Blumenthal wants federal cooperation on nursing home issue

By John O'Brien | May 16, 2008

WASHINGTON, D.C. (Legal Newsline) - Connecticut Attorney General Richard Blumenthal again made an appearance before Congress Thursday, testifying in favor of new laws that would regulate nursing homes.

Before the House Committee on Energy and Commerce's Oversight and Investigations Subcommittee, Blumenthal told the tale of Haven Healthcare, now bankrupt after a series of newspaper articles detailed its failings.

"Connecticut's frustrating and frightening experience with Haven Health and other nursing home failures is symptomatic of a crisis spreading across the nation -- a clear, clarion call for reform," Blumenthal said. "We need greatly enhance federal-state coordination and collaboration -- a real paradigm shift.

"Our present system of scrutiny is ineffective and inconsistent."

Blumenthal, two federal officials and Haven Healthcare's creditors all worked together on a budget in November, after the company, which operated 15 nursing homes in the state, declared bankruptcy.

"The battle against nursing home fraud and mismanagement should be two-pronged," Blumenthal said. "One front should be at the federal level -- a strike force to investigate corruption or self-dealing, and other measures combining state and federal authority to raise standards and practices.

"Second, at the state level, the federal government should reward or require stronger oversight mechanisms, including official state monitoring and scrutiny of nursing home finances, appointment of state court receivers for nursing homes in situations of gross financial mismanagement, bans on financial bleeding and self-dealing, mandatory levels of insurance coverage, and regulation of management companies and landlords."

According to his site, Blumenthal said Congress should:

-Establish a Patient Protection and Financial Integrity Strike Force to rapidly investigate corruption and self-dealing and rescue their operations by replacing management and even ownership;

-Create a national clearinghouse of nursing home information including all state and local citations, for use by state oversight agencies;

-Mandate simple, strict, straightforward scrutiny and safeguards - as preconditions for enhanced federal funding - that provide strong financial state oversight; and

-Establish a Nursing Home Policy Unit, devoted to developing and requiring better standards and practices.

Also, he believes federal law should provide incentives and requirements that states:

-Conduct regular financial forensic audits of nursing home finances;

-Appoint a receiver upon a finding of gross financial mismanagement, which will be defined through regulation, but includes having more than 35 percent of accounts overdue by more than 120 days or failing to pay required pension fund and health insurance contributions for more than 60 days;

-Ban corporate bleeding of nursing home finances - such as a statutory cap on management fees, rental payments and loan payments by the nursing home to related entities for calculating Medicaid reimbursement rates and prohibition on use of nursing home assets as a guaranty for loans unrelated to the nursing home operation;

-Require that nursing home regulation include both the management company that operates the facility, as well as the landlord of the facility;

-Adopt mandatory minimum insurance coverage for nursing home owners and management companies for malpractice and liability;

-Require state approval of any change of 10 percent beneficial ownership -regardless of form of ownership; and

-Require property owners that rent facilities to nursing homes to be responsible for physical plant repairs and maintenance.

Blumenthal is a frequent source of Congressional testimony. He made an appearance in April, pleading with legislators to prohibit the U.S. Post Office from delivering cigarettes in the mail.

In November, he submitted testimony in a wiretapping issue, and he criticized the Food and Drug Administration in his July testimony about his petition asking Purdue Pharma to revise the warning label on its prescription painkiller OxyContin.

From Legal Newsline: Reach John O'Brien via e-mail at john@legalnewsline.com.

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