Vickie Holtz thought she was doing the right thing when she alerted state health authorities to unsafe conditions at the Minneapolis care facility where she worked.

The director of nursing at Bywood East Health Care, a 96-bed boarding care home for adults with mental illnesses, said she became alarmed last fall when she was unable to hire staffing agencies or procure essential medical supplies because bills were going unpaid. In one case, an elderly resident who was unable to walk on her own went weeks without a proper wheelchair because of the facility's deteriorating finances.

"I was in tears because I realized that, if we can't get proper equipment and proper staff, then we can't maintain a safe level of care," said Holtz, a registered nurse who had worked at the facility for four and a half years.

Now, Holtz, who is 52 and lives in Red Wing, is out of a job and is alleging a violation of the Minnesota Whistleblower Act, which prohibits employers from retaliating against staff who report violations of state law. She has not yet filed a formal complaint.

The former administrator said she was abruptly fired Monday, nearly five months after she warned state health officials that financial problems were putting residents in harm's way. Her warning triggered a far-reaching state investigation and a possible state takeover of the company that operates the facility. In October, the state Department of Health took the unusual step of asking a Ramsey County District Court judge to appoint a receiver for the owner of Bywood East and two other boarding care homes in Minneapolis that have fallen into financial disarray.

A recent state audit found pervasive financial problems and violations of state law at Mission Directed Health Care Inc., which owns homes in Minneapolis that care for about 160 people with mental illnesses and other health problems. The facilities collectively owe hundreds of thousands of dollars to vendors for essential items such as food, drugs, utilities and staffing. State investigators have also found that money has been siphoned from resident trust accounts to pay for expenses.

The situation has become so dire that some of the company's staff have resigned in recent weeks, and administrators are urging state regulators to take over the homes before they are forced to close and residents are displaced.

Stephen Kaminski, president and owner of Mission Directed Health Care, has said the Health Department's petition for receivership is unwarranted and largely based on false statements by employees.

He denied firing Holtz for reporting information to the state. Rather, he said Holtz was dismissed Monday for "performance-related issues," based on interviews with former and current staff who worked for Holtz. He declined to be more specific, citing employment law concerns.

Concern over wheelchair

Holtz said her job was to oversee resident care at Bywood East, which involved hiring and scheduling staff and procuring necessary medical supplies.

A struggle to get a wheelchair made Holtz suspect something had gone deeply wrong.

In September, Holtz said she noticed that a newly admitted resident — a petite older woman with an amputated leg and other physical ailments — was unable to get around because her wheelchair was too large for her small frame. As a result, the woman had to wait for someone to bring her to meals and activities. The resident also had a dangerous pressure sore and needed a small cushion to ease the rubbing against the chair.

"The fact that she couldn't move on her own really limited her independence and quality of life," Holtz said.

Holtz said she ordered a smaller wheelchair and cushion for the resident, expecting the supplies to arrive within 72 hours. Instead, days turned to weeks and the wheelchair didn't arrive.

After a flurry of calls, Holtz said she finally learned the $600 order had been declined because Bywood East owed the supplier about $9,000 in back payments. Holtz said she then used the company credit card to pay for the wheelchair and cushion, which arrived about three weeks late.

Soon after, Holtz said she became further alarmed when at least five staffing agencies began to refuse sending workers to Bywood East, claiming they were not being paid.

As a nurse and facility administrator, Holtz said she was legally required to report the problems to the state, which she did along with several of her coworkers.

"It was clear that the business practices of the building were now potentially causing harm to these residents," she said. "If we can't get basic medical supplies in a timely fashion, then we have a duty to call it in."

Complaint leads to investigation

The report prompted surveyors with the Department of Health to visit the facility last October and launch a deeper investigation into the provider's financial records. The agency found that Mission Directed's three facilities — Bywood East, Birchwood Care Home and Grand Avenue Rest Home — had a pattern of failing to pay vendors for items as basic as food, telephone service, waste disposal and supplemental staffing.

In addition, state health inspectors found that Bywood East had failed to safeguard residents' personal funds. A review of financial records showed that nearly $33,000 should have been in resident trust accounts as of Sept. 30, 2022. Instead, they showed a balance of $1,673, state inspectors found. A review of the facility's financial statements found that thousands of dollars were transferred out of resident accounts to fund payroll, according to a state health investigative report.

Holtz worried about being dismissed from her job since alerting the state to the problems, she said. Then, early Monday morning, Holtz said she had just arrived at work and laid her computer bag on her desk when she was asked to report to the administrator's office. She said she was met there by Kaminski, the owner, who ordered her to pack her belongings and leave immediately. No reason was given, she said.

"This unending crisis all began because one resident didn't have a properly fitted wheelchair," she said. "And now I have lost the ability to care for vulnerable adults and dedicated staff."

The Department of Health has said it cannot initiate a receivership until one is ordered by a district court judge. Currently, no such order exists. A hearing on the matter has been scheduled for April 26.