Immense nursing home set to close following failed sale, bankruptcy

A troubled New York nursing home is closing its doors with approval from a state bankruptcy judge and the Department of Health after years of legal and financial challenges — including failing to secure a buyer even with a $10 sale price. 

Six hundred-bed Cold Spring Hills Center for Nursing and Rehabilitation is expected to end operations no later than May 15. New York’s Department of Health recently signed off on the closure and said the decision was reached after carefully considering the health and well-being of the facility’s 300 residents.

“The department has approved the closure plan submitted by operators of Cold Spring Hills following the US Bankruptcy Court’s approval of the motion by Cold Spring Hill’s operator to approve the closure plan,” a department spokesperson told McKnight’s on Wednesday. “The department will ensure the facility operator and administrator carry out a safe and orderly closure that respects the needs and desires of — and is as minimally disruptive as possible to — nursing home residents and adult day health care program registrants and their families.”

The Woodbury, NY, nursing home began sending out termination notices to more than 10% of its 500 employees on Feb. 7, according to local reports. The layoffs came after the proposed buyer, Eliezer Jay Zelman, who runs several nursing homes across the state, backed out of weeks-long negotiations to take over the facility. He was approved to purchase Cold Spring Hills for just $10, though that initial number was contingent upon him taking out a $72 million mortgage. 

Zelman was unable to reach a deal with 1199SEIU United Healthcare Workers East, a union that most Cold Spring employees belong to, and through which they received previous health insurance coverage. 

He sought to remove positions from the bargaining unit, including registered nurses, physical therapists, physical therapy assistants, occupational therapists, respiratory technicians and dietitians, according to court documents obtained by Newsday. 

He also wanted to “eliminate all scheduled wage increases and drastically slash benefits,” while sustaining a health insurance plan provided by Cold Spring Hills where the facility paid the insurer directly.

A union attorney said that unless the nursing home allowed union members to opt back into their union-sponsored health plan, an agreement could not be reached, Newsday reported. 

The signs were there

The 600-bed nursing home, Long Island’s second largest facility, was founded by Bent Philipson; his son Avi has a 24% stake in the company.

In 2023, the pair were at the center of a civil case brought by New York Attorney General Letitia James that alleged the older Philipson was the principal owner and that the organization instituted straw owners to conceal his control.

The suit alleged Cold Spring diverted over $22.6 million in Medicaid and Medicare funds from resident care through a “fraudulent network of companies that were used to conceal up-front profit taking” and that the owners repeatedly cut staffing before COVID.

That’s just a fraction of the legal troubles Cold Spring owners have faced, with health benefits being a key factor in much of the litigation brought on by workers.  

In August 2023, employees and 1199SEIU representatives asked the state to place the nursing home in receivership after employees alleged they were wrongfully stripped of their healthcare benefits. 

Two months later, in October 2023, a lawsuit filed by the attorney general was resolved when state Supreme Court Justice Lisa Cairo ordered the company to promptly pay $2.65 million to ensure employees could keep their health benefits. At that time, the facility was appointed a nursing home’s health monitor.

Six months later, however, in April 2024, Cold Spring Hills was held in contempt for failing to make the payment.

The owners recently said in court documents that the facility was losing more than $600,000 weekly.

In December 2024, Cold Spring officials wanted to initiate an “emergency evacuation” of residents, and a Dec. 31 facility closure with sweeping layoffs, according to Newsday. 

The move was blocked by Justice Cairo who granted a temporary restraining order, requiring the facility to remain open and forgo plans to transfer any residents.