Negligent Nursing Homes Grab 5 Billion Tax Dollars in One Year

As the political battle over sequestration continues to dominate the news cycle, House Republicans are pushing for a 2.3 percent cut in Medicare reimbursements—hoping to save billions in taxpayer dollars. Democrats are largely opposed to the plan, fearing it will send the nation’s healthcare system into a crisis.

If members of both parties bothered to read a report released last week by the Health and Human Services Office of the Inspector General, they might find some common ground in saving American taxpayers money on Medicare.

The Inspector General report reveals that in 2009 nursing home conglomerates bilked U.S. taxpayers to the tune of more than $5 billion for care that by all legal definitions was substandard at best, negligent at worst. A full 37 percent of nursing homes across America receiving Medicade reimbursements did not meet plan-of-care standards for residents.


Those numbers do sound bad, and the human toll is even worse, says Brian Lee, a former Long Term Care Ombudsman for the state of Florida. Lee now heads the nursing reform advocacy group Families for Better Care.

“In Florida, for example, we had a case where a military veteran’s care plan being ignored resulted in him waiting two months for his catheter to be properly changed,” Lee tells TakePart. “Can you imagine that? We had another case in Miami where a woman jumped out of a third-story window after staff failed to give her a necessary psych exam.”

“Here you have a highly profitable industry providing horrible care and being overpaid to the tune of $5 billion from Medicare alone.”

Lee’s list of tragedies could go on all day—and virtually all of them could have been prevented if nursing homes lived up to the standards they are obligated to fulfill in order to receive Medicare dollars.

“Here you have a highly profitable industry providing horrible care and being overpaid to the tune of $5 billion from Medicare alone,” says Lee. “That sum doesn’t even include Medicade. Yet somehow they keep going.”

Given the conditions Lee describes, a wave of lawsuits by nursing home residents and their families should have forced corrupt companies out of the market and prodded legitimate operators to change their ways.

Unfortunately, despite thousands of court proceedings every year, civil lawsuits are largely unsuccessful in bringing reform. Massive nursing home conglomerates have become very sophisticated in hiding their corporate structures.

Dilapidated facilities are run by penniless, name-only, limited-liability corporations that claim poverty when found liable in court and immediately declare bankruptcy. On paper, it appears as if the facility operator’s financial situation is indeed dire, but often they have found ingenious ways to funnel profits up to publicly traded Fortune 500 giants.

Even the government has trouble keeping track of these complex corporate structures. Typically, the best results from lawsuits and actions from government watchdogs is to take down shell LLCs and shut down the worst of the worst facilities. But these actions lack the teeth needed to bite into the systemic fraud and abuse in the system.

Too often, nursing home companies that harm the elderly humans in their care are required to pay only a small fine—often less than $1,000 per violation—an expense easily calculated into the cost of doing business.

Shut down one substandard facility, and another one springs up in its place.

Lee insists that if nursing home corporate structures were unmasked, preserving the status quo would become impossible. “There is absolutely no way the government could justify spending billions on Medicare and Medicade reimbursements for substandard care,” he says. “They would have to do something.”

If America’s legislators want to balance the budget and save American tax dollars, cutting out nursing home fraud and abuse would be a nice place to start.

Would you have any misgivings about placing your parents in a nursing home? Explain in COMMENTS.

Related Stories on TakePart:

• Grandma’s Nursing Home Nightmare

• How the Affordable Care Act Can Curb Nursing Home Neglect

• Clip of the Day: A Nursing Home Resident Feels the Power of Music

Matthew Fleischer is a former LA Weekly staff writer and an award-winning social justice reporter in Los Angeles. Email Matt


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