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  • Manor rebellion

    Rogue Valley Manor Board files suit to seek independence from Pacific Retirement Services
  • Hints that something was afoot at the Rogue Valley Manor were subtle at first. But then boardroom cajoling gave way to blunter words and lawyers were called in.
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  • Hints that something was afoot at the Rogue Valley Manor were subtle at first. But then boardroom cajoling gave way to blunter words and lawyers were called in.
    As the quarterly Manor board meetings turned into almost weekly gatherings, many of the 950 residents of Southern Oregon's best-known retirement community started asking questions.
    Then it all hit like a thunderstorm blowing in from the Siskiyous: First the Rogue Valley Manor board filed suit in Jackson County Circuit Court asking for approval to seek independence from Pacific Retirement Services' control and the restoration of its authority over the retirement center's campus and affairs.
    The lawsuit alleges that "PRS has engaged in a course of dealing that has been improper and detrimental to the Manor and its residents," in part due to excessive management fees and interference by PRS in the Manor board's functions.
    PRS responded immediately, placing longtime Manor Executive Director Kevin McLoughlin on administrative leave, a move that some Manor residents said came because PRS believed McLoughlin had sided with the Manor board in the dispute.
    In a letter signed by the PRS board and management team and sent to Manor residents on Friday, the organization said it would fight any break-up attempt.
    "Because we believe the separation of the two organizations is not in the best interest of either RVM or PRS stakeholders, PRS will vigorously defend itself against this court action and is considering removal of one or more members of the Rogue Valley Manor board of directors," the letter stated.
    "It is important that you know the decision to make these changes was not made hastily. These actions are a result of PRS' lack of confidence in the RVM board's ability to successfully lead RVM into the future."
    In essence, said Earl Norgard, former president of the residence council at the Manor, the battle is for control and governance, with the Manor board attempting to gain equal footing with PRS when negotiating terms of management service. PRS has the power to set management fees unilaterally, with those costs passed onto Manor residents. (Correction: The name of the council has been corrected in this story.)
    "I think the gloves have already come off and I don't think our board is blinking," Norgard said.
    PRS has "in essence and fact" complete control over decisions affecting the Manor, said Norgard, a one-time chief financial officer for Wells Fargo. "The complete control has been used too much to their benefit and in some ways to our detriment."
    PRS owns and operates continuing-care units in Oregon, Washington state, California and Texas, and in recent years has focused on management agreements for senior communities.
    While Manor executives created PRS in 1991 to provide management and other services, PRS became in essence the parent company of the Manor, with its board appointing members to the Manor board. That took control of the Manor operations and finances out of the hands of its own board.
    The Manor board's complaint says the arrangement "no longer serves (its) stated organizational missions and no longer is in the best interests of the Manor, its residents and its stakeholders."
    Thomas McDermott, a Portland attorney representing the Manor board, said the board is seeking a preliminary injunction to head off any effort by PRS to remove members from the Manor board.
    At issue is PRS' pledge to the Manor that it would manage the senior living community at cost — with no profit — once the new parent company was formed, McDermott said. The Manor board believes extra fees collected from its residents now support less-profitable PRS endeavors, he noted.
    "We're not in the least bit interested in causing harm to PRS," McDermott said. "If approved, there is no ownership transfer, just a corporate reorganization. We would like to go back to the way it was before PRS was created. Then we'd be able to much more comfortably deal as equals and have at-arms-length transactions."
    PRS President and Chief Executive Officer Brian McLemore said there is more at stake than control of the Manor.
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