Lender sues White Plains nursing home in $41.7M foreclosure

A Kansas insurance company has filed a $41.7 million foreclosure action against a White Plains nursing home that has struggled to survive since inception.

White Plains Institute for Rehabilitation lawsuit — The building is at the corner of Church Street and Barker Avenue in downtown White Plains. Photo by Bob Rozycki

Security Benefit Life Insurance Co. of Topeka sued White Plains Healthcare Properties I on May 1 in Westchester Supreme Court, to force the sale of the property at 120 Church St.

White Plains Healthcare is the landlord for Epic Rehabilitation and Nursing at White Plains. The Epic affiliate that runs the nursing home is not a defendant in the foreclosure action, but last year White Plains Healthcare sued the affiliate for nearly $114 million claiming that it had defaulted on the lease.

The 160-bed nursing home was designed to serve patients with Alzheimer”™s disease, as well as those in need of rehabilitation and long-term care, and patients with no financial means.

In 2017, Security Benefit loaned $38.5 million to White Plains Healthcare, an affiliate of The Congress Companies, the Peabody, Massachusetts company that built the nursing home.

Security Benefit claims that White Plains Healthcare missed 14 monthly payments, including four payments that were due before the Covid-19 pandemic struck, and that it missed the final payment last August when the entire principal balance came due.

Now the landlord owes $41,743,537, including late charges and other fees, according to the lawsuit.

Security Benefit is demanding that the property be sold to pay off the debts.

The lawsuit also names as defendants William A. Nicholson, CEO of the Congress Cos.; Howard Fensterman of Lake Success; Matthew Barbara of Islip; and Paul Barbara of Babylon, who allegedly guaranteed the loans.

Last year, White Plains Healthcare sued Epic for allegedly defaulting on a $506,097 monthly lease payment one month after Epic took possession of the building, in September 2019.

The landlord also claimed that Epic had failed to pay real estate taxes, utility fees and security deposits. It demanded nearly $114 million, including $95 million for future rents and fees over the 30-year-lease.

Epic and executives Lizer Jozefovic and Mark Neuman broadly denied the allegations in their response to the lawsuit, and they filed counterclaims of fraud and breach of contract.

They said Epic began planning the nursing home in 2009 and received a state Department of Health approval in 2012.

Fensterman and Nicholson said they could finance the project, according to Epic, and The Congress Cos. proposed building the nursing home for $56.6 million.

Epic says the financing was delayed for years, and then in 2015 White Plains Healthcare agreed to deliver the building by September 2017.

Instead, Epic”™s Josefovic and Neuman claim, the building was finished more than two years late and $5 million over budget in December 2019, just before the onset of the Covid-19 pandemic.

Delays in completing the project, Epic claims, caused it to “lose substantial revenue.”