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New Nursing Home Lawsuit Against Facility Outsourcing

NBC News published a story this week in a new nursing home lawsuit from out west that challenges a practice used by some long-term care facilities. According to the story, an attorney recently filed suit seeking to throw out part of a law which allowed facilities in that state to outsource their own management. Essentially, the state law allows nursing home chains to pay another company to actually run the day-to-day of the facility. This “managing” entity is paid a percentage of proceeds for this task. However, the lawsuit aruges that this arrangement is in violation of federal law.

Specifically, the suit suggest that federal law prohibits outside entitites (i.e. a “management company”) from operating nursing homes. If that reading of the federal law is true, it might contradict state laws which allow nursing home chains to operate under these businesses models.

Why does this matter for nursing home residents? Some patient safety advocates argue that this arrangement results in funds that could go toward actually improving resident care intsead being funneled to this management company. Importantly, in most cases these management companies are legal entities controlled by the owning business itself. In other words, it is more a complex business maneuvering than efficiency tool.

The attorney who filed this latest suit explained, “It’s just their way of taking 5 percent off the top and leaving the nursing home with insufficient resources so that nursing homes limp along with poor care for patients.”

The problem is that most of the funds used to operate these facilities come from the government in the form of Medicare and Medicaid payments. Those payments are often the bare minimum needed to ensure adequate care each day. However, if 5% of those bare minimum payments are skimmed for “management” fees, then the residents are unlikely to get the adequate care they need. This suit seeks to change that by ensuring more funds end up going to things that actually affect resident lives.

The nursing home chain named in the suit and state public health officials disagree with the claims made, and so it will be interesting to see how this particular matter plays out in the coming weeks and months.

System-Wide Lawsuits
Most nursing home lawsuits relate to individual cases of neglect or abuse. The attorneys at our firm in Chicago have worked on countless lawsuits of this nature, often involving issues like bed sores, falls, low staffing levels, medication errors, and resident on resident violence. These actions are usually filed by family members after they become aware of the inadequate care that their loved ones have received at a particular facility.

However, as this latest story suggests, some suits of this nature relate to different matters altogether. These system-wide suits are often aimed at certain practices or violations of law that many facilities engage in. While less common, these actions can be a helpful way for tens of thousands of nursing home residents to be helped by clarification of the law and enforcement of rules to improve resident care quality.

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