Five Star Quality Care, Newton, Mass., announced a lawsuit filed against Sunrise Senior Living, alleging that Sunrise overcharged by as much as $10 million for insurance while managing 31 of Five Stars senior living communities between 2003 and 2006.
Calls seeking comment were not returned before deadline by Sunrise, a publicly traded company based in McLean, Va.
According to the lawsuit, filed in Massachusetts Superior Court for Middlesex County, Sunrise discovered during an investigation of accounting irregularities that excessive self-insurance payments were made to Sunrises not-for-profit self-insurance program. Five Star severed all of its contracts with Sunrise by the end of 2006. In January of this year, communities currently managed by Sunrise received a memorandum notifying them they'd be reimbursed, according to the lawsuit, which argues that Sunrise has no legal basis to leave Five Star out of the planned refunds.
Sunrise faces an ongoing investigation by the Securities and Exchange Commission into insider stock sales, timing of stock option grants and historical accounting practices. -- by Gregg Blesch