The Palm Beach Post reported on Florida’s attempts to protect the corporate decision-makers from accountability for their decisions that affect the care provided at the facility.  In the case of “vicarious liability,” HB 869 says, punitive damages may not be imposed unless “an officer, director, or manager of the actual employer, corporation, or legal entity condoned, ratified, or consented to the specific conduct.”  The bill makes it even more difficult to hold the corporate decision-makers (who make millions from taxpayers) responsible for the neglect and abuse at their nursing homes.

Advocates for residents warn it’s a bad move in a state with one in five homes on a watch list for safety concerns.  15 more nursing homes recently joined the state watch list, joining some 123 others already on it.

“All this legislation does is immunize corporate decision-makers from any accountability,” said Brian Lee, the state’s former long-term care ombudsman and now the executive director of an advocacy group, Families for Better Care.

Meanwhile, executives who controlled nursing homes in Palm Beach and two other counties face felony charges in a $2.75 million Medicaid fraud case. A Pahokee nursing home paid more than $26,000 for an assistant CEO’s BMW and a Gainesville affiliate paid more than $50,000 for her Cadillac convertible, according to documents supporting the arrests. The Gainesville home is on the watch list.

This additional protection is not needed.   Florida had the most dramatic changes in liability costs in the country, with claims per 1,000 beds dropping by half from 2000 to 2007 and severity falling from $450,000 to $100,000 per claim.

 

Nursing homes nationwide that were not meeting even basic requirements to look after their residents charged taxpayers billions of dollars.  The Department of Health and Human Services’ inspector general said Medicare paid about $5.1 billion for patients to stay in skilled nursing facilities that failed to meet minimum quality of care rules in 2009, in some cases resulting in dangerous and neglectful conditionsOne out of every three times patients wound up in nursing homes that year, they landed in facilities that failed to follow basic care requirements laid out by the federal agency that administers Medicare, investigators estimated.

 

By law, nursing homes need to write up care plans specially tailored for each resident, so doctors, nurses, therapists and all other caregivers are aware how to help residents reach the highest possible levels of physical, mental and psychological well-being.  This is not done. Neglect is rampant.  Investigators estimate that in one out of five stays, patients’ health problems weren’t addressed in the care plans, falling far short of government directives.

The government spends taxpayer money on facilities that actually endangers people’s health. In other cases, residents got therapy they didn’t need, which the report said was in the nursing homes’ financial interest because they would be reimbursed at a higher rate by Medicare.

 

 

 

Time Magazine had an interesting article explaining how and why health care bills are so expensive.  A for-profit system encourages waste, greed, and outlandish markups.  Executive compensation is ridiculous.  The article gives great details but here are some excerpts.

“Yet those who work in the health care industry and those who argue over health care policy seem inured to the shock. When we debate health care policy, we seem to jump right to the issue of who should pay the bills, blowing past what should be the first question: Why exactly are the bills so high?”

“The result is a uniquely American gold rush for those who provide everything from wonder drugs to canes to high-tech implants to CT scans to hospital bill-coding and collection services. In hundreds of small and midsize cities across the country — from Stamford, Conn., to Marlton, N.J., to Oklahoma City — the American health care market has transformed tax-exempt “nonprofit” hospitals into the towns’ most profitable businesses and largest employers, often presided over by the regions’ most richly compensated executives. And in our largest cities, the system offers lavish paychecks even to midlevel hospital managers, like the 14 administrators at New York City’s Memorial Sloan-Kettering Cancer Center who are paid over $500,000 a year, including six who make over $1 million.”

 

“Taken as a whole, these powerful institutions and the bills they churn out dominate the nation’s economy and put demands on taxpayers to a degree unequaled anywhere else on earth. In the U.S., people spend almost 20% of the gross domestic product on health care, compared with about half that in most developed countries. Yet in every measurable way, the results our health care system produces are no better and often worse than the outcomes in those countries.”

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The Miami Herald’s Naked Politics had an interesting article on the arrest of CEO Maxcine Darville and Assistant CEO and Assistant CEO Joanne Carter of the Council on Aging of Florida; the product of an investigation by the Attorney General Office’s Medicaid Fraud Unit.  Darville and Carter were in command of the nursing home management company and charged with misusing Medicaid funds. Darville and Carter are accused of using $2.75 million in Medicaid allocations to give themselves excessive salaries and pay for personal expenses like mortgage payments, cell phone service and household bills. The questionable spending occurred by January 2006 and March 2012.

The Council on Aging of Florida, a for-profit company that operates four facilities, is not affiliated with the Florida Council on Aging, a statewide advocacy group for the elderly.
Here is the full press release:
Today Attorney General Pam Bondi’s Medicaid Fraud Control Unit, with the assistance of the Alachua County Sheriff’s Office, arrested the CEO and Assistant CEO of the Council on Aging of Florida, Maxcine Darville and Joanne Carter, respectively, for using more than $2.75 million of Medicaid dollars for excessive salaries and personal expenses. The Attorney General’s Office investigated the women for allegations that between January 2006 and March 2012 the two used Medicaid program payments to the Council on Aging of Florida to cover excessive salaries and personal expenses, such as mortgage payments, Internet service, utility bills, cell phone service, and personal long distance calls. The Council on Aging of Florida is a nursing home management company, and it is not affiliated with the Florida Council on Aging.
“We will not allow those who are entrusted with providing legitimate Medicaid services and accurately billing the program to exploit the system,” stated Attorney General Pam Bondi. “We will continue to protect taxpayers’ dollars by investigating and prosecuting those who commit Medicaid fraud.”
Darville and Carter are each charged with one count of organized scheme to defraud, a first-degree felony. If convicted, Darville and Carter each face up to 30 years in prison and $10,000 in fines. Attorney General Bondi’s Office of Statewide Prosecution will prosecute the case.

Ronald E. Burrell and Michael Elliott from Caremerica, a North Carolina company that operated assisted-living facilities in both Carolinas, have been sentenced five years in prison in a corporate tax evasion case.  The Justice Department says Burrell and Elliott were also ordered to pay $4.8 million each in restitution.  Burrell was the chief executive and Elliot the chief financial officer of the company. Both had pleaded guilty earlier to conspiracy to defraud the Internal Revenue Service to avoid paying federal employment taxes.

 
 
 

Bloomberg News had an interesting article on a recent study by federal health care inspectors which said U.S. nursing home industry overbills Medicare at least $1.5 billion a year for treatments patients don’t need or never receive. That is incredible.  The national for profit chains were the worse offenders.  78 percent of $105 billion in revenues went to for-profits in 2010, up from 72 percent in 2002.  The emergence of national for profit chains is fueling waste, fraud and patient harm in the $2.8 trillion U.S health care sector.

Thirty per cent of claims sampled from for- profit homes were deemed improper, compared to just 12 percent from non-profits, according to data Bloomberg News obtained from the inspector general’s office of the U.S. Department of Health and Human Services.

“The November study that found $1.5 billion in improper nursing-home bills — equivalent to about 5 percent of total Medicare outlays to the facilities — was by the U.S. Department of Health and Human Services office of inspector general.  It followed a 2010 OIG report that found for-profit nursing homes were nearly twice as likely as nonprofits to bill Medicare at the highest rate for patients of similar ages and diagnoses.”

Nursing homes employ more than 1.6 million workers, second only to hospitals in the health care sector, according to the Alliance for Quality Nursing Home Care, the trade group representing for-profit facilities.   Most of these workers are certified nurse aides who get no health benefits and are paid minimun wage.  Understaffing leads to burn-out, stress, and lashing out at residents.

The 10 largest for-profit nursing-home chains employed 37 percent fewer registered nurses per patient-day between 2003 and 2008 — and received 59 percent more deficiency notices from government inspectors — than nonprofits did, according to a study published last year in the journal Health Services Research.”

“At a nursing home in South Carolina owned by Life Care Centers of America Inc., an 80-year-old woman who couldn’t control her head or keep her eyes open was placed in a standing frame for 84 minutes of physical and occupational therapy just two days before she died — one in a number of Life Care overcharges for unnecessary care, according to civil fraud allegations filed in November by the U.S. Justice Department in federal court in Chattanooga.”

In a civil complaint unsealed last month, U.S. prosecutors accused Life Care of billing Medicare for unnecessary and sometimes harmful treatments at its 230 nursing homes between 2006 and 2012.

This is what happens when for profit chains put profits over people.

Other blogs have discussed this report here and here.

 

Michael Stratton of Stratton Faxon wrote a great article on their blog The Connecticut Legal Examiner on how private investment groups use corporate shells to hide from liability and accountability.  Below is a reprint of the article.

“Private investment groups are replacing ‘mom and pop’ nursing home owners. Plaintiff lawyers may need to dig through the resulting complex ownership and management structures to identify – and hold accountable-the corporate entities that have harmed their clients

Private equity enterprise and large public companies are operating more nursing homes today, replacing the more traditional operators, individuals, and faith-based enterprises that are sensitive to the plight of the elderly.

With the continuing increase in demand for elder-care resources, these entrepreneurs are often more concerned with profits than resident care. And because occupancy levels in nursing homes are already high and government reimbursement rates are capitated, some ”vulture capitalists” try to increase their bottom line by lowering costs. This usually translates into cutting staff, since labor is the largest cost-component of the nursing home budget.

Because the nursing home business is primarily service oriented, cutting staff usually means cutting service. That, in turn, translates into poor resident care. When the quality of care suffers, the nursing home operator’s liability increases in both the civil and administrative arenas, to mitigate their exposure for potential liability, nursing home operators resort to complex corporate strategies to limit their liability.

The cornerstone of the nursing home industry’s “escape and evasion” strategy is creating an amalgamation of single purpose enterprises (SPEs) to prevent litigants from obtaining judgments against people or entities other than the nursing home licensee. The licensee is typically just a shell company. Nursing home operators have found that numerous SPEs are less attractive defendants than a single company with multiple operating interests and multiple real estate holdings.

Under the SPE structure, nursing home revenues are often placed into centralized accounts under the parent company’s control. Payments are made from those accounts on behalf of the individual nursing homes without regard to the revenues a particular facility generates. Monies are used for myriad purposes unrelated to resident care, including acquiring new facilities and servicing the debts of the parent and affiliated companies. Dividends are rarely paid to the parent by its subsidiaries because the parent has unlimited access to the funds in the centralized account.

Identifying the real culprit at the root of nursing home abuse is no easy task. It requires hard work, determination, and perseverance. Focus your case on the misconduct of these corporate predators. Even with the advent of more stringent disclosure provision, the nursing home industry will continue to obfuscate when it comes to identifying the parties that are truly responsible for the management and operational decisions in nursing homes.”

 

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The Commercial Observer had an interesting article on the recent litigation involving Sava owners and operators and how expert accountants were needed to explain the complex web of corporate shell games. Two top forensic accountants were retained in a decisive battle in a legal war for control of about 170 nursing homes.

The trial in New York Supreme Court had its origins eight years ago, when real estate investor Ruby Schron teamed up with his lawyer, Leonard Grunstein, in a labyrinthine $1.3 billion leveraged buyout that created SavaSeniorCare. At issue for the two expert witnesses: the exact whereabouts of $100 million.”  In the nursing home case, the accounting helped determine that Mr. Schron could acquire the company without any further investment by simply assuming the debt. On Mr. Schron’s side was Harvey R. Kelly. Providing expert testimony for Defendants was David S. Williams. The rival accountants’ task was to sort out transactions among some 30 people and entities involved in the buyout, as well as the movement of money through an escrow account from entities on Mr. Schon’s side of the deal to Mr. Grunstein and his companies, to establish whether, and how much of, the money was lent.  The case, which hinged on how much money from a $100 million loan by Mr. Schron actually found its way to Sava. The accountants in Schron v. Grunstein were more than $110 million apart in their estimates of how much money was lent.

“In 2004, Mr. Grunstein and investment banker Murray Forman approached Mr. Schron with a proposal to buy Mariner Health Care Inc., a public company that operated more than 250 nursing homes and owned real estate associated with about 170 of them.”  “Grunstein and Forman proposed a complex transaction employing a ‘PropCo/OpCo’ structure whereby Old Mariner’s real estate would be separated from the nursing home operations.”

A newly formed company, National Senior Care Inc., bought all of the shares of Old Mariner, then sold the real estate to one of Schron’s companies, SMV. That entity then leased the properties to another newly formed company, SavaSeniorCare, controlled by Mssrs. Grunstein and Forman. National Senior Care retained the operations of about 100 nursing homes located on properties that were leased from third parties.

While neither Mr. Grunstein nor Mr. Forman put any of his own money into the deal, Mr. Schron raised about $1.1 billion in financing, acquiring real estate valued at about $800 million. According to documents signed at closing, the financing included a $100 million loan to the owner of Sava that gave him an option to acquire the company, the judge wrote.

Mr. Kelly said a promissory note signed by both sides at the time of closing—and amended and restated in 2006 when a second, $20 million loan was made—was the best evidence that the loan existed. And he said documents showed that the nursing home company had made use of the money, including making a $65 million loan to the “New Mariner” entity on the day of the transaction.

Documents included “audited financial statements of SavaSeniorCare that an outside independent audit firm rendered the opinion that [an entity controlled by Mr. Grunstein] had contributed $100 million,” he said. “So, you’ve got years’ worth of very consistent documents demonstrating that. I find that the most credible evidence.”

The biggest problem Murray Forman and Leonard Grunstein had was their obvious lack of credibility.  “Apart from the fact that all of the documentary and non-party witness evidence contradict their testimony, their evasive answers and manner on the witness stand left the court with a firm belief that both gave testimony that was less than candid,” the judge wrote. He ordered the defendants to proceed with the transfer of control of the company “without further delay.”

 

Boston.com reported that Chief U.S. District Judge Mary M. Lisi doubled the damages against Antonio Giordano.  The nursing home executive must repay $12 million to the federal government for diverting money for personal benefit causing two nursing homes to fail. Giordano is in prison on conspiracy and embezzlement charges. Judge Lisi increased the damages to deter future violations by other individuals who raid publicly funded projects.

 

NBC had an interesting article about how understaffing leads to poor care including increasing the risk of preventable infections.  Heavy patient loads and chronic burnout have long been among the top complaints of nurses in the healthcare industry.  A new study proves that those problems affect not only the nurses themselves, but also the patients they are responsible to care for.

This study confirms that there is a direct link between staffing, the number of nurses providing patient care, and patient outcomes. The issue of nurse-to-patient ratios is hotly debated in the U.S., where no one appears to track nationwide staffing averages. Neither the ANA nor the American Hospital Association keep such statistics. Nursing patient loads can vary from as low as one nurse for every one or two patients in intensive care units to far higher than the 1:5 ratio mandated in surgical units in California.

This certainly isn’t the first time that UPenn nursing researchers have found that staffing levels have had direct effects on patient health. A 2002 study found that adding a single patient to a nurse’s caseload increased the risk of dying within a week by 7 percent. Boosting the load from six patients to eight increased the risk by 31 percent over a nurse caring for four patients.

And a 2010 study found that patient deaths would drop by 14 percent in New Jersey and 14 percent in Pennsylvania if those states adopted California’s hard-won mandated nurse-to-patient ratios of 1 to 5 in surgical units. That study was led by Linda Aiken, director of the Center for Health Outcomes and Policy Research at the University of Pennsylvania School of Nursing, who also collaborated on the current study.

 

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