An out-of-court settlement between Rogue Valley Manor residents and the Manor's parent corporation Pacific Retirement Services gives the residents more autonomy, a voice on the Manor board and a partial refund of management fees they claim were inflated. Best of all for both the residents and PRS, the deal averts a lawsuit that could have dragged on for months had it gone to court.
The dispute between the Manor's more than 900 residents and PRS came to a head in August. Residents complained that PRS, created by Manor executives in 1991, had become too powerful and exerted too much control over the Manor's operations. Specifically, residents charged that the $3,500 management fees they paid to PRS to manage the retirement community on their behalf were higher than permitted under the terms of the Manor's own bylaws, which stipulated that the management be provided at cost.
Members alleged that profits from the excessive fees financed for-profit ventures outside the Manor, such as Centennial Golf Course, rather than benefiting Manor residents.
PRS responded to residents' protests by dismissing seven of nine Manor board members and firing Executive Director Kevin McLoughlin, who was popular with residents.
After two months of fruitless mediation, the Rogue Valley Manor Residents' Steering Committee broke off talks and announced it would file a lawsuit seeking $30 million from PRS along with reinstatement of McLoughlin and the dismissed board members.
A tentative agreement was reached in December to avert the lawsuit. The deal was presented to residents on Friday, and they voted overwhelmingly to ratify it over the weekend.
The residents didn't get everything they wanted — McLoughlin won't be coming back, and PRS will credit back only $400,000 in management fees, not the millions the residents said they had overpaid. But residents who contributed to the legal fund backing the lawsuit will have up to 70 percent of their expenses refunded.
Most importantly, the settlement guarantees two residents will have voting seats on an independent Manor board, and PRS will have limited power to remove board members. Fees will be capped for three years and negotiated after that.
Those provisions, along with the promotion of Sarah Smith from marketing director to executive director, should go a long way toward restoring residents' confidence in the Manor's future operations. PRS avoids what could have been a lengthy and costly court battle, one that could have badly damaged its reputation as one of the nation's premier continuing care retirement communities.