Photo by George Lauby

Photo by George Lauby The lobby from the second floor balcony, July 25.

Officials at the Pawnee Assisted Living Hotel are battling to remain open in the face of a court filing by Nebraska Attorney General Jon Bruning.

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The hotel, located in downtown North Platte, serves nearly 70 low-income, mostly mentally ill residents.

The Attorney General filed suit Aug. 2 in Lincoln County District Court to terminate operations because the hotel has not provided worker’s compensation coverage for employees in more than 600 days.

The hotel has had one worker's comp claim by a former employee during that time, according to the attorney general's filing.

Hotel Director Sandy Schade said Tuesday that the hotel is in the process of obtaining a worker's comp policy and hopes to resolve the issue. The hotel board of directors has pursued the issue for several weeks. Schade said former board member Kendra Fletcher was the board's point person to obtain worker's comp, but Fletcher left the board before completing the project.

Fletcher, on the other hand, said she and two other board members had a policy lined up, but Schade was not forthcoming with financial records or the $4,500 needed to begin coverage.

Schade said Tuesday she is currently working with a North Platte insurance agent.

The hotel employs 22 people, according to Kathy Jo Smith, the president of the board. In the past, the hotel employed as many as 33, according to a report from the Nebraska Health and Human Services.

Smith said the staff and residents are feeling strained.

"I cannot believe this community doesn't have the heart to help us," she said. "All of us are only one accident away from a brain injury, and, chances are good we would need Medicaid to survive. This is the real world. These are real folks who need to be helped."

If the hotel closes, Smith said it would be like a family torn apart.

"That's the way the employees are trained, to treat the residents as family," she said. "They look out for one another. The elderly help the younger and the younger residents look out for the elderly."

Some of them are close friends and depend on each other, she said.

Some are scared to death, Activities Director Donnita Deaver said.

"When our residents hurt, I hurt," Deaver said. "No one knows our residents as well as I do."

Resident Terri Boles said she loves living at the Pawnee.

"What makes it home is that these people work hard for us," Boles said. "Sandy slept over one Christmas Eve because the weather looked bad and she didn't want to not be here for Christmas. These people go the extra mile for us."

Volunteer Janice Paternostro. who has also served on the board, said disruptions make things worse.

"When you upset people who have mental disabilities, it just compounds their problems," she said.

Caregiver Margaret Richards said working at the Pawnee has convinced her to change her field of study from graphic arts to art therapy. She is taking online college classes.

Three board members resigned in June -- Fletcher, Geri Kniep and Matt Feeney -- leaving only two members. Fletcher said she and Feeney had been on the board for some time, but Kniep was only on the board a month or so. Kneip was ambitious and wanted to clean and spruce up the hotel as soon as possible, Fletcher said, but her methods clashed with Schade's.

The Nebraska Attorney General asked the court to issue an injunction to restrain the hotel from doing business, but gave Schade and Smith until Aug. 30 to file a reply.

The hotel has been in financial straits for years. Paychecks have been late off and on for more than 12 months. By late May, some workers had gone without pay for three pay periods.

And in early July, the Nebraska Department of Health and Human Services ordered the staff to correct nearly 40 substandard practices related to cleanliness, meals, record keeping, lighting and client health.

The HHS report said there were no immediate dangers to the well-being of clients or employees.

Mental health advocates have also investigated to see if clients have been abused or neglected.

Schade said the staff is "working through it." The hotel is a low-income facility. so financial strains are part the situation, she said. She will meet with the HHS in two weeks.

Region II of the Nebraska Department of Health and Human Services, which oversees care for the severely disabled, has 10 clients in the hotel and is in the process of transferring them elsewhere, Schade said.

Complaints from employees about late paychecks have been filed with the Nebraska Department of Labor. However, half of the employees wrote the Bulletin and said "we are here for the residents, not for money. A few of us just hired on in the past few months. We knew what we were getting into and have no regrets."

The assisted living hotel had workers’ comp insurance at one time, but the coverage was cancelled Nov. 26, 2010. The hotel did not reply to a January 2011 state request to come into compliance, the attorney general said.

This report was updated Wednesday, Aug. 8.