphy’s plan – if his lawsuit succeeds

Dunphy alleges in his filed Complaint “that an increase to the Medicaid reimbursement rate paid to public nursing homes eliminated Pine Crest’s operating expense deficits beginning in the first quarter of 2023,” and he recent alleged in an interview that “Pine Crest’s circumstances have changed for the better. Pine Crest ended 2023 in the black and revenues continue to exceed operational expenses this year. These two factors give us some breathing room to consider our options.”
However, Dunphy also said, “If I succeed in stopping the sale, I want a referendum to be held asking the voters if they are willing to increase property taxes by $2 million per year for 10 years to keep Pine Crest.”
In a somewhat contradictory statement, he said: “The increased revenue will ease the property tax burden.” However, a referendum would also be put on residents’ property tax bills, so it would increase the amount residents pay for that 10-year period.
He also then suggests that he would ask the community to further fund the nursing home’s maintenance expenses.
“The biggest expense involved in keeping Pine Crest is the deferred maintenance needs of about $12 million,” Dunphy said. “These can and should be addressed systematically at a rate of $1 million per year over the next 10-15 years. Some of the required maintenance is more urgent than the rest. We should decide which need has the most urgency and launch a community-wide fund drive do deal with it like we did when the library addition was built. This measure may pay for some urgently needed maintenance but, if not, whatever donations come in will help.”
“We can increase Pine Crest revenues even more if we implement an idea the Ad Hoc Committee on Pine Crest identified – converting one of Pine Crest’s existing wings to a dementia ward. There is a demand for nursing home beds of this type and the conversion would require little more than installing a security door,” Dunphy said. However, months ago North Central Health Care administrators and proposed new owners, Grant and Andrea Thayer, have said this plan is already in the works.
“It’s the democratic thing to do,” Dunphy said of holding a referendum.
“If the referendum fails, we can put our nursing home up for sale and you will hear no complaints from me,” he said.
Of course, such a referendum would take time to orchestrate and if the referendum fails, there is no guarantee the current buyer would still be interested in purchasing Pine Crest in light of such delays and expenses already incurred in moving forward toward a Sept. 30, 2024, closing date, and there is no guarantee a broker would be able to find a new buyer that meets the County’s requirements at such time as that might occur.

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