California AG Sues Nursing Home Operators for Alleged Neglect and Misuse of Funds

SAN DIEGO — California Attorney General Rob Bonta has filed a sweeping lawsuit against a group of for-profit companies tied to 19 skilled nursing facilities across the state, alleging they siphoned millions of dollars while failing to provide adequate care to elderly residents.

The civil lawsuit, filed in San Diego Superior Court, targets one corporation and 24 related limited liability companies. The complaint links the businesses to Aaron Chesley, co-founder of Carlsbad-based Sweetwater Care, and James Gamett, founder of Encinitas-based Sweetwater Private Equity. While Sweetwater Private Equity is not named as a defendant, the lawsuit claims the network of companies ultimately benefited both men.

Chronic Understaffing and Patient Harm

The complaint alleges that the companies extracted management and administrative fees from the nursing facilities while billing Medi-Cal and Medicare, all while shortchanging staff and compromising patient care.

On about 30% of the days reviewed between 2020 and 2024, the facilities failed to meet California’s requirement of 3.5 direct care service hours per patient per day. According to the lawsuit, 6,443 instances were recorded where staffing levels fell below this legal standard.

These staffing shortfalls allegedly resulted in serious harm to patients. The complaint describes elderly residents suffering from untreated pressure ulcers, unwitnessed falls, and missed medical emergencies. Some residents were found soiled in urine and feces for extended periods.

A System Built to Obscure Responsibility

Sam Brooks, director of public policy at The National Consumer Voice for Quality Long-Term Care, said the ownership structure described in the lawsuit is unfortunately familiar. He noted that “these layers and layers of ownership allow them to hide profits, allow them to hide from liability for their poor care,” and called the outcomes described in the complaint “just horrible.” Brooks added, “Sadly, I’ve read about a lot of situations like this — it’s all too common.”

None of the 19 facilities are located in San Diego County. Instead, they are spread across smaller cities such as Clearlake, Porterville, Visalia, and Tulare.

$300 Million Billed, $31 Million Diverted

During the time period investigated, the facilities billed nearly $300 million in government reimbursements. However, over $31 million was allegedly diverted as profit or management fees, instead of being used to meet legal staffing standards.

“The Sweetwater defendants chose to offer salaries and wages... that were below market wages, thereby causing and contributing to the understaffing patterns,” the lawsuit states.

California law permits related-party transactions in nursing homes if they are disclosed. However, the Attorney General’s office and advocates argue that these arrangements often mask the removal of money from patient care. Brooks said recent research suggests that “60% of profits are hidden in these related party transactions.”

Seeking Accountability

The lawsuit seeks penalties of $2,500 per violation per defendant. Advocates say the case highlights the need for stronger regulation to ensure taxpayer dollars are used for patient care—not corporate profit.

“Ultimately, there needs to be a limit on or a requirement that says, you know, something like 90 cents of every dollar goes toward direct resident care,” Brooks said.

The Attorney General’s office said the case is part of an ongoing effort to hold nursing home operators accountable and to protect vulnerable Californians.