Landmark Recovery Evicted from Facilities, Owner Invests More Capital

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Landmark Recovery has been evicted from two facilities in different states, bringing the total of facilities lost to forced closures in 2023 to five.

Public documents and other sources show that the Franklin, Tennessee-based addiction treatment facility operator struggled with several financial obligations after the sudden closure of three Indiana facilities. After charting a high-flying course to national expansion, these and other developments show a company deeply in flux.

Landmark’s leadership contends that it offered to catch up on rent at the facilities — Landmark Recovery of Oklahoma City and Landmark Recovery of Las Vegas — but says the property owner rejected the offer.

Public records show Wellness Real Estate Partners owns the two properties. Ultimately, Wellness prevailed in retaking possession of the properties following rulings from local judges.

“The unexpected closure of our Indiana facilities immediately cut 40% of our company’s revenue,” Landmark Recovery co-founder and CEO Matt Boyle told Behavioral Health Business. “Due to the sudden shock, we were unable to pay rent for a period of 60 days while we sourced additional capital.”

State regulators in Indiana shuttered the three facilities after reports of mismanagement and three patient deaths in July. In September, Landmark Recovery lost an initial appeal to reinstate the licenses. The matter is pending.

Wellness Real Estate Partners filed legal action against Landmark Recovery in Las Vegas on Oct. 9 and in Oklahoma City on Oct. 12. Judges ruled on the evictions for each facility on Oct. 10 and Oct. 19, respectively.

In the Oklahoma case, Wellness Real Estate Partners claimed Landmark Recovery was behind on a total of $351,138.01 in charges as of Sept. 28. Wellness terminated its lease with Landmark — after serving it with notice — on Oct. 5.

Wellness is also seeking $418,306.92 in accrued charges through Oct. 4 and a total of $8.24 million in future rents, according to Wellness’ lawsuit in the action.

The same lawsuit shows — as does a publicly available copy of the lease — that Matt Boyle and Cliff Boyle, his co-owner and father, ​made a guaranty that made them responsible for the financial aspects of the lease if Landmark Recovery violated lease terms. Landmark denies several of the contentions in its response filed in court.

“We can’t publicly comment on Landmark Recovery at this time, but Wellness Real Estate Partners has been and will continue to be committed to working with behavioral health companies as a capital partner to support their growth,” Wellness CEO Patrick Haynes told BHB.

Boyle also said Landmark Recovery does not discuss pending litigation.

Internal company communications reviewed by BHB show Landmark Recovery management informed its Las Vegas staff on Oct. 23 that it would close by Oct. 27. The Oklahoma facility closed on Nov. 27, according to social media posts by an alumni group tied to the facility.

Landmark Recovery now operates 11 facilities. It opened its newest facility, Praxis of Morrilton by Landmark Recovery, on Nov. 25. Some Oklahoma City patients were transferred to the Morrilton facility — a more than four-hour commute.

How Landmark Recovery navigated its cash crunch

A representative for Landmark Recovery told BHB that Landmark Recovery was able to weather the financial crisis of suddenly losing its Indiana facilities through an “ownership infusion” of capital.

“The company isn’t prepared to say more than that at this time,” the representative continued.

As of 2020, when Landmark first partnered with Wellness Real Estate Partners in Las Vegas, Landmark Recovery’s real estate and operations were owned in combination by Cliff Boyle and two Boyle family trusts.

Cliff Boyle came out of retirement in March and works at the company as its chairman, where he leads “several corporate support teams,” the representative said.

Public deed documents and internal company communications reveal that Landmark Recovery also beefs up its balance sheet by selling facilities it first acquires and operates to real estate investment trusts (REITs), often for a profit.

In a Jan. 1, 2023, email to all staff reviewed by BHB, Matt Boyle said the company had lined up three facility sales that would bring Landmark a total of $140 million but didn’t disclose the buyers of those facilities.

Here are a few separate examples of this approach.

Landmark Recovery acquired the facility for Praxis of Cleveland by Landmark Recovery in Euclid, Ohio, from the Diocese of Cleveland Facilities Services Corp. for $625,000 on Nov. 16, 2018. It opened the facility in October 2021 and sold the facility to STORE Capital, a diversified Scottsdale, Arizona-based REIT, for $12.8 million in January 2023, according to deed documents.

The company acquired the property where it operates Landmark Recovery of Louisville for $1.65 million from Daymar Properties of Louisville LLC on Oct. 30, 2017, opened the facility in September 2017 and sold it to Irvine, California-based Sabra Health Care REIT for $8.8 million on Aug. 19, 2019.

This has been a crucial strategy for the company since its early development. In 2019, Matt Boyle told Louisville Business First that selling off facilities at higher-than-appraised rates on the promise of paying rent as a tenant in the facility was key to its expansion. The company was founded in 2016.

Another critical part of Landmark Recovery’s growth strategy has been to seek out certain skilled nursing facilities, or similar post-acute care settings, and convert them into addiction treatment facilities. It partnered with the health care REIT Welltower (NYSE: WELL) for its then-largest Medicaid-only facility located in Mishawaka, Indiana.

The facility has since closed after three male patients died under Landmark’s care at this center between July 3 and 9.

Troubles at Landmark’s Medicaid facilities

Landmark’s Praxis brand is dedicated to serving Medicaid patients in facilities separate from patients using other means to pay.

On Oct. 24, the St. Joseph Coroner’s office released its cause-of-death reports for each.

One patient reportedly died from a deadly combination of buprenorphine and gabapentin, a risky but accepted medication regime in addiction treatment. The use of gabapentin in treating opioid use disorder is an off-label use. The American Society of Addiction Medicine suggests the use of gabapentin in treating those in withdrawal of potent opioids and other substances. One study finds that patients taking medications are twice as likely to be admitted to the hospital for drug poisoning as those only taking buprenorphine. The coroner’s office ruled the death an accident.

Another died of natural causes related to chronic alcohol use. The third died by suicide.

Boyle told BHB in an email that the deaths were “tragic” and “a sad reality of the work we do.”

Boyle also views the coroner reports as vindication for the company.

In an internal email, Boyle wrote that the coroner reports proved the deaths were not the fault of Landmark Recovery.

“The events of July were tragic, but they were not a result of a failure of the company to provide quality healthcare,” Boyle wrote. “That is beyond a shadow of a doubt now.”

A wave of allegations

Still, the company is not without other external challenges. Landmark faces several lawsuits from former employees and former patients at its facilities in Indiana. A lawsuit previously filed in Indiana state court has moved to federal court.

Also, in federal court, an ex-employee in Colorado alleges she was wrongfully terminated as retaliation for her honesty to state regulators.

The suit, filed in the U.S. District Court for the District of Colorado, states that the former employee aided a virtual inspection as part of an audit of Landmark Recovery of Denver in Aurora. During the inspection, the former employee allegedly showed a state official a medication cart. She opened an unlocked “bottom drawer of the cart, revealing a large zip-tied bulk case of controlled-substance medications, including Ativan, Valium, and Suboxone.”

The former employee expressed concern about the facility’s lack of double-locked containers and not regularly counting controlled substances.

Landmark Recovery of Denver failed the audit over its handling and storage of controlled substances. Gaderick was fired on the shift after the audit results were delivered. According to the lawsuit, the nursing director told her, “The audit was the point of contention, based on your pointing out a problem.”

On top of the financial and legal challenges, the company has seen a revolving door of leaders coming and going or changing roles. Here are the changes BHB has tracked during 2023 and that Landmark Recovery has confirmed:

— Justin Hartman, chief revenue officer, is leaving the company in January 2024.

— Matthew DiGiacobbe, chief financial officer, departed in August and has not been replaced.

— Scott Quattrochi started 2023 as the company’s chief operating officer but left the role earlier in the year.

— AJ Henry, the company’s chief people officer, became chief operating officer and transitioned back to his original position.

— Joshua Hatch, chief growth officer, was let go in March.

— Michelle Dubey, chief clinical officer earlier in the year, was removed from the C-suite to similar vice president role.

— Matt Robinson joined as chief development officer in July.

— Chris Kang, general counsel and vice president of the company, is set to leave the company.

Landmark Recovery won’t replace any of the departing executives for the time being, a company representative told BHB. Leaning out the leadership team is part of the company’s plans to cut overhead and improve the speed of decision making, key parts to the company’s turnaround plan.

Other efforts have included laying off a third of the company over the course of a few weeks in August.

Financial troubles are still current. In Jefferson County, Kentucky — where Landmark Recovery operates two facilities — it faces two liens. In one, Indianapolis-based Cambri Builders is seeking $223,939 for its work on the renovation of the Praxis facility on Preston Highway. In the other, Louisville’s city government is seeking $4,263 in unpaid occupational license taxes.

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