According to a proposed class action, residents who left Pennsylvania senior living communities operated by Simpson Senior Services were denied full entrance fee refunds due to improper “Market Upgrade” deductions, sometimes in excess of $100,000.
Filed against the operators of the Jenner’s Pond, Simpson Meadows, and Simpson House communities, the lawsuit says that seniors looking to live in one of the defendants’ facilities must sign a form agreement stipulating they’ll pay hundreds of thousands of dollars in entrance fees. In exchange, the defendants agree to refund a portion of the entrance fees when a resident leaves the community and his or her unit is resold, the case says.
The lawsuit alleges, however, that the defendants, in violation of their contracts, have deducted unlawful “Market Upgrades” from residents’ entrance fee refunds in excess of $100,000 for purported renovations that were neither mentioned in nor permitted by the initial agreements.
The plaintiff in the case says she signed a “Continuing Care Agreement” before moving into the defendants’ Jenner’s Pond facility in 2007. Under the agreement, the plaintiff was permitted to reside in an apartment in exchange for monthly service fees and an “Entrance Payment” of $290,000, according to the suit.
The contract, which the suit claims is provided to all senior living residents in Simpson retirement communities, further stipulated that the defendants were to pay the plaintiff or her estate a refund of 50 percent of the resale value of her unit after she left, the complaint says. Moreover, the contract permitted the defendants to deduct from the refund only necessary “maintenance, repairs or replacements” to the unit, the lawsuit relays.
As the lawsuit tells it, because the defendants maintained “exclusive control” over the repairs and resale of residents’ units, they were in a position of fiduciary trust with residents, who were forced to rely on the companies to resell their apartments in good faith and maximize their refunds.
“As such, Defendants had a duty of candor and honesty and a duty to act in residents’ best interests when reselling the units,” the complaint reads.
After the plaintiff moved out of the Jenner’s Pond facility in December 2018, the defendants sold her unit the following March for $360,000, the case says. Despite being required to pay the plaintiff 50 percent of the unit’s resale value, the defendants sent the woman a check for only $124,377, the suit claims.
After inquiring about her reduced entrance fee refund, the plaintiff was allegedly told that the defendants “deducted the market upgrades ($111,247.00) from the sale price of $360,000 which gave us the resale value of $248,753.00. The refund amount is $124,377.00 which is based on 50% of the resale value.”
The lawsuit alleges that by using residents’ money to make “capital improvements” to the defendants’ property that were “entirely within Defendants’ sole discretion and control” and then reducing residents’ payments by those amounts, Simpson has engaged in self-dealing.
According to the suit, the agreements signed by residents do not provide for such “Market Upgrade” deductions, which fall outside the scope of the stated “maintenance, repairs, and replacements” permitted under the contract and are not even mentioned within the document.
The lawsuit, which looks to cover all former residents of a Simpson retirement community whose refund payments were reduced by a “Market Upgrade,” claims the defendants have “inappropriately and routinely” imposed their costs of capital improvements on former residents in violation of contractual terms.
Get class action lawsuit news sent to your inbox – sign up for ClassAction.org’s newsletter here.