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Chappy's Golden Shores fights back with lawsuit

Chappy’s Golden Shores caretaker Benjamin Swanson stands in a bedroom at the closed facility. The room’s resident asked for the room to be left unchanged because she hopes Chappy’s reopens and she can return, Swanson said. (file / News Tribune)

The owner and two former employees of a Hill City, Minn., nursing facility that was closed by the state are firing back with a lawsuit asking that the ruling be overturned and the three women awarded damages of more than $1 million.

The lawsuit, filed on Thursday in 2nd District Court in Ramsey County against Minnesota Department of Health Commissioner Jan Malcolm and two of the department's investigators, alleges "a pattern of malicious and intentional misconduct" in the probe that led the state to revoke the operating license of Chappy's Golden Shores on Feb. 20. Investigators had ordered the facility closed, removed the 37 clients and temporarily suspended its license on Dec. 6.

Jason Steck, the attorney for Chappy's proprietor Theresa Olson and ex-employees Monika Olson and Lisa Anderson, also charged in a news release that the health department has been "blacklisting" former Chappy's employees.

Health Department spokesman Michael Schommer issued a two-sentence response to the lawsuit and Steck's news release.

"Our goal throughout the process has been to protect the safety and well-being of the vulnerable adults who had received services from Chappy's Golden Shores," Schommer wrote. "The public documents clearly show the basis for our actions."

Schommer didn't address the blacklisting allegation.

In the report that led to the state's actions, health department investigator Darin Hatch detailed maltreatment of 10 different clients, including physical assault and sexual misconduct. A subsequent health department investigation by Earl F. Bakke found maltreatment in the care of a client who fractured her hip on the day Chappy's was ordered closed.

The lawsuit filed by Steck, an attorney from Edina, Minn., names Hatch and investigator Amy Hyers as well as the health commissioner as defendants.

In his news release, Steck charged the investigators with "intentional failure to investigate as required by law, concealment of evidence, coercion of witnesses, bias and attempts to blacklist former Chappy's employees."

About the latter, the news release claims that "MDH employees have quietly distributed a blacklist directing health care facilities to refuse to hire former Chappy's employees, including those not accused of any maltreatment."

The allegations in Hatch's report included a staff member hitting a client with a frying pan and threatening to kill his cat, one staff member hitting a client in the head while another staffer held the client down, and two staff members having sexual relations with a client.

The findings tied the death of one client, Steven G. Nelson, to a severe beating at the facility. Steck and Theresa Olson have denied that Nelson was mistreated and have said his death had nothing to do with his care at Chappy's.

No criminal charges have been filed in connection with the state's findings. A spokeswoman for Aitkin County Attorney Jim Ratz said on Thursday that the attorney's office hadn't yet received information from law enforcement.

Steck said in a telephone interview on Thursday that misdemeanor charges have been filed against Theresa Olson and her husband, Keith Olson, but that those charges have nothing to do with maltreatment allegations.

The lawsuit against the health department calls for the license revocation order to be withdrawn pending a new investigation by personnel from outside of the department.

Chappy's laid off 75 employees after it was closed on Dec. 6.

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