A little known provision of President Obama’s Healthcare Reform Act is designed to help plaintiffs and their attorneys bring legal action against nursing homes for alleged neglect and abuse. 

With the demographic transformation of America toward an aging society, lawsuits against nursing homes have surged.  In response some privately owned nursing homes have developed complex corporate structures that obscure who controls the facilities, making it difficult for attorneys to follow the money trail and collect damages.  According to an investigative article on nursing homes published in the New York Times, the maze of companies  protects profits and insulates owners from liability.  When a lawsuit is filed, attorneys are stymied in their efforts to find who is responsible for alleged poor care. 

But a provision in the Healthcare Reform Act promises to put an end to this practice by increasing accountability of nursing home ownership.  Section 6101 enforces a new level of transparency of information.  Several members of Congress worked with the National Citizens Coalition for Nursing Home Reform (NCCNHR) to create this provision – one of several in the Health Care Reform Law intended to protect nursing home residents. 

According to David Couch, an Arkansas attorney who handles lawsuits against nursing homes, the disclosure provision will make it easier for plaintiffs to collect damages for harm inflicted on their loved ones.  Many facilities in America have limited insurance coverage which discourages litigation because of limited recovery potential.  Section 6101 will make it easier for lawyers to pierce the corporate veil and follow the trail of responsibility, thereby getting past the facility itself.  Once this law goes into effect, David predicts a surge in nursing home related lawsuits around the country.

Section 6101 of the Healthcare Reform statute states:

“Nursing facilities must report to HHS and certify as a condition of participation in Medicare and Medicaid that the following information is (‘to the best of the facility’s knowledge’) accurate and current

1)  Each member of the governing body;
2)  Each officer, director, member, partner, trustee, or managing employee;
3)  Each additional disclosable party;
4)  The organizational structure of each additional disclosable party to the facility and relationship of each to one another”

Other disclosable information includes managers, management services, leases, other owners of the property, consulting, accounting, and financial services. The final regulation will include a standardized format for information reporting, and will go into effect in March 2012.  Information on facility ownership will be made available to the public in March 2013. 

It will be interesting to watch what happens to this clause with the current Republican controlled Congress, which has a multipronged effort to repeal Healthcare Reform with the intention of reducing the size of government and cutting federal regulation.

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For an explanation of layers of ownership in nursing homes click here

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