Early Briefing: Raising Our Tech IQ

* Columnist Steve Pearlstein lists several projects in the works that could unlock Washington's tech potential.

The University of Maryland has snagged an important anchor tenant for its new research campus at College Park: IARPA, which will do for intelligence research what DARPA did for basic research in the defense arena and which should attract dozens of private contractors into its orbit.

In a few weeks, Virginia Tech will announce its intention to build a new research center in Arlington, in collaboration with the National Science Foundation, where it will conduct cutting-edge research in bioinformatics, biomedicine and management of the national energy grid. Virginia Tech already offers more than a dozen graduate programs at campuses in Alexandria and Falls Church, but the new research center represents a conscious strategy on the part of President Charles Steger to increase his university's footprint in the Washington area.

Even more ambitious is a plan being put together by Johns Hopkins, along with the University of Maryland and Shady Grove Adventist Hospital, to create a 600-acre "life sciences city" in Shady Grove. It would be home to an expanded hospital complex, government and academic research labs, biotech companies and incubators, and a range of academic programs. But it would also include housing, retail and restaurants, parks, and public transportation infrastructure to transform what is now a collection of office parks into something more like an urban academic community.

At the center of the effort are 108 acres of cattle farmland, known as the Belward Farm, that Hopkins purchased nearly 20 years ago from Elizabeth Banks for $5 million. As part of a new master plan for the area, the state and county have agreed to make changes in plans for a new highway and transit line to accommodate the new complex. When completed, the project would generate hundreds of millions of dollars in new private investment, create space for tens of thousands of new workers and students, and be home to thousands of new residents.

The theory behind the Shady Grove "life sciences city" is that the most vibrant tech clusters are those in which students, teachers, researchers, entrepreneurs and government officials can easily and informally rub shoulders, exchange ideas and hatch bold, ambitious plans. That's what makes places like Cambridge and Palo Alto so successful and so attractive, and what's largely been missing from the local tech scene.

And just this week, five universities announced the creation of the Chesapeake Crescent Innovation Alliance, with the idea that by collaborating and sharing resources, they might be able to attract funding or engage in research that no one institution could do on its own.


Rising fuel costs have caused vacationers and Washington area tourism companies, such as Open Top Sightseeing, to trim spending.

* The spike in fuel prices is hitting the Washington region's tourism industry during the heart of the high season, pummeling vacationers and the companies that cater to them. Official numbers won't be available for months, but warning signs have been spotted.

Some travelers are cutting their trips short and have less money to spend. Tour bus operators and sightseeing boats struggle to maintain prices even as their costs increase. One rental car company is offering free gas to keep people driving as the specter of $4-a-gallon fuel begins to reshape the way we spend our time off.

* Federal data show that Virginia's economic growth slowed in 2007, mirroring a trend in various other states.

The U.S. Bureau of Economic Statistics said Virginia's gross domestic product grew about 1.9 percent in 2007, slowing from 2.2 percent in 2006. The gross domestic product reflects the value of goods and services produced in a state, the Associated Press reported.

The bureau said the state's gross domestic product was about $321 billion for 2007, up from $315 billion in 2006. The state's per capita GDP rose to $41,617 in 2007 from $41,222 in 2006, ranking the state eighth overall in per capita GDP.

The data also show that real GDP growth slowed in 36 states last year as declines in construction, finance and insurance restrained growth.

* More after the jump on a new Metro station for Alexandria, the fight over Clarksburg development, the appointment of people to oversee Prince George's struggling hospital system, and the dismissal of a former chief financial officer's lawsuit against Sunrise Senior Living.

* Alexandria officials are moving closer to adding a Metrorail station on the Blue and Yellow lines near the Potomac Yard development. It would be the first station built in the region since 2004.

The station would be on the east side of the $2.6 billion Potomac Yard development, between the Braddock Road and Reagan National Airport stations.

Earlier this week, the city Planning Commission approved higher-density projects at a town center near the proposed Metro station. The approval, along with an analysis that showed future tax revenue could help finance the $150 million station, has made the station more likely.

* Three years after residents of Clarksburg Town Center found irregularities in their northern Montgomery County development, angry residents say things still aren't being built the right way. And the developer, Newland Communities, is complaining that the residents group is part of the problem.

The disagreements are the focus of dueling lawsuits filed recently over efforts to create a walkable downtown in Clarksburg Town Center. The community is one of several planned developments in an area near the Frederick County border that is expected to grow to about 13,000 homes.

* Prince George's leaders have chosen a lawyer and two financial gurus to represent the county on an authority designed to seek new owners for the county's struggling hospital system.

County Executive Jack B. Johnson (D) and County Council Chairman Samuel H. Dean (D-Mitchellville) said yesterday that they have chosen former Prince George's chief administrative officer Kenneth Glover, former county budget director Thomas M. Himler and Stan Brown, people's zoning counsel for the county.

The group will be joined by three members selected by Gov. Martin O'Malley (D) and a member chosen jointly by the Senate president and speaker of the House of Delegates, none of whom have yet been named.

The hospital system, anchored by Prince George's Hospital Center in Cheverly, is owned by the county and managed by the nonprofit Dimensions Healthcare. The authority will solicit bids from health care companies interested in taking over the system from Prince George's and Dimensions.

* A lawsuit brought by Sunrise Senior Living's former chief financial officer against the company has been dismissed, and neither side is discussing the outcome.

Bradley Rush's lawsuit, filed in September, came as the McLean-based operator of retirement communities grappled with accounting problems that eventually led it to lower earnings by $173 million from 1996 through 2005. A special board of directors committee ultimately determined that "inappropriate accounting" had occurred over a two-year period from the summer of 2003 through the end of 2005, and the company subsequently let go three senior executives, including the president,

Rush was suspended and terminated before that, in the spring of 2007, after the company decided he had failed to adhere to Sunrise's document retention directives, the company said at the time. Sunrise said it had asked employees on two occasions to retain documents about specific accounting issues in anticipation of a review.

Rush sued Sunrise for breach of contract and other claims, saying that the company "initiated a public and private campaign" to defame him "directly and through innuendo" by making it appear he was responsible for the accounting troubles. Rush said senior management pressured him to complete a review of the company's accounting irregularities because Sunrise was looking to be acquired. His suit asked for $13.5 million in lost compensation and other damages.
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The company said the suit lacked "both factual and legal merit."

"The litigation concerning Sunrise and Mr. Rush has been dismissed," the company said in a statement. "We have no additional information to share on this matter."

Rush's attorney, John Dowd of Akin Gump Strauss Hauer & Feld, did not respond to multiple messages left with his secretary.

By Dan Beyers  |  June 6, 2008; 7:32 AM ET  | Category:  Morning Brief
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OPEN LETTER TO
SENATORS MEL MARTINEZ (R-FL,) RUSSEL FEINGOLD (D-WI,) HERBERT KOHL (D-WI) and
PATRICK LEAHY (D-VT)

S. 2838: Fairness in Nursing Home Arbitration Act

Thank you so very, very much for studying and proposing the Fairness in Nursing Home Arbitration Act regarding the legal rights of nursing home and assisted living facilities residents and, thereby, recognizing the sheer agony their caregivers have gone through and still are going through because of the greed of owners of such facilities.

Such a study and such a law is long, long overdue.

Thank you also for keeping the record open so that I will be able to file some of my voluminous file regarding Sunrise Senior Living which, hopefully, will be the subject of a future hearing (a hearing about hospices is also urgently needed.)

Please be aware that on February 7, 2001 Congressman Pete Stark introduced a joint resolution with Mr. Waxman, Mr. Coyne, Mr. Frost, Mr. Lantos, Mr. Miller, Ms Schakowsky and Mr. Strickland calling for a White House conference to discuss and develop national quality of care recommendations for assisted living facilities. This resolution was introduced because of what was (and is still happening) in Sunrise facilities. The latest lawsuit against Sunrise has just been filed in Gaithersburg.

I listened intently to the discussion taking place during your hearing hoping against hope that mention be made of "Sunrise Assisted Living." And, bingo, I had it at the very end just before the close of the hearing when it was said that sunshine was needed to make sure the public knows what happens in nursing homes and assisted living facilities. A lawsuit against Sunrise in Lagoona Hills, CA was mentioned as an example! The speaker assumed that Sunrise would be mortified by that lawsuit... Really?

Mortified? I have been following Sunrise since the fall of 2003 and discovered to my dismay that Sunrise has been sued in practically every State of the Union and that articles about Sunrise have appeared in all and every major newspaper in the US without having any effect whatsoever on the owners or Sunrise or Board Member Chamber of Commerce Tom Donohue. Mortified is not in Sunrise or its sub companies' corporate culture. The mighty dollar is.

I am attaching hereto the July 2007 Sec Report which ends thus: "Sunrise is involved in various lawsuits and claims arising in the normal course of business. In the opinion of management, although the outcomes of these suits and claims are uncertain, in the aggregate they should not have a material adverse effect on Sunrise's business, financial condition and results."

Thank you and your staff for your attention to nursing home and assisted living problems because, as was mentioned at your hearing, a breakdown in daily care at such facilities causes major expensive and painful health problems for the residents as well as an out-of-control rise in health care cost for the community at large.

Marguerite-Jeanne Crais (Greta Swinnen Crais)
413 Queen St.
Alexandria, VA 22314
703 836 6255

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): July 25, 2007

SUNRISE SENIOR LIVING, INC.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization) 1-16499
(Commission
File Number) 54-1746596
(I.R.S. Employer
Identification No.)


7902 Westpark Drive
McLean, Virginia 22102
(Address of principal executive offices) (Zip Code)

(703) 273-7500
(Registrant's telephone number, including area code)

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition


On July 25, 2007, Sunrise Senior Living, Inc. ("Sunrise" or the "Company") announced that its board of directors has decided to explore strategic alternatives intended to enhance shareholder value, including a possible sale of the Company, and provided an update on the Company's pending restatement. A copy of the Company's press release, dated July 25, 2007, is attached as Exhibit 99.1 to this Form 8-K (the "July 25, 2007 Press Release"). The information contained in the July 25, 2007 Press Release regarding the pending restatement and the recapture during 2006 and the first six months of 2007 of an aggregate of approximately $37 million of the prior period real estate-related restatement adjustments is incorporated in this Item 2.02 from the press release by reference.


Item 8.01. Other Events.


The information contained in the July 25, 2007 Press Release is incorporated herein by reference. In addition, the Company provides the following update of legal proceedings:


CGB Occupational Therapy


As described in Sunrise's 2005 Form 10-K, Sunrise is a defendant in a lawsuit filed by CGB Occupational Therapy, Inc. ("CGB") in September 2000 in the U.S. District Court for the Eastern District of Pennsylvania. CGB provided therapy services to two nursing home communities in Pennsylvania that were owned by RHA Pennsylvania Nursing Homes ("RHA") and managed by one of Sunrise's subsidiaries. In 1998, RHA terminated CGB's contract. In its lawsuit, CGB alleged, among other things, that in connection with that termination, Sunrise tortiously interfered with their contractual relationships with RHA and several of the therapists that CGB employed on an at-will basis. There have been no material developments in this litigation from what was previously reported in Sunrise's 2005 Form 10-K.


Settlement of Bellaire Litigation


As also described in Sunrise's 2005 Form 10-K, in September 2005, a bus chartered to evacuate 37 residents from a Sunrise community near Houston, Texas in anticipation of hurricane Rita caught fire, resulting in the deaths of 23 residents. Sunrise was named as one of several defendants in various lawsuits filed in Texas state court as a result of the bus incident. During the first and second quarters of 2007, Sunrise settled all claims made against it and all claims against Sunrise have been dismissed. Sunrise paid a total of $1.5 million, net of insurance payments, to settle the claims made against it, and has incurred approximately $127,000 of additional expenses related to this litigation.

Trinity OIG Investigation

On September 14, 2006, Sunrise acquired all of the outstanding stock of Trinity Hospice, Inc. ("Trinity") for a purchase price of approximately $76 million. As a result of this transaction, Trinity became an indirect, wholly owned subsidiary of Sunrise. On January 3, 2007, Trinity received a subpoena from the Phoenix field office of the Office of the Inspector General of the Department of Health and Human Services ("OIG") requesting certain information regarding Trinity's operations in three locations for the period between January 1, 2000 through June 30, 2006, a period that is prior to the Company's acquisition of Trinity. The Company has been advised that the subpoena was issued in connection with an investigation being conducted by the civil division of the U.S. Attorney's office in Arizona. The subpoena indicates that the OIG is investigating possible improper Medicare billing under the Federal False Claims Act ("FCA"). In addition to recovery of any Medicare reimbursements previously paid for false claims, an entity found to have submitted false claims under the FCA may be subject to treble damages plus a fine of between $5,500 and $11,000 for each false claim submitted. Trinity has complied with the subpoena. As of the date of this Form 8-K,Trinity has received no further requests from the OIG and does not know the status of the OIG investigation. Sunrise is unable at this time to estimate the possible loss or range of loss relating to this matter.

SEC Investigation

As reported in a Form 8-K filed on May 29, 2007, on May 25, 2007, Sunrise was advised by the staff of the Securities and Exchange Commission (the "SEC") that the SEC has commenced a formal investigation. Sunrise has fully cooperated, and intends to continue to fully cooperate, with the SEC.

Putative Class Action Litigation

On January 16, 2007, the first of two putative class action complaints was filed in the United States District Court for the District of Columbia against Sunrise and certain of its current and former directors and officers. The two cases are captioned United Food & Commercial Workers Union Local 880-Retail Food Employers Joint Pension Fund, et al. v. Sunrise Senior Living, Inc., et al., Case No. 1:07CV00102 (USDC); and First New York Securities, L.L.C. v. Sunrise Senior Living, Inc., et al., Case No. 1:07CV000294 (USDC) (filed 2/8/2007). Sunrise is named as a defendant, as are several current and former directors and officers of the Company, in both complaints. The complaints allege violations of the federal securities laws arising out of Sunrise's historic accounting practices, alleged insider trading activities and the granting of certain stock options. New putative class plaintiffs, the Miami General Employees' & Sanitation Employees' Retirement Trust, and the Oklahoma Firefighters Pension and Retirement System, appeared in the two actions and moved for consolidation of the two cases and their appointment as the lead plaintiffs. A stipulation was submitted by the parties pursuant to which these new putative class plaintiffs will be appointed lead plaintiffs and file their consolidated amended complaint (under the caption In re Sunrise Senior Living, Inc. Securities Litigation, Case No. 07-CV-00102-RBW), which, upon filing, will become the only operative complaint in these consolidated actions. The defendants will respond to the consolidated complaint after it is filed. Although the precise content of the consolidated amended complaint and the identities of the individuals who will be named in it as defendants is not known at this time, Sunrise expects that it will vigorously defend itself against these claims.

Putative Shareholder Derivative Litigation

On January 19, 2007, the first of three putative shareholder derivative complaints was filed in the United States District Court for the District of Columbia against certain of Sunrise's current and former directors and officers, and naming Sunrise as nominal defendant. The three cases are captioned: Brockton Contributory Retirement System v. Paul J. Klaassen, et al., Case No. 1:07CV00143 (USDC); Catherine Molner v. Paul J. Klaassen, et al., Case No. 1:07CV00227 (USDC) (filed 1/31/2007); Robert Anderson v. Paul J. Klaassen, et al., Case No. 1:07CV00286 (USDC) (filed 2/5/2007). Counsel for the plaintiffs subsequently agreed among themselves to the appointment of lead plaintiffs and lead counsel. On June 29, 2007, the lead plaintiffs filed a Consolidated Shareholder Derivative Complaint (the "Consolidated Complaint"), again naming Sunrise as nominal defendant, and naming as individual defendants Paul J. Klaassen, Teresa M. Klaassen, Ronald V. Aprahamian, Craig R. Callen, Thomas J. Donohue, J. Douglas Holladay, William G. Little, David G. Bradley, Peter A. Klisares, Scott F. Meadow, Robert R. Slager, Thomas B. Newell, Tiffany L. Tomasso, John F. Gaul, Bradley G. Rush, Carl Adams, David W. Faeder, Larry E. Hulse, Timothy S. Smick, Brian C. Swinton and Christian B. A. Slavin. The Consolidated Complaint alleges violations of federal securities laws and breaches of fiduciary duty by the individual defendants, arising out of the same matters as are raised in the purported class action litigation described above. The Consolidated Complaint also alleges a violation of Delaware law arising from the delay in holding Sunrise's 2007 annual meeting. The plaintiffs seek damages and equitable relief on behalf of Sunrise. A stipulation was submitted by the parties pursuant to which Sunrise and the individual defendants will respond to the Consolidated Complaint (including motions to dismiss or stay) on or before August 13, 2007.

On March 6, 2007, a putative shareholder derivative complaint was filed in the Court of Chancery in the State of Delaware against Paul J. Klaassen, Teresa M. Klaassen, Ronald V. Aprahamian, Craig R. Callen, Thomas J. Donohue, J. Douglas Holladay, David G. Bradley, Robert R. Slager, Thomas B. Newell, Tiffany L. Tomasso, Carl Adams, David W. Faeder, Larry E. Hulse, Timothy S. Smick, Brian C. Swinton and Christian B. A. Slavin, and naming Sunrise as nominal defendant. The case is captioned Peter V. Young, et al. v. Paul L. Klaassen, et al., Case No. 2770-N (CCNCC). The complaint alleges breaches of fiduciary duty by the individual defendants arising out of the grant of certain stock options that are the subject of the purported class action litigation described above. The plaintiffs seek damages and equitable relief on behalf of Sunrise. Sunrise and the individual defendants have separately filed motions to dismiss this complaint, which remain pending at this time.

In addition, two putative shareholder derivative suits were filed in August and September 2006, which were subsequently dismissed. The cases were filed in the Circuit Court for Fairfax County, Virginia, captioned Nicholas Von Guggenberg v. Paul J. Klaassen, et al., Case No. CL 200610174 (FCCC) (filed 8/11/2006); and Catherine Molner v. Paul J. Klaassen, et al., Case No. CL 200611244 (FCCC) (filed 9/6/2006). The complaints were very similar (and filed by the same attorneys), naming certain of Sunrise's current and former directors and officers as individual defendants, and naming Sunrise as nominal defendant. The complaints both alleged breaches of fiduciary duty by the individual defendants, arising out of the grant of certain stock options that are the subject of the purported class action litigation described above. The Von Guggenberg suit was dismissed pursuant to preliminary motions filed by Sunrise (the plaintiff subsequently filed a petition for appeal with the Supreme Court of Virginia, which was denied, thus concluding the case). The Molner suit was dismissed when the plaintiff filed an uncontested notice of non-suit (permitted by right under Virginia law), after the Company had filed preliminary motions making the same arguments that resulted in the dismissal of the Von Guggenberg suit. As described above, the plaintiff in Molner later refiled suit in the U.S. District Court for the District of Columbia.


Complaint Pursuant to Section 211 of the Delaware General Corporation Law


On July 16, 2007, Millenco, L.L.C. filed suit against Sunrise seeking an order from the Court of Chancery of the State of Delaware pursuant to Section 211 of the Delaware General Corporation Law requiring that Sunrise hold its 2007 annual meeting of shareholders within forty-five days after the date on which any such court order is entered.


Other


In addition, Sunrise is involved in various lawsuits and claims arising in the normal course of business. In the opinion of management, although the outcomes of these suits and claims are uncertain, in the aggregate they should not have a material adverse effect on Sunrise's business, financial condition and results

Posted by: Greta Swinnen Crais | June 18, 2008 8:51 PM

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