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New York's AG is suing for fraud after some nursing home owners took large profits

JUANA SUMMERS, HOST:

The owners of some nursing homes in New York have been making millions of dollars in profits even while they've gotten generous payments and loans from the federal government during the pandemic. That is according to an investigation by Jordan Rau with Kaiser Health News. The New York State Attorney General's office is also suing several homes for fraud. Jordan joins us now with more. And, Jordan, you've been reporting on this lawsuit that alleges financial practices that seem disconcerting, to say the very least, at some of these nursing homes. Tell us. What has the state attorney general accused them of doing?

JORDAN RAU: The attorney general has accused three separate nursing homes of moving a lot of the money that was in the nursing homes out and paying it to other companies, companies that they hired to provide management or staffing or, in some cases, to rent the building from. And the lawsuits charge that they overpaid large amounts and that these other companies were, in fact, owned by the same people and controlled by the same people that own the nursing home.

SUMMERS: So this raises a couple questions here. The first is, how common are these types of arrangements? And separately, were they prompted by the pandemic?

RAU: These have been going on long before the pandemic. It's common in the industry that owners have multiple companies that basically take care of all the things with nursing homes, and they move a lot of money into it. So there's nothing new about that. But what's new about it is that what we were able to do is, because of the attention on the pandemic, take a look at what was going on in one state with unusually detailed records, and that was New York state. And we found that these other companies that the owners also owned were making high profits in the year 2020, average profits of 27%.

SUMMERS: So what happens, then, to all that money? Does it end up with the nursing home owners and their investors?

RAU: The short answer is we don't know because they're not required to report it. We do know from the lawsuits, the allegations there, the attorney general was able to subpoena bank records. And some of these owners made huge sums. I mean, she accuses one owner of taking $16 million in profits over the course of about four years, one set of owners of taking $16 million of profits over four years and others of taking similarly large amounts. So it's very possible that this is happening not just in other homes in New York state but around the country because the majority of for-profit nursing homes have these type of financial arrangements. But we just don't know because they don't have to report the details.

SUMMERS: The Biden administration is currently in the middle of deciding whether to require nursing homes to have more aides and nurses on staff. Tell us. How do these financial factors figure into that decision?

RAU: The Biden administration is thinking about creating some really strong new requirements that nursing homes have to have a lot more nurses and a lot more aides on staff at all times. And the key question here is, how much can nursing homes afford? - because if they can't afford to hire a lot more people, then the government's going to have to pay a lot more through Medicare or Medicaid. And this is key because basically, the Biden administration can't tell how much money these nursing homes are actually making because the money is being moved out. So they're, you know, operating with, frankly, less information than, you know, I have when I go to buy a used car about what type of profits are being made by the person that I'm setting the rate for. And it's a tough answer that they cannot get it.

SUMMERS: And last question. What is the next step legally for some of these nursing home owners in the attorney general's lawsuit?

RAU: The attorney general wants them to repay the money that they got from the nursing homes. And the lawsuits are also asking that the court bar some of these owners from operating nursing homes. And the attorney general's office says that some of the patient problems in terms of care that are identified in the lawsuit are still going on. And those were some pretty harrowing incidences of residents being left in their own filth for hours on end because no one came to get them, falling and smashing their heads and getting these huge lacerations, not being able to get up and go to the bathroom. And the AG's office says that they believe that some of these conditions are continuing. The homes themselves are fighting these lawsuits very vigorously. They've hired a lot of lawyers, and they say that the money that they took out of the homes has no bearing on the quality of the care and the problems that they had were just due to the pandemic in particular and have been rectified.

SUMMERS: That is Jordan Rau with our partner Kaiser Health News. Jordan, thanks for your reporting.

RAU: Thank you.

(SOUNDBITE OF ASHANTI SONG, "FALLING FOR YOU") Transcript provided by NPR, Copyright NPR.

Jordan Rau - Kaiser Health News