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Miami Personal Injury Attorney > Blog > Miami Personal Injury Attorney > Civil Lawsuit Shines A Light On Nursing Home Industry

Civil Lawsuit Shines A Light On Nursing Home Industry


The Department of Justice recently filed a lawsuit against a nursing home and the management company that operates it. Why are these two separate things? Essentially, during the late 2000’s, a number of nursing homes declared bankruptcy and were purchased by management companies which now own and operate these nursing homes. The nursing homes themselves pay fees to the management companies even as the nursing homes run at deficits. Often, without these fees, the nursing homes would be reporting profits. The management companies then place pressure on the nursing homes to reduce costs related to care. This results in low-quality understaffed nursing homes. In some cases, the conditions are so poor that residents live in bug-infested apartments unprotected from attacks by other patients or even staff. Necessary medical treatment is forgotten or denied while the nursing home makes odd decisions to prescribe medications that are unnecessary. But even as the nursing home management company rakes in millions each year, the fines are generally less than one million. In this case, the company was fined $824,000 related to the unnecessary prescribing of medication and a patient suicide that occurred because he was denied needed psychiatric care.

How does the arrangement work? 

A nursing home is a separate business entity that is purchased by a management company as an asset. The management company extracts profits from the nursing home in the form of fees such as rental agreements. The rental agreements are often far in excess of typical market values. The management company then has the choice of reducing their fees, or, as happened in this case, forcing the nursing home to cut back on expenses. This includes expenses related to staff. One of the chief allegations against the fined nursing home was that understaffing led to poor patient care and treatment management.

Communications between the nursing home and the management company indicate that the management company opted to increase revenue by reducing the number of “walkie-talkies”. What is a walkie-talkie? It is a patient who is capable of walking and talking. Walkie-talkies require less intensive care and thus the Medicaid and Medicare reimbursements tend to be lower than non-walkie-talkies. In other words, the facility opted to bring in more critical patients even as the nursing home was facing staffing issues.

Analyzing the law 

The civil lawsuit focused primarily on the billing of Medicaid over “worthless services”. Traditionally, suits filed under the False Claims Act focus on overbilling. In this case, the nursing home was charging Medicaid for prescribing antipsychotics and antibiotics to patients who did not need those medications. The lawsuit against the management company includes 104 alleged false claims relating to 13 patients. If the US government wins its case, the management company could be forced to pay 3 times the amount alleged to have been billed.

Talk to a Nursing Home Abuse Attorney in Miami 

Nursing homes generally fail in patient care due to systemic issues with the nursing home itself. These facilities are still responsible for providing quality care and ensuring patient safety. When they fail, they can be sued. Call the Miami personal injury lawyers at the office of Alan Goldfarb, P.A. today to learn more.



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