TRAVERSE CITY — The long-running financial crisis at Grand Traverse Pavilions may end Monday with the arrival of a multimillion-dollar payment.

That’s when the senior care facility is expected to receive $6.97 million from the Employee Retention Credit program of the Internal Revenue Service. Those funds were locked in a bureaucratic maze that had forced Pavilions to borrow millions from Grand Traverse County in the last year.

“This was really an error on the IRS side,” said James Hogge, political director for U.S. Rep. Jack Bergman, R-Watersmeet, in Washington, D.C. “Our staff in Traverse City and D.C. worked very hard to cut through the red tape. We don’t take no for an answer.”

Severe challenges rocked Pavilions since the COVID-19 pandemic began in early 2020. Issues ranged from acute staffing shortages and leadership turnover to subpar quality ratings from the federal government.



Worst of all was the financial crisis that intensified in 2023. While waiting for much-needed ERC funds, the facility cut 15 full-time positions in September and went deeply into debt.

Pavilions officials reached out to Bergman’s office for help in November after calls to U.S. Sen. Gary Peters, D-Mich., failed to yield assistance, they said.

“Our board members are thrilled that this money is finally coming through,” said Mary Marois, chair of the county Department of Health and Human Services, which oversees Pavilions. “We’re very grateful for the help from Bergman’s team. They made it happen in record time.”

More good news arrived Thursday when DHHS board members learned that Pavilions had received an additional $3.77 million in reimbursements from the state of Michigan. That money is the result of a new way that Medicare and Medicaid payments are calculated.

Both the ERC money and the Medicare-Medicaid money will be deposited in the Pavilions fund managed by the Grand Traverse County treasurer. The first priority is to repay the county the $5.78 million they had borrowed during the crisis, Marois said.

“It’s very happy news,” said outgoing Grand Traverse County Treasurer Heidi Scheppe. “Here’s how it works: The IRS will send the check to [the treasurer’s] office, which we will then deposit into the Pavilions fund [account]. Instead of carrying a negative balance, they’ll show a positive balance.”

After repaying the county, the DHHS board and Pavilions management will focus on fiscal responsibility, maintaining a positive fund balance and “keeping our financial house in order,” Marois said.

County Commissioner T.J. Andrews, who represents District 7, said she was “delighted” by the funding news.

“It’s been a long time with lots of uncertainty,” Andrews said. “Unfortunately, that cast a shadow over the relationship between the Pavilions and the county.”

Andrews praised county administrators and Pavilions staff for working together “in good faith” to resolve the longstanding financial problem.

“This is unquestionably a turning point, a part of the process to resolve issues that hit bottom in 2023,” she said. “While there’s still much to do, this is a really, really good sign for 2024.”

This resolution of the financial problem joins a busy news month at the Pavilions: New CEO Gerald Bodalski was selected after an intensive four-month search process. The federal agency that oversees skilled nursing facilities boosted the Pavilions quality rating to three stars. And a whistleblower lawsuit brought against the organization in January 2023 was settled Wednesday.

Located on the grounds of the Grand Traverse Commons, Pavilions provides skilled nursing care, assisted living quarters, respite care and rehabilitation services to low-income senior citizens. Currently, 147 seniors live in the skilled nursing facility and another 50 or so live in assisted living cottages nearby. It is the largest such county-owned facility in Michigan.

Hogge said Bergman was “ecstatic” when he heard about the swift resolution of the ERC logjam.

“When it comes to helping our constituents in northern Michigan, this is one of the biggest victories in a long time,” Hogge said. “If you know Jack, you know he’s not an emotional guy, but this was something special.”

Hogge heaped special praise on Lauren Pauly, Bergman’s district representative in Traverse City, who worked on the Pavilions’ financial problem for more than eight weeks.

“She’s not one to seek out attention, but she certainly deserves accolades for this project.”

The nearly $7 million in IRS money for the Pavilions was an outgrowth of federal programs to stimulate the economy and help organizations stay in business during the COVID epidemic.

In March 2020, then-President Donald Trump signed the $2.2 trillion federal Coronavirus Aid, Relief, and Economic Security (CARES) Act. The Employee Retention Credit, part of the CARES Act, offered up to $28,000 per employee per year in cash reimbursements to employers. That funding was extended to Dec. 31, 2021, by the American Rescue Plan Act.

Widespread fraud in the ERC program spurred the IRS to declare a moratorium on processing new claims from Sept. 14, 2023, through the end of 2023. That created a further backlog for legitimate claims that were pending, and may have factored into the long delay that Pavilions faced, officials said.