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Report: Low-Rated Nursing Homes Receive Billions in Taxpayer-Backed Loans

Low-rated nursing homes are being rewarded with billions in federal funding to secure better interest rates on mortgages, despite having been cited for egregious instances of abuse and neglect of patients. usadollarbills1

An investigation, launched by the Center for Public Integrity, indicated that since 2009, hundreds of nursing homes across the country raked in an estimated $2 billion in low-cost mortgages, guaranteed by the Department of Housing and Urban Development – even after being stamped with the lowest possible rating for quality of services.

In total, the center discovered some 240 nursing homes given just one star in the federal rating system received the loans backed by HUD. Some of these homes received chronically low ratings – in one case, for seven consecutive reporting cycles. In fact, not only did these centers receive HUD-backed mortgages and refinance offers, they also received federal guarantees for construction and improvement loans. From 2009 to 2012, the number of these “bad apples” getting the best interest rates on federally-backed loans increased year-over-year.

Fort Lauderdale nursing home abuse lawyers are troubled by these poorly rated centers being rewarded with taxpayer dollars, despite consistently failing in their primary purpose: Providing basic-level quality care to our nation’s vulnerable and growing elderly population.

At least 11 of these centers were located in Florida. Ohio, which had the largest number of these low-rated centers receiving prime loan rates, had 30.

The investigation found that HUD does mandate these centers submit the most recent quality reports in evaluation of loans for construction and rehabilitation. However, the results of those quality of care reports don’t appear to have made much difference in the evaluation process – even in light of nearly 20 years of sharp criticism from both HUD’s Office of the Inspector General and the Government Accountability Office.

These nursing home loans are granted as part of the National Housing Act of 1959. The idea at the time was for-profit nursing home centers had difficulty securing reasonable terms on loans. The program expanded five years later to include non-profit nursing homes too. But all of this was before the inception of the Medicaid program in 1965. Prior to that, nursing homes were perhaps correctly viewed as risky ventures. But with federal dollars providing a steady stream of income for the care of older, infirm adults, that is simply no longer the case.

Industry advocates are trying to redirect the conversation on this issue by pointing to the fact an increasing percentage of these centers are earning top, five-star ratings. But this doesn’t alter the reality that nursing homes proven to violate federal law and key industry safety standards – thereby putting our loved ones at risk – have consistently relied on government support to do it.

The revelation has outraged senators and scholars alike. Some have indicated the loans raise serious question about how public dollars are spent, what kind of communication is had between agencies and what appears to be an egregious lack of supervision.

Beyond that, it puts taxpayers at risk of losing money. When a loan is federally-guaranteed, the public is tapped to pay when a facility defaults. Companies that provide poor care are more likely to default. It makes little financial sense for taxpayers to support these centers just from a smart investment standpoint. In 1995 alone, a GAO report indicated $187 million in taxpayer losses from the program.

Perhaps the greater problem is that when nursing homes know they will face few consequences for meting out poor care, there is little incentive for them to change.

Freeman Injury Law — 1-800-561-7777 for a free appointment to discuss your rights.

Additional Resources:

Poorly-rated nursing homes got HUD-guaranteed mortgages anyway, Nov. 14, 2014, By Jeff Kely Lowenstein, The Center for Public Integrity

More Blog Entries:

Nursing Home Lawsuits Push Bad Operators Out of Business, Nov. 9, 2014, Fort Lauderdale Nursing Home Abuse Lawyer Blog

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