A nursing home operated by Community Hospital of San Bernardino has finally been fined $80,000 for a patient’s death in 2008.  The California Department of Public Health issued the fine after a lenghty investigation revealed that neglect and inadequate care led to a patient’s preventable death.

According to a report, an unidentified patient died Feb. 2, 2008, after tubes that connected him to a ventilator had been disconnected.  A ventilator alarm that should have alerted staff about the disconnection but was ignored or couldn’t be heard.



Wisconsin has reached a settlement with Mariner Health Care, Inc. (“Mariner’) and Sava Senior Care Administrative Services, LLC (“Sava”), two nursing home chains operating out of Atlanta, Georgia and their principals, Murray Forman and Leonard Grunstein who also own the chain of Fundamental Long Term Care Holdings, L.L.C.

The settlement terms include the payment of $182,370.97 to the state as part of $422,419.08 attributable to Wisconsin Medicaid.  The settlement relates to the defendants solicitation and receipt of kickback payments from Omnicare, Inc. (“Omnicare”), the nation’s largest pharmacy that specializes in dispensing drugs to long term care facilities.

The settlement is based on a complaint filed in March 2009 in the United States District Court for the District of Massachusetts under state and federal false claims statutes, in which the plaintiffs allege that Omnicare, Mariner, Sava, and three individual investors conspired to arrange for Omnicare to pay $50 million in exchange for agreements by Mariner and Sava to continue using Omnicare’s pharmacy services for a 15 year period. The states and federal government have received a total of $14 million in civil damages from Mariner and Sava to compensate Medicaid and Medicare programs for harm suffered as a result of this conduct.

In November 2009, the United States government and several states also entered into a $98 million settlement agreement with Omnicare that, among a variety of kickback claims in several cases, resolved Omnicare’s liability for the allegations in this matter.



See articles from Wisconsin Business and Wisonsin Journal Sentinel.


MSNBC Business reported the fascinating story from Reuters about a house in Cheyenne, Wyoming that is used to protect corporations from paying their fair share of taxes.  More than 2,000 companies are registered at a 1,700-square-foot brick house at 2710 Thomes Ave. The story exemplifies the problem with American tax policy and how corporations including national nursing home chains evade liability.  Excerpts below:

A Reuters investigation found the house is the headquarters for Wyoming Corporate Services, a business-incorporation specialist that establishes firms which can be used as "shell" companies, paper entities able to hide assets.

Wyoming Corporate Services will help clients create a company, and more: set up a bank account for it; add a lawyer as a corporate director to invoke attorney-client privilege; even appoint stand-in directors and officers as high as CEO. Among its offerings is a variety of shell known as a "shelf" company, which comes with years of regulatory filings behind it, lending a greater feeling of solidity.

"A corporation is a legal person created by state statute that can be used as a fall guy, a servant, a good friend or a decoy," the company’s website boasts. "A person you control… yet cannot be held accountable for its actions. Imagine the possibilities!"

All the activity at 2710 Thomes is part of a little-noticed industry in the U.S.: the mass production of paper businesses. Scores of mass incorporators like Wyoming Corporate Services have set up shop. The hotbeds of the industry are three states with a light regulatory touch-Delaware, Wyoming and Nevada.  The incorporation industry, overseen by officials in the 50 states, has few rules. Convicted felons can operate firms which create companies, and buy them with no background checks.

No states license mass incorporators, and only a few require them to formally register with state authorities. None collect the names and addresses of "beneficial owners," the individuals with a controlling interest in corporations, according to a 2009 report by the National Association of Secretaries of State, a group for state officials overseeing incorporation. Wyoming and Nevada allow the real owners of corporations to hide behind "nominee" officers and directors with no direct role in the business, often executives of the mass incorporator.

"In the U.S., (business incorporation) is completely unregulated," says Jason Sharman, a professor at Griffith University in Nathan, Australia, who is preparing a study for the World Bank on corporate formation worldwide. "Somalia has slightly higher standards than Wyoming and Nevada."

An estimated 2 million corporations and limited liability companies are created each year in the U.S., according to Senate investigators. The Treasury Department has singled out LLCs as particularly vulnerable to being used as shell companies, as they can be owned by anyone and managed anonymously. Delaware, Nevada and Wyoming had 688,000 LLCs on file in 2009, up from 624,000 in 2007.

Treasury and state banking regulators say banks have flagged billions of dollars in suspicious transactions involving U.S. shell companies in recent years. On June 10, a federal judge in Oregon ordered a company registered there to pay $60 million for defrauding a Ukrainian government agency through sham transactions involving shell companies. The civil lawsuit described a network of U.S.-registered shells connected to fraud in Eastern Europe and Afghanistan.

A growing niche in the shell business is shelf corporations. Like paper-only shells, which enable the secrecy-minded to hide real ownership of assets, shelf companies are set up by firms like Wyoming Corporate Services, then left "on the shelf" to season for years. They’re then sold later to owners looking for a quick way to secure bank loans, bid on contracts, and project financial stability. To speed up business activity, shelf corporations can often be purchased with established bank accounts, credit histories and tax returns filed with the Internal Revenue Service.

"They just slot in your names, and you walk away with the company. Presto!" says Daniel E. Karson executive managing director at investigative firm Kroll Inc. "The purpose is to conceal ownership."

On its website, Wyoming Corporate Services currently lists more than 700 shelf companies for sale in 37 states.  "If they’re signing a large contract, they may not want it to look like they’ve just formed a company," said Brett Melson, director of U.S. sales at Harvard Business Services. But he added: "Unsavory characters can do a lot of bad things with the companies."

Wyoming Corporate Services is run by Gerald Pitts, its 54-year-old founder and president. On paper, he is a prolific businessman. Incorporation data provided by Westlaw, a unit of Thomson Reuters, show that Pitts is listed as a director, president or principal for at least 41 companies registered at 2710 Thomes Avenue.  Another 248 firms name Edge Financial Inc., another incorporation service, as their "manager." Gerald Pitts is the president of Edge Financial, according to records on file with the Wyoming secretary of state’s office.

Companies registered at 2710 Thomes Avenue have been named in a dozen civil lawsuits alleging unpaid taxes, securities fraud and trademark infringement since 2007, a review of Westlaw data shows. State and federal tax authorities have filed liens against companies registered at the address seeking to collect more than $300,000 in unpaid taxes, according to Westlaw.

Among those registered at the little house in Cheyenne are two small companies formed through Wyoming Corporate Services that sold knock-off truck parts to the U.S. Department of Defense, according to a Reuters review of two federal contracting databases and findings from an investigation by the Pentagon’s Defense Logistics Agency. The owner of those firms, Atilla Kan, awaits sentencing on a 2007 conviction for wire fraud in a related matter.

Also linked to 2710 Thomes is former Ukrainian Prime Minister Pavlo Lazarenko who was once ranked the eighth-most corrupt official in the world by watchdog group Transparency International. He is now serving an eight-year jail term in California for a 2004 conviction on money-laundering and extortion charges. According to court records, that scheme used shell companies and offshore bank accounts to hide stolen Ukrainian government funds.

Court records submitted in Lazarenko’s criminal case and documents from a separate civil lawsuit, as well as interviews with lawyers familiar with the matter, indicate Lazarenko controls a shelf company incorporated in Cheyenne that owns an estimated $72 million in real estate in Ukraine through other companies including Capital Investments Group, registered at 2710 Thomes Avenue.  The dossier on Capital Investments Group claims that other directors of the alleged front companies include Lazarenko’s wife, son and mother-in-law.

Why use a shelf company? "To hide who they are and what they are doing.

The loopholes in U.S. disclosure of bank-account and shell-company ownership have drawn fire.

The U.S. was declared "non-compliant" in four out of 40 categories monitored by the Financial Action Task Force, an international group fighting money laundering and terrorism finance, in a 2006 evaluation report, its most recent. Two of those ratings relate to scant information collected on the owners of corporations. The task force named Wyoming, Nevada and Delaware as secrecy havens. Only three states – Alaska, Arizona and Montana – require regular disclosure of corporate shareholders in some form, according to the 2009 report by the National Association of Secretaries of State.

Shell companies remain a headache for law-enforcement authorities. An attorney can provide an extra shield. Cheyenne attorney Graham Norris Jr. tells prospective clients sent to him by WCS that he will create a company on their behalf. That way, he says, he can invoke attorney-client privilege-adding a layer of privacy anytime there is an inquiry about their identities.

The 2006 U.S. Money Laundering Threat Assessment, prepared by 16 federal agencies, devotes a chapter to the ways U.S. shell companies can be attractive vehicles to hide ill-gotten funds. It includes a chart to show why money launderers might like to create shells in Wyoming, Nevada or Delaware, which offer the highest levels of corporate anonymity.


The Daily Mail and Daily Journal had articles discussing a recent West Virginia decision by the Supreme Court to protect nursing home residents constitutional right to a jury trial.  This is clearly the national trend in the vast majority of jurisdictions.  Mandatory arbitration clauses in nursing home admissions paperwork is inherently unfair.  Critics of the process argue the arbiters are biased and beholden to the nursing homes that give them their business.

The Court persuasively argued that nursing homes shouldn’t be able to insert fine print into contracts to duck getting taken to court if they are accused of harming residents.

"In essence, our Constitution recognizes that factual disputes should be decided by juries of lay citizens rather than paid, professional fact finders (arbitrators) who may be more interested in their fees than the disputes at hand," Justice Menis Ketchum wrote.

"The process of signing paperwork for medical care — specifically a contract for admission to a nursing home — is often fraught with urgency, confusion and stress," the court ruled. "People seek medical care in a nursing home for long-term treatment to heal; they rarely view the admission process as an interstate commercial transaction with far-reaching legal consequences."

The majority of nursing homes do not give patients any notice about the clauses. Also, would-be nursing home residents may have little choice but to sign the agreements. Facilities present the contract after the person is admitted.

Why doesn’t the nursing home industry look for ways to prevent abuse and neglect instead of forcing residents to sign their rights away?


MSN Health had an interesting article about a new Journal of General Internal Medicine study showing a 10% spike in fatalities at teaching hospitals in July.  David Phillips, PhD, the study’s lead author and professor of sociology at the University of California, San Diego, speculates that the "July effect" may occur because that’s the month when new doctors-in-training begin their residencies.

All told, as many as 98,000 deaths occur each year due to all kinds of medical mistakes—the equivalent of a fully packed 747 crashing every other day. According to a congressionally mandated study on Medicare recipients, during 2008, 1 in 7 hospital patients experienced at least one unintended harm that prolonged his or her stay, caused permanent injury, required life-sustaining treatment, or resulted in death.

Infections that are acquired after checking into the hospital kill 31,000 patients a year, which nearly rivals the number of breast cancer deaths annually, says Peter Pronovost, MD, PhD, the author of Safe Patients, Smart Hospitals.

Weekends, nights, and holidays are not the optimal times for operations.  Stroke patients treated in hospitals on Saturday and Sunday were 16% more likely to die than those treated on weekdays, found a recent study from the University of Toronto. Staffing tends to be lighter then; getting lab results takes longer; and on-call docs have to drive in from home.

One in 100 patients admitted to a hospital dies of venous thromboembolism—a potentially deadly blood clot that forms in a vein—but half of those lives could have been saved with simple preventive measures available everywhere. When you’re admitted to the hospital, you should be screened.

The chance of medical mishaps shoots up during shift changes, says Arthur Aaron Levin, MPH, director of the Center for Medical Consumers. Before your current nurse leaves, request time to review your chart and what treatment you’re supposed to get next.


NY Daily News reported the ongoing saga at Prentiss Center for Skilled Nursing Care in Ohio after a hidden camera installed by a patient’s son caught caregivers brutally abusing his elderly mother.  Several CNAs were filmed manhandling 78-year-old Esther Piskor.  Piskor’s son, Steve, told the station that he hid a camera inside a fan on his mom’s dresser after the home ignored his complaints that his mom was being beaten up.  His mother, a grandmother of 25 who has Alzheimer’s, had red welts on her face and raised her hands in fear whenever he visited, Piskor complained.

The state Department of Health cited the center, run by Cleveland’s giant MetroHealth health care system, for failing to prevent the abuse.


Jim Tuttle at Public Opinion Online wrote an article on the arrest of CNA Paula Hawks for allegedly pinching, hitting and kicking a 93-year-old resident at a Chambersburg nursing home.   Hawks is charged with simple assault.  Franklin County’s Area Agency on Aging contacted Chambersburg Police Friday about a June 10 incident at Magnolias of Chambersburg.  Richard Irwin is president of IntegraCare, the company that operates Magnolias.

One of Hawks’ former co-workers, Wanda Gehrett reported the abuse and physical assault.  Hawks admitted that she had pinched, hit and kicked the elderly woman in her care. She also said that she had been fired, but that she was not informed why.

According to online court records, Hawks pleaded guilty in 2006 to a summary charge of harassment for subjecting another person to physical contact.  Hawks served about a week in 2006 for contempt of court.


The Washington Post had an article about the common and growing negligence of wrong site surgery.  Perfroming surgery on the wrong body part is beyond reckless.  Mistakes such as amputating the wrong leg, performing the wrong operation or removing a kidney from the wrong patient can be prevented by following safety rules: ensuring that an X-ray isn’t flipped and that the right patient is on the table, for example. Such errors are considered so egregious and avoidable that they are classified as “never events” because they should never happen.

"Some researchers and patient safety experts say the problem of wrong-site surgery has not improved and may be getting worse, although spotty reporting makes conclusions difficult. Based on state data, Joint Commission officials estimate that wrong-site surgery occurs 40 times a week in U.S. hospitals and clinics."

Last year 93 cases were reported to the accrediting organization, compared with 49 in 2004. Reporting to the commission is voluntary and confidential — to encourage doctors and hospitals to come forward and to make improvements, officials say. About half the states, including Virginia, do not require reporting. In two states that track and intensively study these errors, 48 cases were reported in Minnesota last year, up from 44 in 2009; Pennsylvania has averaged about 64 cases for the past few years.

Some recent cases:

In April an ophthalmologist in Portland, Ore., operated on the wrong eye of a 4-year-old boy.

In December 2010, Beth Israel Deaconess Medical Center in Boston reported that neurosurgeons had performed three wrong-site spinal surgeries in a two-month period.

After five wrong-site operations in less than three years, state officials in 2009 ordered that video cameras be installed in the operating rooms of Rhode Island Hospital in Providence, which was fined $150,000.

Tennessee Tricities reported the upcoming trial of Amanda Tibble who originally pled guilty but then refused to place her admission in open court.   According to a court document, Tibble cursed patients and twisted a 75 year-old resident’s arm behind his back.  Despite pleading guilty to four counts of unlawful abuse or neglect of an adult, CNA Tibble was accused of physically and verbally abusing patients at John M. Reed Nursing Home will still go to trial in August.

Amanda Tibble accepted a plea bargain in return for a reduced jail sentence.  With her not willing to accept full responsibility for the crimes (she pleaded guilty because it was in her best interest for two of the counts) Judge Robert Cupp denied the plea bargain and set Tibble’s trial date for August 9.


KAALtv reported serious problems with the quality of care at St. Mark’s Lutheran Home in Austin.  Many family members have complained.  The family council –which is made up primarily of family members of residents in the nursing home–are saying quality of care has been a battle with the facility for far too long.

"We’ve continually come to the board and the management, and it seems quite often to us some of the same problems keep reoccuring," says President of the Family Council Dick Heuton.

"St. Marks basically is considered a low performing below average facility," says Jean Mueller, regional ombudsman for the state.

According to Medicare’s website, St. Mark’s Lutheran Home was inspected in April and had 11 deficiencies. Inspectors found they failed in areas of quality care and nutrition.  Inspectors found evidence they failed to prevent or promote the healing of bed pressure sores and they failed to ensure the unpasterized eggs, served to residents, were cooked properly. Another major deficiency is staffing or lack their of, "we have some really good nurses and aids and support staff here, but they just don’t have enough of them," say Huebner.

"A lot of time after the state inspectors have been here, what’s happened is they get a little better for a little time then they just fall right back off, then we’re in the same boat we were in before, " says Huebner.