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Southlake senior home fired sales director who refused 'price fixing' task, suit alleges
The former sales director says seniors are being taken advantage of with the increasing cost of care. The monthly median cost for a private room in a nursing home in Dallas in 2021 was $8,460.
Sarah Harris refused to complete a competitive analysis spreadsheet for her boss at HarborChase of Southlake, a senior living facility. She says that while this is a well-accepted practice in sales, it equates to price fixing. She wants to be an advocate for seniors, who are paying thousands a month to live in facilities that continue to inch up their prices, she says.(Shafkat Anowar / Staff Photographer)
By Natalie Walters
5:00 AM on Jan 3, 2023 CST
Sarah Harris says she was fired from her director of sales position at upscale assisted living facility HarborChase of Southlake for refusing to help it engage in what she says is illegal price fixing.
Her assignment was to create a competitive analysis spreadsheet by meeting with her counterparts at rival facilities to find out their pricing.
Harris, 64, told her boss this equates to price fixing and violates federal antitrust laws.
"Not only can the company be prosecuted but also the individual involved in the conversations," Harris emailed her supervisor on Sept. 15, 2021.
Later that day, Harris says her boss terminated her employment. HarborChase of Southlake says Harris resigned.
In September 2022, Harris sued the facility in the Northern Texas District Court, alleging retaliatory termination in violation of the Antitrust Anti-Retaliation Act of 2019.
"Immediately after I left, I knew I had been treated unfairly," Harris said. "You don't fire someone because of a moral conviction. You at least have a conversation."
The facility filed an answer to the suit in November in which it denied engaging in any unlawful employment practices as alleged by Harris. In a joint filing, the parties said settlement discussions had taken place but further discovery was needed before continuing. The facility also said in the filing that Harris resigned from her position and denied engaging in price fixing.
A trial date is set for Nov. 27.
In a statement to The Dallas Morning News, Karin Bateman, chief operating officer of the facility's operator, Harbor Retirement Associates, said "to protect the privacy of our associates and to respect the integrity of the lawsuit process, we are currently unable to comment or provide additional details."
Harris said the industry has been hurt by investors coming in to make money by developing and operating facilities, which sometimes turns the focus away from the level of care.
HarborChase of Southlake is part of Dallas-based developer Silverstone, started in 2012 by high-end commercial real estate businessmen Denny Alberts and John Goff. They sold Crescent Real Estate Equities, now an investor in Silverstone, to Morgan Stanley in 2007. The Silverstone development portfolio lists nine facilities, including The Preston of the Park Cities and HarborChase of Plano.
The portfolio is valued in excess of $1 billion.
"The industry is like typical corporate America," Harris said. "It's numbers-driven. Many facilities are owned by investors so they're very sensitive about the bottom line. The seniors are not always the focus. Sometimes it's more about the numbers."
An abrupt ending
Harris was excited to start as director of sales at HarborChase on July 26, 2021, having spent the past decade working in the senior living industry, she said. The facility is less than 30 minutes from Dallas and Fort Worth and offers assisted living and memory care services.
The employee Harris was replacing ran through the position's duties, noting the facility expected her to fill out competitive analysis spreadsheets each quarter to send to corporate, the lawsuit said. The practice is widely accepted in the industry and had been done at previous facilities she worked at but always made her uncomfortable, she said.
"It made me really nervous," she said.
Less than two months into her new job, Harris was asked to complete her first spreadsheet that listed the facility's competitors in the local market with spaces to enter details including the pricing for different floor plans, any price increases, any monthly discounts at that time and the amount required for a deposit.
"Make sure that you have accurate occupancy numbers and that you are showing any incentives that are being offered so that we can compare our rates to what is actually being sold," her boss wrote in an email, according to the lawsuit.
The following day, Harris emailed her boss that she refused to complete the task, saying it constituted illegal price fixing. After receiving the email, her boss told Harris she would accept Harris' resignation, the lawsuit said. When Harris asked if she would be fired if she didn't resign, her boss said she would, according to the lawsuit.
Harris then stood up and walked to her desk to gather her things and was escorted off the premises, the lawsuit said.
"Within four hours of sending the email, I was fired," Harris said. "I was stunned."
The facility argues Harris effectively resigned, while Harris says being told she could resign or be fired is the same as being terminated.
Related: Considering a retirement community for your aging parents? Here are 7 tips
HarborChase of Southlake is less than 30 minutes from Dallas and Fort Worth and offers assisted living and memory care services. (Liesbeth Powers / Staff Photographer)
Wrongful termination?
The Criminal Antitrust Anti-Retaliation Act of 2019, which is cited in the lawsuit, prohibits employers from retaliating against employees who report possible criminal violations, including price fixing, internally or to government authorities.
If an employee is retaliated against, they can file a complaint with the Secretary of Labor and, if they don't receive a final decision within 180 days, they can file a civil action in federal court. Harris filed her complaint with the Secretary of Labor in December 2021. She's still awaiting a final decision.
No big damages or awards are granted in these cases compared with others, attorneys say. If the case is won, the employer has to reinstate the employee at the same seniority level and grant them back pay and interest, as well as special damages, including attorney fees.
Michael Finio, counsel at Saul Ewing in Harrisburg, Pa., said the Anti-Retaliation Act is new, so it's hard to say how the case may proceed. In a search of federal court cases nationwide and state court cases in Texas, the legal team behind Harris, Jackson Spencer Law, found no other cases that have used the Anti-Retaliation Act.
Finio noted the act protects employees who speak up about possible criminal violations and, while it's a felony for companies to agree to fix prices, it's not illegal for them to share pricing information.
"Sharing isn't a good idea because it creates an environment in which illegal things can happen," he said. "I always tell clients they're creating a risk that's easily avoidable by keeping their mouth shut. There are many cases where two to three years after, it's sourced back to an email or phone call where someone said or did something dumb."
If the case goes forward, he said Harris' attorneys will have a "field day" asking the facility's executives about the practice, including how long they have been doing this, what they do with the information and why they put employees in this position.
Brian Robison, attorney at Brown Fox in Frisco, said based on the complaint Harris filed, he thinks the case will likely move past a motion to dismiss it and go into discovery.
"It appears she sees what she thinks is a problem. She reports it. And then she's told to quit or she'll be fired," he said. "So just reading this, it looks like she has a case."
The Sherman Antitrust Act of 1890, which Harris references in the lawsuit, prohibits activities that restrict competition in the marketplace. But the act's "incredibly vague" language about what is considered restrictive has pushed courts to apply a reasonability test.
If competitors are truly fixing prices, that would be unreasonable, Robison said. But in this case, it depends on what the facility is doing with the information, he said.
"There is a narrow set of circumstances where competitors can exchange information, even pricing, if it's not for an anti-competitive reason," he said. "But what they're doing is very dangerous. They're playing with fire."
Jennifer Spencer, managing partner at Jackson Spencer Law, said HarborChase can obtain pricing information on competitors lawfully with mystery shopping, where it would hire someone to pretend to be interested in its competing facilities in order to gather pricing information on them.
The burden is on HarborChase to show what reason it had for collecting all pricing and discount information from competitors and keeping it in a spreadsheet other than to fix prices, Spencer said. Spencer said she doesn't foresee having to prove that what HarborChase did was price fixing. Either way, it was illegal for the facility to terminate Harris after she brought up something she thought in good faith was criminal, Spencer said.
An accepted wrong?
Harris said competitive analysis spreadsheets are widely accepted in the industry, despite the potential harm to seniors. When used, facilities raise prices based on what competitors are charging rather than the cost of business, she said.
The monthly median cost for a nursing home facility in Dallas in 2021 was $5,627 for a semiprivate room and $8,460 for a private room, according to Genworth's annual Cost of Care Survey.
Harris says when she was asked to perform the practice she had long side-eyed, she saw it as an opportunity to be an advocate for seniors.
"Our elderly people in America are extremely vulnerable," Harris said. "And as health care providers, we should be their advocate and look out for their best interests."
Harris said she hopes her case can start a conversation about the predatory practice. She said the Department of Justice interviewed her about the case in August.
"It's an epidemic across the nation; that's why the DOJ is interested in the case," she said.
Related: Dallas retirement home Edgemere drops restructuring plan, backs sale plan
Natalie Walters, Business reporter. Natalie is an award-winning reporter who covers banks, crypto, fraud, deals and other money topics for The Dallas Morning News. She was previously based in New York where she reported for The Motley Fool, TheStreet and Business Insider. She grew up in Augusta, Ga., and holds an MA in Investigative Journalism from The Cronkite School.
natalie.walters@dallasnews.com NatalieReporter
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