Posts Tagged ‘Nursing Homes’

Daughter Who Took Mother’s Money May Owe Nursing Bills


Betty Budd spent the last years of her life at Presbyterian Medical Center, a nursing home in Oakmont, Pennsylvania. When she died she owed $96,000 to the facility, and only had $28,000 left in her estate. After collecting that amount, the nursing home filed suit against Ms. Budd’s daughter Elizabeth.

Using a power of attorney, Elizabeth Budd had handled her mother’s finances for the entire time she resided in the nursing home. At one point, with the unpaid bill mounting rapidly, the facility contacted Elizabeth Budd about the delinquency. She insisted that the money was almost gone, and promised that she would spend down the remaining money and make an application with the state Medicaid agency.

Elizabeth Budd never did apply for Medicaid for her mother. If she had her mother would not have qualified. She still had too much money available, even at the time of her death—generally speaking, single Medicaid applicants may not have more than $2,000 in available resources. Even if Elizabeth Budd had simply paid a portion of the nursing home bill her mother would not have qualified if, as the nursing home suspected, Elizabeth Budd had taken $100,000 of her mother’s money and put it into an account in her own name.

The nursing home sued Elizabeth Budd after her mother’s death. Their lawsuit made four different allegations against her. First, it charged that she had agreed to spend down the money and make a Medicaid application, and that she had breached her contract. Second, it alleged that she had defrauded the nursing home by misrepresenting her intentions. Third, the nursing home argued that Elizabeth Budd had fraudulently conveyed her mother’s property to avoid her creditors. Finally, the facility claimed that Elizabeth Budd had a duty to use her own funds to support her ailing and indigent mother.

The Pennsylvania Superior Court dismissed the nursing home’s claims for breach of contract, fraud and fraudulent conveyance. It found that any agreement Elizabeth Budd entered into with the nursing home was really between the home and her mother, and that Elizabeth Budd could not defraud the nursing home because she did not personally owe it any money.

The court did decide, however, that Elizabeth Budd might be liable. Pennsylvania law requires adult children to support their indigent parents, and the court ruled that the nursing home might be able to prove that Elizabeth Budd owed money on her mother’s bill—especially if it appears that the very reason her mother was indigent was that Elizabeth Budd took her money. The case was sent back to the trial court for further proceedings to determine her liability. Presbyterian Medical Center v. Budd, August 29, 2003.

Betty and Elizabeth Budd’s case is in some ways similar to an earlier case reported on in Elder Law Issues. Almost exactly two years ago we described a Connecticut case involving J. Michael Cantore, Jr., who was sued for failing to get Medicaid eligibility for his ward, Diana Kosminer. Because he had been appointed as conservator for Ms. Kosminer, the nursing home brought suit against Mr. Cantore’s bonding company for an unpaid $63,000 nursing home bill. While two cases probably do not amount to a national trend, nursing facilities regularly report problems with getting family members, agents and conservators to properly pay care bills, and at least occasionally must resort to litigation to secure payment.

Purchase of Life Interest Does Not Gain Medicaid Coverage

JULY 7, 2003 VOLUME 11, NUMBER 1

Qualifying a family member for Medicaid assistance with the cost of nursing home care can be complicated. When Pat Monroe’s mother went into a nursing home in Arkansas, Ms. Monroe had a clever idea: she had her mother buy an interest in her own home. Unfortunately for her it didn’t work as she intended.

Ms. Monroe’s mother, Berniece Groce, had moved into the Clay Cliff nursing home in July. Ms. Monroe held a power of attorney for her mother, and she used it to pay the nursing home expenses for nearly a year.

Ten months later Ms. Monroe took an unusual step. She bought a home for her mother—or at least an interest in a home. Using the last of her mother’s savings she paid $43, 953.13 for a “life estate” in Ms. Monroe’s own home.

The holder of a life estate is entitled to the use of the property for the rest of their lives, but their interest expires automatically on death. It is not uncommon for a property owner to transfer title to children or others, retaining a life estate. By this means the owner can dispose of the “remainder” interest during life while protecting his or her own right to use the property for life. But what Ms. Groce did (through her daughter) was different. She did not retain an interest in property she already owned, but instead purchased the life interest in property she had never owned before.

Because a Medicaid recipient is entitled to retain his or her home, Ms. Monroe reasoned that her mother’s life estate in the residence would be protected. Ms. Groce would qualify for Medicaid, Ms. Monroe could continue to live in the home (with her mother’s permission, of course), and her mother’s interest in the home would automatically disappear at her death.

Unfortunately for Ms. Monroe, the state Medicaid agency saw things differently. In its view, the purchase of the life estate was nothing more than Ms. Groce giving away over $40,000. She did not really purchase anything of value, reasoned the Medicaid agency, and she never actually resided in the home.

After Medicaid eligibility was denied Ms. Monroe appealed on her mother’s behalf. The Arkansas Court of Appeals agreed with the Medicaid agency and the trial court, and denied Ms. Groce’s Medicaid eligibility until the expiration of the disqualification period imposed by the $43,953.13 gift. Groce v. Director, Arkansas Dept. of Human Services, June 11, 2003.

Arizona Medicaid regulations require that the Medicaid applicant either actually resides in the home or “has resided” there. The result would probably be the same in Arizona.

Fund Earmarked For Nursing Homes Frozen In Budget Crisis


Nursing home operators, often joined by advocates of better care for seniors and the disabled, have maintained that government-set payment rates for nursing homes are inadequate to ensure quality care. Most of the focus of those complaints falls on Medicaid reimbursement rates and, to a lesser extent, Medicare payments for long-term care.

The State of Missouri came up with an interesting idea to address the problem. As part of its state Medicaid plan, it announced late in 2000 that it would begin paying an “enhanced” Medicaid reimbursement rate to seven nursing homes in the state, all of them owned and operated by local governments. Those government agencies, in turn, would forward the “enhanced” payments back to the state, which would then make the money available to all nursing homes, public or private, for one-time “quality and efficiency” grants.

This complicated scheme would improve the profitability of, and the quality of care provided by, nursing homes, while costing the state very little. Because the federal government pays about 60% of Missouri’s Medicaid costs, it would amount to a transfer of funds from the federal government to state coffers, with ultimate distribution back to nursing home operators.

By budget time in 2002, Missouri had accumulated $133 million in “enhanced payments.” Last year’s budget provided for most of that money to be returned to individual nursing homes.

Then disaster struck. Missouri, like most of the states, was suddenly faced with a huge budget shortfall. Revenues fell $1.3 billion short of projections, and the state scrambled to cut spending.

Among the thousands of programs Governor Bob Holden cut was the remaining $20 million in nursing home quality and efficiency grants. Nursing homes cried foul, arguing that the money was never really the state’s to cut, since it had come from federal revenues into a fund earmarked for nursing homes, but a Cole County Circuit Court judge disagreed.

On appeal, the Missouri Supreme Court affirmed the lower court—and agreed with the Governor. The Missouri State Constitution requires that the state’s budget remain in balance, noted the Court. In order to accomplish that, the Governor has broad powers to withhold money, even after the it has been budgeted by the Legislature. The fact that the “enhanced payments” fund did not fall short of its own revenue projections does not prevent the Governor from choosing that fund to bear some of the brunt of budget cuts. Missouri Health Care Association v. Holden, December 2, 2002.

Nursing Home Fined $320,000 Over Care of Ventilator Patients


When a nursing home demonstrates that it is unable to provide consistent quality care there are several ways to correct its problems. The marketplace offers one corrective opportunity, of course. Personal injury lawsuits may effect some improvement in future care, if only because the nursing home’s insurance provider may insist on changes before agreeing to continued coverage. Perhaps the most direct control, however, is provided by federal and state government regulation.

As an example, consider Fairfax Nursing Home in Berwyn, Illinois. The facility has a history of problems with ventilator-dependent patients—those who require a mechanical device to assist with their breathing. One of the first incidents occurred in 1996, when a patient on a ventilator experienced a respiratory emergency. Staff members responded appropriately and administered oxygen, but one therapist turned off the patient’s ventilator to silence its alarm. Once the patient was stabilized the therapists left the room, but no one remembered to turn the ventilator back on, and the patient died.

Over the next year state health inspectors made surprise inspection visits and followed patients’ charts. In at least five cases inspectors determined that Fairfax employees were not following their own regulations for handling ventilator-dependent patients, and that a “civil monetary penalty”—a fine—should be imposed. The state suggested that the federal government levy a fine of $3,050 for each day that Fairfax violated its own protocols. Since the violations stretched over 105 days, the total fine amounted to $320,000.

Fairfax appealed the imposition of a fine to the federal Court of Appeals. The nursing home argued that the fines should have been imposed at a much lower rate—as low as $50 per day of violation—because its deficiencies did not place patients in “immediate jeopardy.”

The Court of Appeals upheld the fine. The Court agreed with the Administrative Law Judge who initially heard the case, who had held that any respirator-dependent patient at Fairfax during the period in question was endangered by “the systemic incapacity of the facility to render the necessary care to sustain life and avoid serious injury.” Fairfax Nursing Home, Inc., v. United States Department of Health and Human Services, August 15, 2002.

Nursing home residents and their families have limited access to information about the quality of care in individual facilities. The results of periodic surveys such as those made at Fairfax Nursing Home, however, are available to consumers and interested persons. The record of inspection results at every nursing home receiving Medicare or Medicaid funds can be reviewed online at More information about how family members can help ensure better nursing home care for their loved ones can be found through the National Citizens’ Coalition for Nursing Home Reform at

Long Term Care Industry Must Be Accountable, Says Advocate


By Patricia Nelson*

I disagree with a recent Elder Law Issues assertion that higher reimbursement rates are automatically required to meet nursing home staffing needs (see More On DHHS/HCFA Report Of Nursing Home Staff Shortages). Before such conclusions can be made, I await Sen. Charles Grassley’s US Committee on Aging report that will analyze some bankrupt nursing chains’ finances. The report will evaluate how nursing homes’ profits and obscene salaries/perks could instead have been used to pay for promised long-term care (LTC) services.

A recent NY Daily News article published profit margins and owner salaries from several NY nursing homes. Both totals were outstanding—mostly in the million dollar range—clearly showing why NY has one of the highest Medicare/Medicaid reimbursement rates in the nation. Since the majority of these facilities annually file Medicaid Cost Reports, the government is well aware how its monies have been spent. Since HCFA is solely responsible for monitoring reimbursements and has data at its disposal to alert itself to wrongdoing, how is it possible that so much public money entered the profiteers’ pockets?

There can be no other answer why 25% of America’s nursing homes remain dangerous places to live. Why laws and regulations are routinely ignored or circumvented to accommodate the nursing home industry—rather than protecting its residents. Industry campaign contributions are key to keeping government’s regulatory agencies clueless on how to solve the nursing home crisis. Placing industry insiders in high HCFA regulatory positions successfully stops any meaningful industry reforms from reaching the streets. The recent decision to return higher reimbursement rates to the industry is typical of how government monies are routinely awarded without necessary accountability.

The industry in its arrogance has become omnipotent. It routinely bypasses its legal obligations to provide a service for which it is paid. It rewards itself with obscene profit margins and compensation by purposefully withholding resident services for which consumers have paid and are legally entitled to have. These fraudulent activities continue unabated because government is well compensated by industry to ignore the real problems the industry creates.

And what recourse do consumers have to stop these bad practices? Clearly, each state’s oversight systems are seriously compromised. Numerous studies by the US Government Accounting Office conclude that the states do not adequately protect LTC consumers. In addition, consumers are prevented by state legislation from seeking help from local law enforcement as they must submit all complaints to their ombudsman office, which has no training in criminal investigations. In short, on the merry-go-round of LTC reimbursements, the industry always gets the brass ring.

Higher reimbursement rates without industry accountability is not the answer. Complicity between the nursing home industry and government must be exposed and legislation requiring a major overhaul in favor of industry accountability must be passed. The insanity of today’s LTC practices will be eliminated when the nursing home industry is subjected to the same civil and criminal laws—and procedures—as the rest of us.

*Patricia Nelson is executive director of Glenda’s House, Princeton, NJ, an affiliate of the Association for Protection of the Elderly. Glenda’s House conducts investigative research and advocates on behalf of New Jersey’s elder and disabled consumers by exposing corrupt practices that violate their rights. Ms. Nelson has written numerous articles on nursing home reform issues and is a noted public speaker for elder and disabled rights.

More On DHHS/HCFA Report Of Nursing Home Staff Shortages


Last week Elder Law Issues reported on a government study of nursing home staffing and safety. This week we continue that report. The full DHHS/HCFA report is now online.]

As described last week, the Department of Health and Human Services report recommends minimum staffing levels for nursing aides, Registered Nurses and Licensed Practical Nurses in nursing homes. It also suggests optimum levels. Almost two-thirds of U.S. nursing homes fall below those optimum staffing levels, and about half are below even the minimum levels for RNs and LPNs.

Why are staffing levels so low? Part of the problem, according to the government report, is the government itself. In recent years the federal Medicare and Medicaid programs have moved aggressively to cut medical costs, with particular emphasis on long-term care costs. Particularly notable was the Balanced Budget Act of 1997, which reduced government spending largely through reductions in Medicare and Medicaid financing, and with particular emphasis on long-term care, hospital care and drug costs. One result: many nursing homes can not afford adequate staffing.

A related problem in recent years has been the growing number of individual nursing homes, regional and national nursing home chains facing financial difficulties. A number of national chains have filed bankruptcy proceedings in the past eighteen months. Vencor, Sun Healthcare, Integrated Health Services and Mariner Post-Acute Network, four of the largest chains in the country, all filed for bankruptcy protection during that time period. Combined, these troubled organizations operated well over a thousand nursing homes.

The DHHS study looked at staffing ratios in those financially troubled nursing homes as compared to other chains and individual homes. Not surprisingly, staffing in the bankrupt chains decreased in the last four years—but so did staffing levels in the non-bankrupt chain facilities. Staffing levels in non-chain nursing homes, meanwhile, increased slightly during the same time period.

What will Congress and the Administration do about the decline in nursing home staffing? Republican Senator Chuck Grassley of Iowa, Chairman of the Senate’s Special Committee on Aging, provided one preview. In a press release issued days after the report was received, the Senator intoned that “the suffering of nursing home residents is intolerable. Bedsores and malnutrition turn the stomach and hurt the conscience. They beg for a solution, the sooner, the better.”

Senator Grassley “plans to look into options to encourage states to increase Medicaid rates for nursing homes if they agree to hire more staff with the increased rates.” In addition, the Senator promises to consider giving the nursing home industry back some of the money cut from Medicare budgets by the Republicans’ “Balanced Budget Act of 1997″—provided that the nursing home industry uses the money to hire more staff.

Will this solve the nursing home staffing problem? Perhaps. Direct government regulation may work better. In those states with minimum staffing requirements, the report indicates that staffing approaches the levels deemed acceptable by its analysis. But if staffing levels are increased by government order, but no new money is added to the system, those nursing homes already experiencing financial difficulties can hardly be expected to thrive.

Government Reports Nursing Home Staffing Is Inadequate

JULY 31, 2000 VOLUME 8, NUMBER 5

In 1990 Congress became concerned about the quality of care in American nursing homes. The Department of Health and Human Services was directed to prepare a report on nursing homes by the beginning of 1992. Last week DHHS finally sent the first part of that report to Congress a little over eight years late. Maybe it took so long because the figures on nursing home care are so bad.

Nursing home operators and patient advocates tend to disagree on many things, but central to their differences is the appropriate level of staffing required to operate safe and healthy nursing homes. The DHHS report to Congress attempts to determine minimum and optimal staffing levels in nursing homes.

DHHS reviewers tried three different methods to determine the appropriate staff-patient ratios for nursing homes. They considered the numbers proposed in professional journal articles. They also considered “outcome” measures like injury and death rates, and compared them to staff ratios.

Finally, the reviewers conducted “time-motion” studies in an attempt to determine how many staff hours are required to adequately care for each nursing home resident. While the literature review was not very helpful, the other two measures provided strong arguments for a minimum staffing level.

The report proposes a minimum staffing level of 2.0 hours of aides for each resident day. In other words, one full-time aide position should be filled for every four patients in the facility.

According to the report, there should also be one full-time RN on staff for every 40 residents, and a combination of RNs and LPNs at the level of about one for every ten patients. Of course, those staff members need to be spread across shifts to provide 24-hour coverage as necessary.

How do nursing homes stack up against those minimum requirements? Poorly, as it turns out. More than half (54%) of nursing homes studied now fall below the minimum staffing level for aides, and about a third fall below the minimum standards for professional staff. That is for minimum standards: the figures are much bleaker when compared to optimum levels.

According to DHHS it would be much better if RN and LPN rates were considerably higher. The agency recommends that RNs should be hired at the rate of one for every 18 residents, and the combination of RNs and LPNs should total one for every 8 patients. Between half and two-thirds of all nursing homes fall below those preferred staffing levels.

Why are staffing levels so low? One culprit is the federal government itself. Vigorous budget-cutting by Congress has resulted in a record rate of bankruptcies in the industry. More on that problem, and the early Republican response to the report, in next week’s Issues.

Patient’s Bill of Rights Also Protects Employee From Firing


In the absence of a detailed employment agreement spelling out the grounds for discharge, most employees can be fired for any reason at all. Sometimes, however, notions of public policy override the ability of an employer to discharge an employee.

Jane Hausman worked for the St. Croix Care Center, a nursing home in Prescott, Wisconsin. She was the director of social services and one member of a five-person team charged with seeing to it that St. Croix’ patients received proper care. Beginning in 1992, she and some of the other members of her team became concerned about that quality of care.

In internal memos, Ms. Hausman detailed what she thought were shortcomings in patient care at St. Croix: patients falling from bed, staff members failing to respond to cries for help, disrespectful treatment of patients, improper diets and a general failure to investigate injuries and possible mistreatment. Over the course of nearly a year, Ms. Hausman saw little change in the treatment of her patients.

In March of 1993, Ms. Hausman contacted the regional Ombudsman for nursing home care, and ultimately requested an external investigation. Three months later, St. Croix fired Ms. Hausman and one other staff member. Both brought suit to recover their jobs and to secure damages for what they contended was a wrongful discharge.

St. Croix turned the claim over to its insurance company, St. Paul Insurance. The insurer argued that the policy was intended to protect patients, and that even if an employee was wrongfully discharged it should not have to pay any of the damages.

Meanwhile, the nursing home itself argued that Ms. Hausman was an “at will” employee—that she could be discharged for any reason or for no reason at all. The Wisconsin Supreme Court disagreed, citing the public policy interest in protecting nursing home residents from neglect or abuse. Furthermore, ruled the court, Ms. Hausman had a duty imposed by her state social work license, and she could not be fired for discharging that duty.

Now the Wisconsin Court of Appeals has decided that Ms. Hausman can recover her damages from St. Croix’ insurance company. The policy covered anyone injured by St. Croix “interfering with the rights provided to a person by a patient’s bill of rights or any similar law,” and the court reasoned that a Wisconsin law prohibiting retaliation against employees for reporting neglect was a part of the patient’s bill of rights, even though it protected employees rather than patients. Not only did Ms. Hausman prevail against St. Croix, but her claim was also covered by the facility’s insurance. St. Paul Fire and Marine Insurance Co. v. Hausman, October 5, 1999.

Congressional Report Criticizes Monitoring Of Nursing Homes

MARCH 29, 1999 VOLUME 6, NUMBER 39

There are over 17,000 nursing homes in the United States, housing more than 1.6 million residents. The federal government will contribute $39 billion to the care of those nursing home residents in 1999. Recently, the U.S. Congress’ General Accounting Office (the GAO) was asked by five Democratic members to look into how well governmental monitoring works to ensure quality of care in those nursing homes.

The GAO looked at the database maintained by the Health Care Financing Administration’s (HCFA), the agency in charge of Medicare and Medicaid. The GAO also picked out 74 individual nursing homes in Pennsylvania, Michigan, Texas and California; each had received at least one referral to HCFA for failures in the past, and the GAO wanted to assess how well HCFA’s monitoring and compliance functions were working.

Each year, serious deficiencies in quality of care are reported in more than one-fourth of the nation’s nursing homes. The most frequent violations reported by HCFA include inadequate prevention of pressure sores, failure to prevent accidents and failure to assess residents’ needs and provide appropriate care. Even more alarmingly, 40% of the homes in which such problems were noted at the beginning of the study period still demonstrated similar problems three years later.

Although HCFA has the power to fine or otherwise sanction nursing homes, its practice is to give the nursing home an opportunity to first correct the problems. If a fine is actually levied, HCFA can not collect the fine during an appeal. The GAO described the usual scenario: HCFA notifies a nursing home of failures and threatens to impose a fine, but allows the nursing home to demonstrate that it has corrected its deficiencies. Then, on the next review, HCFA discovers that the nursing home has returned to its previous pattern of failures.

HCFA has a number of options for dealing with nursing homes which fail to meet standards. In addition to ordering a plan of correction, HCFA can fine a nursing home up to $10,000 per day, or can (working with state government) place a state-selected monitor in the nursing home to help ensure that the home complies with standards. At the extreme, HCFA and the state have the power to impose a substitute manager on the nursing home, or to deny Medicare and Medicaid payments for residents in noncompliant nursing homes.

Despite HCFA’s broad authority to force nursing homes to comply with minimum standards, the GAO report found that few sanctions are actually administered. Even when fines are levied, the nursing home can appeal the sanction and avoid payment until the administrative process is completed. The high volume of appeals (coupled with a shortage of hearing officers) has led to a backlog of over 700 cases, some dating back over three years. One single Texas-based nursing home chain, the GAO noted, has appealed 62 of 76 fines levied against its homes, for a total of $4.1 million.

The GAO report recommends that HCFA take several steps to improve its oversight of nursing homes. In addition to speeding up appeals , the GAO suggests that HCFA should terminate non-compliant homes from Medicare and Medicaid, and more closely monitor those homes readmitted to the programs.

A copy of the entire GAO report can be obtained online at, or by contacting the General Accounting Office.

Three Common Myths About Paying For Nursing Home Care


The possibility of nursing home placement terrifies many seniors and their families. The specter of loss of control and dignity is part of the problem, but financial concerns may also be overwhelming. It does not help that accurate information is so difficult to obtain. Myths about nursing home costs, long term care insurance and government benefits persist, making the situation more frightening and difficult.

Remembering that Arizona law may differ from that of other states (and, of course, from the systems in other countries), a few of the more common myths about nursing home costs include:

Myth: Long term care insurance is too expensive, and is only for the elderly anyway.

For many people, long term care insurance is the best choice for protecting against the exhaustion of assets required to qualify for government assistance with nursing home care. Although premiums can be expensive, the cost for younger applicants is dramatically lower. The average long term care insurance purchaser is in his or her late 60s or early 70s, but financial advisers recommend that insurance be considered by those twenty years younger.

Myth: Medicare will take care of my medical care if I should need to go to a nursing home.

Medicare is an extensive federal government program providing medical care to the elderly and disabled. Most American citizens and resident aliens over age 65 qualify for its excellent coverage. But Medicare’s nursing home benefit is almost entirely illusory.

Many Medicare beneficiaries believe that the program covers 100 days of nursing home care. But only the first 20 days are fully covered; the next 80 days require the patient to pay the first $96 of care each day. The program also limits its coverage to care which leads to improvement. In other words, once it is clear that the patient will not be likely to return home, Medicare coverage will end.

Medicare supplemental insurance policies and Medicare HMOs may help some nursing home residents. But neither kind of plan increases the length of coverage–most simply provide for the payment of the $96 per day charged to the beneficiary.

Myth: If either my spouse or I enter the nursing home, we will lose our home.

Neither the nursing home nor the government has any ability to “take” the home of a nursing home resident. If no long term care insurance is in place, and the patient does not qualify for Medicaid, the nursing home will expect to be paid each month. That does not mean, however, that the nursing home can “take” away the home–in fact, one’s homestead is exempt from the claims of unsecured creditors including the nursing home.

Once assets (and income) are diminished, the patient may qualify for Medicaid. If the patient’s spouse is still living in the home, Medicaid is not permitted to count the home as an available asset, and may not seek to recover the cost of care it provides by forcing sale of the home (or any other asset, for that matter). If the patient is not married, Medicaid may not force the sale of the home until after the death of the recipient, and even then only in some circumstances.

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