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Country's Worst Nursing Homes Receive Federal Insurance

The Center for Public Integrity recently revealed that hundreds of the country’s lowest-rated nursing homes are receiving federally-backed, guaranteed mortgages. This assistance is worth billions of dollars, so why is it being given to facilities that harm residents and do not meet federal safety standards?

The Department of Housing and Urban Development (HUD) insures mortgage loans through a little-known program with little to no oversight. Throughout the country, nursing homes (and particularly for-profit chains) routinely receive HUD-guaranteed loans, regardless of the quality of care they provide.

Another federal agency, the Department of Health and Human Services (HHS) rates the country’s nursing homes based on annual health inspections, staffing levels, and resident care. Take, for example, the Alden Alma Nelson Manor nursing home in Rockford, Illinois, which consistently earns the lowest possible quality rating from HHS, and has earned these abysmal ratings for the better part of a decade. Alden Alma recently paid hundreds of thousands of dollars in fines for the deaths of three residents and incidents of abuse and sexual assault. Despite this, Cambridge Realty Capital approved a $12 million mortgage for the facility, and the HUD insured the loan.

Another Illinois facility that received an HUD loan, the Crossroads Care Center in Woodstock, has a federal one-star rating. It was also fined about $360,000 for the deaths of six residents, including allegations that a nurse purposefully overmedicated and killed residents. That nurse, Marty Himebaugh, was found guilty of felony criminal neglect.

Again, despite this, in 2013 Crossroads Care received $4.4 million in a HUD-backed loan, it’s second since 2001. Similarly, the Alden Wentworth Rehabilitation nursing home on Chicago’s South Side received a $10.6 million HUD loan, even after a beloved resident fell four stories at the home, prompting a senate hearing. Two years before the loan, another resident died after wrongfully receiving narcotics for three weeks.

Stories like this abound throughout Illinois and the rest of the country. HUD officials claim that they are not made aware of safety and health issues, yet how this can be true is disconcerting. Why is there no system by which HUD employees must check a facility’s quality of care before financing it? Why is there no emphasis put on regulatory enforcement, or communication between agencies – particularly when it comes to our nation’s most vulnerable citizens?

The Center for Public Integrity states that this type of situation is not uncommon: since 2001, hundreds of the worst-ranked nursing homes in the country have received HUD-guaranteed loans, worth about $2.5 billion. In fact, the number of one-star nursing homes receiving HUD insurance rose every year between 2009 and 2012.

An esteemed nursing professor at University of California at San Francisco said that this HUD pattern points to serious issues about the communication – or lack thereof – between government agencies, an outrageous lack of oversight, and the improper use of public funding. There hasn’t been any public scrutiny over the HUD’s practices, which makes a bad problem even worse.

How, When, and Why This is Allowed

As mentioned, these loans are made possible by a little-known federal program: the National Housing Act of 1959, which was enacted by Congress to make it easier for nursing homes to secure loans on reasonable terms. It was created in effort to provide a reliable stream of income to nursing homes, which previously had trouble finding loans.

This may seem like a good thing, but the program means that if nursing homes default on the loans, the public pays (about $187 million in defaults have been incurred since 1959). These mortgages have been granted to over 7,000 nursing homes; currently, about 13% of all nursing homes have HUD-guaranteed loans.

About 240 nursing homes with a one-star rating have HUD loans, with Ohio having the most of any other state (30). In Illinois, 20 one-star nursing homes have HUD loans, and California ranked third among states. For-profit nursing homes make up the large majority of one-star loan recipients, with corporations owning two-thirds (despite representing only about half of all nursing homes nationwide). Experts believe that the HUD should restrict its guaranteed loans to only non-profit nursing homes, which generally run higher quality and safer facilities. This makes sense. The government should not be financing large, for-profit, multi-billion dollar corporations.

Part of the reason these facilities are able to get away with the death and demise of residents while still securing financial backing is because the owners spend hundreds of thousands in donations to political candidates.

Floyd A. Schlossberg, for example, owns a chain of nursing homes in Illinois, including the above-mentioned Alden facilities, which have racked up more than four dozen violations and nearly $1 million in fines for grotesque abuse and neglect of residents. As of August 2014, he held 18 active HUD-backed loans, worth about $230 million. How? Surely his donation to Senator Mike Crapo (R-Idaho), who is a member of the committee that oversees HUD did not hurt.

Our team of nursing home abuse lawyers has been working on behalf of injured residents for over 30 years. We know exactly the kind of devastation owners who are not held accountable for their conduct cause. If you or someone you love was hurt while in a nursing home, contact our firm immediately. Our legal consultations are always free, confidential, and available to potential clients nationwide.

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