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Law360 (January 28, 2021, 10:13 PM EST) -- Sen. Elizabeth Warren on Thursday called a nursing home company's decision to grant a $5.2 million "retention bonus" to its CEO "unseemly" after more than 2,800 residents died from COVID-19 in the company's facilities.
In a letter to Genesis HealthCare Inc., Warren, D-Mass., also questioned why then-CEO George V. Hager Jr. and other top executives received bonuses after the company accepted $300 million in state and federal aid under the Coronavirus Aid, Relief and Economic Security, or CARES, Act. She also called out the fact that Hager announced his retirement shortly after receiving the bonus.
"I would like an explanation for this unfathomable greed amidst a public health tragedy and economic crisis," Warren said, adding that Hager also received a $935,000 annual bonus in 2020, a $650,000 retirement bonus and $300,000 consulting contract.
Hager was paid the bonus in October before announcing his retirement in January, according to Warren's letter, which cited various media reports and a U.S. Securities and Exchange Commission filing about the size of his bonus and other payments.
"We have received Sen. Warren's letter inquiring about the compensation decisions made by our board of directors concerning our former CEO and senior executives," Lori Mayer, a spokesperson for Genesis HealthCare, told Law360 in an email. "While the letter relies, in part, on inaccurate information published in the media, we are evaluating the inquiry seriously and look forward to the opportunity to provide more information and context in our response. Genesis has been on the frontlines during this pandemic with our leadership and employees working around the clock to keep our patients, residents and staff members as safe as possible."
Warren said the 2,800 deaths occurred at 350 Genesis facilities spanning 25 states as of December, a rate that is "higher than in comparable nursing home chains."
"To be clear: the pandemic has killed over 400,000 Americans, and it is possible that even aggressive actions by Mr. Hager and other Genesis executives would not have prevented outbreaks at company facilities," Warren said. "But there is no rationale whatsoever for offering Mr. Hager a multimillion dollar windfall in the wake of these fatalities."
Warren also said that Hager told investors during a November call that the company was "burning cash" during the pandemic.
"I now know that millions of dollars of that cash was spent on Mr. Hager's lavish bonuses and handouts to other top executives," Warren said. "CARES Act funding should not be used to line the pockets of company executives who fail to address the public health threats from the pandemic, and your company should not be seeking additional public funds while giving departing executives multimillion dollar bonuses."
Warren requested that the company provide her with answers to a series of questions by Feb. 10, including details about the relief funds it has received, if the Genesis board has the power to claw back the bonus money and if it intends to do so.
"What specific benchmarks related to the health and welfare of Genesis residents were in place with regard to decisions about Hager's bonuses and other ongoing payments?" Warren asked. "Did the company determine that he met those benchmarks despite the deaths of nearly 3,000 residents?"
Genesis did not respond to a request for comment.
--Editing by Emily Kokoll.
Update: This story has been updated with a comment from Genesis.
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