South Carolina Nursing Home Blog : South Carolina Nursing Home Lawyer & Attorney : Poliakoff & Associates Law Firm : Elderly Care, Senior Care

The Providence Journal had an article about the federal government seeking more than $12 million from former nursing home executive Antonio L. Giordano and his associates, claiming they enriched themselves by diverting millions of dollars from nursing homes as the homes slipped into debt, in violation of an agreement with the U.S. Department of Housing and Urban Development.

The government, on behalf of HUD, accuses Giordano; his longtime chief financial officer John J. Montecalvo; Pasquale V. Confreda, a general partner with Coventry Health Center Associates, and Coventry Health Center Associates itself of illegally channeling money from two nursing homes to themselves and businesses that included two consulting firms, one owned by Giordano’s daughter and the other by his son.

The nursing homes — Mount St. Francis Health Center, in Woonsocket, and the Coventry Health Center — were backed by HUD-insured financing and later went into receivership. Those named in the suit were barred from transferring money or property belonging to the nursing homes while the homes were not financially solvent under the terms of the HUD mortgage insurance.

Giordano and Montecalvo oversaw the management of both nursing homes. Confreda was a general partner of Coventry Health Associates, which owned the 344-bed Coventry Health Center.

The suit filed in September in U.S. District Court says Montecalvo and Giordano misused $4.2 million in Mount St. Francis funds in violation of the HUD agreement reached when the parties secured an $8.6-million HUD-insured mortgage. The government by law is allowed to seek double the amount that was allegedly misspent, or $8.5 million, including legal fees.

Giordano, Montecalvo, Confreda and CHC Associates are accused of diverting another $1.8 million from Coventry Health Center, equaling $3.6 million, with legal fees. In that case the parties secured a $15.3-million HUD-insured mortgage after refinancing.

The case grew from an audit done by the Office of the Inspector General of the nursing homes’ operations from Jan. 1, 2000, to Dec. 31, 2003, the suit says. According to the suit, $958,675 associated with the 194-bed Mount St. Francis was disbursed in violation of the HUD agreement.

The largest sums included $224,720 paid to a consulting firm run by Giordano’s son, Antonio A. Giordano, and $272,200 to a firm led by his daughter, Mary D. Gentili. Another $104,520 went to the now-closed Hillside Health Center that Montecalvo managed as well as $109,000 to the Sterling Health Care Management Co., where Montecalvo acted as general manager.

In addition, according to the suit, Giordano and Sterling, under Montecalvo, received $1.4 million each in management and partnership fees that violated the agreement.

The suit claims $1.4 million in funds related to the Coventry Health Center were diverted to eight entities in violation of the HUD agreement. The largest sums in that batch included $250,000 that went to Management Realty Service, a Rhode Island company where Giordano’s daughter served as president, and $267,000 that went to the consulting firm she led. Another $425,816 went to Sterling, the suit says.

Giordano and Montecalvo pleaded guilty in 2006 to federal charges that they misused money from the two homes and from the now-closed Hillside Health Center in Providence. Giordano was sentenced to 2½ years in prison and Montecalvo to 2 years.

They later admitted to embezzlement and conspiracy charges in state court, where they agreed to pay about $1.1 million in fines and restitution but avoided additional jail time.  Giordano and Confreda were also named as major delinquent borrowers in the state’s credit-union crisis of the early 1990s. In 2005, the state agreed to accept a $3-million payment to settle the debts left over from the banking crisis. The deal, approved by the DEPCO Asset Review Committee, cancels out more than $10 million in delinquent loans Giordano and his business partners owed Rhode Island taxpayers.

They be placed under the jail.

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McKnights ran an article about the increase in nursing home and assisted living costs which each rose by an average of 3.3% over the last year, according to the 2009 MetLife Market Survey of Nursing Home, Assisted Living, Adult Day Services, and Home Care Costs.

The average cost of a private room in a skilled nursing facility expanded to $219 per day from $212 a day in 2008.

Semi-private room costs increased by 3.7% to $191 per day.

The monthly cost of assisted living nationally rose to $3,131 from $3,031 in 2008.

The average hourly cost of an in-home caregiver climbed by 5% to $21 per hour, up from $20 the previous year.

Once again, Alaska topped the list of states for the most expensive nursing home care. The average daily rate in that state is $584. Louisiana received the opposite distinction. Its average nursing home rate totaled just $132 per day—the lowest in the country, according to the MetLife report.
 

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The American Association for Justice released an astounding statistic: medical malpractice insurance companies’ average profits are higher than those of 99 percent of Fortune 500 companies.

As the nation remains mired in a debate over health care reform and how to keep down the costs of expanding coverage, AAJ is trying to point out that Republicans claims that medical malpractice lawsuits are one of the big cost drivers is completely misleading. In fact, though malpractice claims and so-called “defensive medicine” does account for a small percentage of unnecessary costs, medical errors and the astronomical profits of malpractice insurers appear to be a bigger part of the problem.

AAJ’s report released today finds that the average profit of medical malpractice insurance companies is higher than 99 percent of all Fortune 500 companies and 35 times higher than the Fortune 500 average for the same time period; and malpractice insurers have seen their profit margins range from 5.9 percent to 74.8 percent, with an average of 31.2 percent.  The report also finds that malpractice insurers have publicly overestimated their losses and underestimated their profits in an attempt to suggest the insurance business and medical practice in general faces a crisis that must be resolved by so-called “tort reform” — i.e., making it harder for patients to sue and to collect damages for their injuries.

“Insurance companies are gouging doctors on their premiums to mislead lawmakers,” said American Association for Justice President Anthony Tarricone, managing partner at Kreindler & Kreindler LLP, in a statement released with the report. “And today, injured patients are often left with no avenue to pursue justice, while health care costs continue to skyrocket.”

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Ken Terry, a former senior editor at Medical Economics Magazine, is the author of the book Rx For Health Care Reform and wrote the below article about the profitability of the long term care industry. 

As healthcare reform starts to look probable, industry groups of all kinds are stepping up their lobbying. One of those groups is the nursing home industry, which is already facing a $16 billion cut in direct support from Medicare over the next 10 years, as well as Medicaid cuts in many states. Twenty-four states have reduced funding for nursing homes in the past year, and Medicaid everywhere pays less than it costs to house and care for elderly patients, say industry officials. So nursing homes depend on Medicare to stay in business, they point out.

The nursing home operators warn that further cutbacks in Medicare-which are part of the reform legislation–will drive many facilities out of business. Some homes are laying off employees now, and a few have recently closed. Meanwhile, the need for these institutions is increasing. The number of people in the nation’s 16,000 nursing homes rose to 1.85 million in 2008 from 1.79 million the previous year.

But all is not doom and gloom in the nursing home industry, says the Washington, DC-based Center for Medicare Advocacy. According to this group, reports from the Government Accountability Office (GAO) and the Medicare Payment Advisory Commission (MedPAC) show that Medicare overpays nursing homes billions of dollars a year. MedPAC found that that aggregate profit margins for freestanding nursing facilities exceeded 10 percent for seven years in a row. In 2007, their profit margin was 14.5 percent. Moreover, they didn’t add staff. So the Center for Medicare Advocacy believes that the nursing home operators are pocketing much of the profits, rather than reinvesting them.

The advocacy group also charges that nursing home owners are waging a campaign to derail healthcare reform by scaring their residents into thinking that it will reduce their Medicare benefits. The center specifically cites Genesis Healthcare, which owns more than 200 skilled nursing homes and assisted living communities in 13 eastern states. If this sounds familiar, it might be because some Medicare Advantage plans have been sounding the alarm on reform to their members.

So, whom should we believe? The nursing home industry, which depicts reform as a grim reaper that will turn elderly patients into the street, or the Medicare advocacy group, which relies on government data? As usual, the truth probably lies somewhere in between. Nursing home operators have been known to put their own profits before their residents’ well-being, but states are certainly cutting back on Medicaid, and some homes are undoubtedly in jeopardy.

The one thing that can be said with certainty is that it’s becoming increasingly likely that MedPAC will be transformed into an agency with sweeping powers over Medicare. If that happens, nursing homes better look out.
 

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The Oakland Tribune had an article about how many nursing homes refuse to carry insurance in an effort to limit their liability and fail to compensate residents who are injured or die as a result of their abuse or neglect.  The article discusses the case of Grover Brown.  Brown was 37 years old who developed pressure sores soon after arriving at the High Street Care Center in East Oakland.  One of the sores never healed properly. But once the wound did begin to fester, he wasn't moved, washed, monitored or medicated with antiseptic.  The wound got worse,  Surgeons had removed his tailbone because the wound had festered without treatment.  Even as the sore turned green and smelled foul indicating infection, the nurse in charge at the time told an aide that was the way "it was supposed to smell," according to Department of Public Health records.  The infection ate away at the bone through to the marrow despite repeated treatment orders from physicians to the staff of High Street Care Center.

Brown is suing High Street Care Center, which had a long list of citations from the Department of Public Health — 164 between 2004 and 2008. The facility was owned until December 2008 by Trinity Health Systems, whose president, Randal Kleis, has operated about a dozen facilities across the state under several corporate names.  But Brown likely won't see more than a token settlement from High Street Care Center because skilled-nursing facilities, nursing homes and assisted-living care facilities — charged with caring for the most vulnerable — are not required to carry liability insurance.   And Kleis' other assets are untouchable because they were legally registered as separate corporate entities — a common way operators shield themselves and their profits, said Kathryn Stebner, a lawyer who has been representing victims of nursing home abuse since 1987.   

The state Attorney General's Office, which is California's ultimate watchdog, has gone after fewer than a dozen problem nursing homes for elder abuse and neglect since 2000.  That leaves private attorneys to pursue the operators — almost always after the damage has been done.

Medi-Cal began reimbursing facilities for the cost of liability insurance in late 2004 with the expectation that care would improve. But the decision whether to carry insurance was left to nursing-home owners. There was nothing to mandate the improvement.

The incident was not an isolated mistake. Brown's lack of care was the consequence of an indifference to the health and safety of residents at the facility.  High Street Care Center had a record of poor care, according to records from the Department of Public Health:

On Dec. 7, 2004, an 82-year-old woman at High Street Care Center was suffering from a bed sore that had penetrated through her tendons and muscles to the bone. She was taken to a hospital, where doctors found she weighed 65 pounds and described her as "extremely emaciated." She went to a new nursing home and immediately began gaining weight.

In January 2005, inspectors discovered that the supervisor of dietary services was not certified.

Just two months after being admitted in March 2005, a 54-year-old breast cancer patient who had trouble swallowing lost 23 percent of her body weight. She dropped from 117 pounds to 90 pounds by May 2, 2005. But staff told her family she was gaining weight.

In December 2005, inspectors described finding a cockroach crawling around the base of trash cans full of dirty diapers in one of the rooms. A resident told inspectors that they were crawling around "all the time."

In 2006, a 59-year-old woman told staff at the Center for Elder Independence, a community day care program for elders she attended for treatment, that a certified nursing aide at High Street Care Center had used a washcloth to cover the woman's nose and mouth. When she cried out in pain for fear of being smothered, the aide hit her on the side of the head. A social worker alerted to the alleged abuse by High Street Care Center staff, also had reported the incident to the Public Health Department. The facility's administrator told inspectors that although the aide denied the allegations, he fired the aide and "believed something had happened to the resident."

Kleis has settled at least two previous wrongful-death lawsuits in the past six years, court records show. In each case, Kleis asserted he was losing money and could not afford insurance.

The MacArthur Care Center, run by Kleis under the company name Trinity Health Systems, had an extensive record of problems and lawsuits. The Department of Public Health cited the facility for 79 deficiencies between 2004 and 2009.

AARP spokesman Mark Beach said every responsible business should have liability insurance especially those like nursing homes and skilled nursing facilities that take care of the most vulnerable and dependent people. It fosters accountability and ensures people are compensated when something happens even if an owner declares bankruptcy, he said.

Having insurance, he added, "is the right thing to do."

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A friend of mine who is interested in nursing homes sent me a link to Money-Driven Medicine: Patients for Sale.  I have not seen the movie but the trailer looks interesting.

Money-Driven Medicine provides the essential introduction Americans need to become knowledgeable participants in healthcare reform.   Based on Maggie Mahar's acclaimed book, Money Driven Medicine: The Real Reason Health Care Costs So Much, the film offers a behind-the-scenes look at how our 2.6 trillion dollar a year healthcare system went so terribly wrong and what it will take to fix it.

The U.S. spends twice as much per person on healthcare as the average developed nation, fully one-sixth of our GDP - yet our outcomes, especially for chronic diseases, are very often worse.  The U.S. is the only industrialized nation that has chosen to turn medicine into a largely unregulated, for-profit business. 

In Money-Driven Medicine, Dr. Donald Berwick, president of the Institute for Health Care Improvement, explains: “We get more care, but not better care.” Our fee-for-service system channels resources into the high-tech, high-cost “rescue care” patients need after they become critically ill, while it skimps on the preventive primary care which could keep them out of the hospital in the first place. As a consequence, emergency rooms overflow while family practitioners are becoming an endangered species. Medical students explain that these perverse pay incentives drive them away from primary care into higher-paying specialties.

Medical ethicist Larry Churchill doesn’t mince words: “The current medical care system is not designed to meet the health needs of the population. It is designed to protect the interests of insurance companies, pharmaceutical firms, and to a certain extent organized medicine. It is designed to turn a profit. It is designed to meet the needs of the people in power.”

These businesses comprise the “medical-industrial complex” which has wrested power from physicians, turning healthcare into a commodity and patients into profit centers.   Although many uninsured and underinsured Americans receive too little care, the well-insured often get unnecessary, even risky care. More than two decades of studies by researchers at Dartmouth reveal that one-third of our healthcare dollars are squandered on useless tests and ineffective or unproven procedures no better than the less-costly ones they replace. The studies demonstrate that evidence-based, accountable care would be both more effective and less expensive. 

In Money-Driven Medicine frustrated doctors and outraged patients testify to the tragedies which can happen when profit trumps patients’ needs. Money-Driven Medicine will encourage health professionals and patients to work together to take control of American medicine back from the MBAs.

 

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There is a new study from WellPoint: Institute of Health Care Knowledge that shows why the U.S. spends so much on health care costs in comparison to other Western countries despite the quality being lower than in those countries.  The study states:

Despite the common belief that costs increase due to excess insurer profits, the aging of America and the high cost of medical malpractice, these factors have little if any impact on health care premiums. The key drivers of health care premium increases are advances in medical technology and subsequent increases in utilization, excess price inflation for medical services, cost-shifting, the high cost of regulatory compliance and patient lifestyles (e.g., physical inactivity and increases in obesity). Though still a factor, prescription drugs contribute less significantly to rising health care costs due to the increased use of generic medications.

Popular explanations for the upward spiral of health care and health insurance costs include the impact of an aging U.S. population, the high cost of medical malpractice insurance and “excess” insurer profits. None of these, however, is a primary driver of health care costs and the resulting rise in health insurance premiums.

Here is a copy of the study.  Tort reform does nothing to lower the cost of health care and medical malpractice awards do not affect the overall cost of health care.

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Michael Owens of the TriCities.com website reported a story about another sexual assault of a nursing home resident by an employee nurse.  The article discusses how a co-worker, Patricia Davenport, reported the employee molesting a resident on two different occasions but was told  she was mistaken by NHC (National HealthCare Corp.).   She quit after the complaints were ignored.

Davenport then told the Office of the Attorney General of Virginia that she witnesses the same aide molesting two different nursing home patients.  Davenport said the first time she stumbled upon the abuse of patients was in August 2007. The woman’s shirt and bra had been shoved high on her chest. A nurse’s aide was standing behind the wheelchair, and he was reaching around to fondle the patient’s breasts. Later that same month, Davenport said, she caught the same aide fondling a blind patient.  That aide, James W. Wright was indicted on four counts of aggravated sexual battery. Each count stems from the investigation into the treatment of a different patient from 2000 to 2007.

National HealthCare Corp., runs the Bristol nursing home as well 75 others in Tennessee and other eastern states.  Virginia Department of Health Professions records show that Wright still holds an active license to work as a nurse’s aide.  The abuse was not a secret among nursing home staff.  “When I talked to the rest of [the nurses], they said this has been going on for years,” Davenport said.   Davenport said she complained to her supervisor.  “You look at those people every day in the face knowing they’re getting abuse and you can’t do anything because nobody’s got your back,” Davenport said. “I don’t want to go back to nursing.”

A second article discusses additional abuse by Wright at the Brookdale Senior Living-Grand Court Bristol nursing home, where the aide accepted a job after passing the criminal background and job reference checks.  Although nursing aides said they witnessed and reported sexual abuse by Wright to NHC officials, NHC did not pass along any of that information to Grand Court.  In all, eight people from both nursing homes have told investigators they were groped, fondled and sexually assaulted by Wright between July 2003 and May 2008, according to documents filed by the Virginia Board of Nursing.   Nursing board documents show that seven NHC patients complained of being sexually assaulted while under Wright’s care.

Despite those complaints at NHC, the aide arrived at his new job in September 2007 with flawless references, said Holly Botsford, a spokeswoman for the Chicago-based Brookdale Senior Living, which runs 548 homes across the nation, including Grand Court Bristol.  “None of [the checks] indicated he had any previous employment or character issues,” Botsford said.  A Grand Court patient was sexually assaulted the following May, according to Virginia Board of Nursing documents.

A pair of former NHC nurses said the nursing home’s management routinely dismissed patient and nurse allegations against Wright.   It was in 2003 that former NHC nurse Diane Lewis reported a patient’s complaint of being touched inappropriately. A staff director did ask the patient about the complaint, but the investigation ended there.  Twice in August 2007, then-nursing aide Patricia Davenport complained that Wright mistreated two patients.


 

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Here is a link to The Frederick News-Post which had a terrific op-ed by Katherine Heerbrandt about accountability and the nursing home industry.  The editorial is below:

Nursing homes are places where residents go about the business of wrapping up their lives or recuperating from illness, so it's not surprising that many of us have an aversion to them. Perhaps we see a future we don't want to contemplate.  But as baby boomers age, living out our golden years in a long-term care facility is a real possibility. The size of the disabled older population who will need assisted or nursing home care will grow by more than 50 percent between 2000 and 2040, according to the Urban Institute.

Entrepreneurs are looking at long-term care facilities as good investments. But as private equity investors flood into the nursing home business, "it's become harder and harder for families, regulators or prosecutors to identify the right individual or business entity to hold accountable for bad care," Janet Wells, public policy director of National Citizens' for Nursing Care Reform, said in an interview.

"The Office of Inspector General says it has found as many as 17 limited liability companies in the ownership and operations of a single facility," Wells said. "Most of these companies are making profits from the business, but they can't be held accountable by anyone for what happens to an individual resident."

This trend, she said, triggered a transparency bill this year and is part of the controversial health care reform legislation currently before Congress. A similar bill failed last year, and compromises were made. The bill currently before the House requires Nursing Home Compare (Medicare.gov/NHCompare/home/asp) to report the number of adjudicated criminal violations by facilities or crimes committed by their employees. States will also have to post survey reports online so consumers can read the inspectors' findings.

It's an uphill battle for advocacy groups. Nursing home lobbyists have much deeper pockets. "The nursing home industry is extremely powerful," Wells said. "And although it claims it can't make a profit from operating nursing homes, spends hundreds of thousands of dollars on campaign contributions and lobbying."

Lobbying, it seems, is a recession-proof profession. In the past decade, nursing home lobbyists' spending has risen from $25 million to $100 million, according to opensecrets.org, maintained by the Center for Responsible Politics.

Tyonja Bathgate became an unwilling advocate for nursing home residents' rights when her husband, Colin, moved to a local long-term care facility two years ago, and she worked with Delegate Sue Hecht on a bill to allow cameras in nursing homes. That bill failed this year.

Based on her experiences, Bathgate supports any legislation that will make nursing home operators more accountable and their operations more transparent.

Even if you or a loved one is not in a nursing home, she said, you are still affected by this legislation.

"Where do you think Medicare/Medicaid comes from? Those are tax dollars and nursing homes shouldn't be able to hide behind LLCs, or to spend millions on lobbyists. That's ridiculous," she said.

She's right. Why shouldn't the facilities entrusted with caring for our nation's chronically ill and elderly be held accountable for how they run their businesses?

For sample letters to your representatives and more information on the details of the nursing home transparency legislation, visit nccnhr.org.
 

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This is the third day in a row that I am writing about the insane profits by nursing home chains.  I am all for them making a profit if good quality care is also delivered but I don't understand how they can complain about needing tort reform to make a profit.  It just isn't true.  Below are some highlights from the first quarter for Five Star Quality, Inc.:

-- Total revenues for the first quarter of 2009 increased 14.0% to $295.2 million from $258.9 million for the same period last year.

-- Net income for the first quarter of 2009 was $25.4 million compared to net income of $1.6 million for the same period last year.

-- Net income per share from continuing operations for the first quarter of 2009 was $0.78 and $0.67, basic and diluted, respectively, compared to net income per share from continuing operations of $0.14, basic and diluted, for the same period last year.

-- Net income from continuing operations for the first quarter of 2008 included a $3.3 million unrealized loss, or $0.10 and $0.08 per basic and diluted share, respectively, on our holdings of auction rate securities.

-- Senior living occupancy for the first quarter of 2009 was 86.5% compared with 89.6% for the same period last year.

-- Senior living average daily rate for the first quarter of 2009 increased by 3.1% to $146.69 from $142.30 in the same period last year.

-- The percentage of senior living revenue derived from private and other sources for the first quarter of 2009 increased to 69.1% from 66.1% for the same period last year.

-- For those senior living communities that we have operated continuously since January 1, 2008 (comparable communities), occupancy for the first quarter of 2009 was 87.5% compared with 89.7% for the same period last year.

-- The average daily rate at comparable communities for the first quarter of 2009 increased by 4.9%, to $149.46, from $142.43 in the same period last year.

About Five Star Quality Care, Inc.:

Five Star Quality Care, Inc. is a senior living and healthcare services company. Five Star owns or leases and operates 210 senior living communities with 22,260 living units located in 30 states. These communities include independent living, assisted living and skilled nursing communities. Five Star also operates five institutional pharmacies and two rehabilitation hospitals. Five Star is headquartered in Newton, Massachusetts.

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