Nursing Home Fee Challenge Dismissed

A California nursing home reform group lost its novel effort to push nursing home chains to limit management fees and increase funds for staffing.  U.S. District Judge Jon Tiger ruled Monday that the California Advocates for Nursing Home Reform (CANHR) lacks standing to assert claims that federal nursing home law trumps California’s nursing home licensing laws.

The CANHR suit challenged Country Villa East and C.V. Westwood Single Purpose Entity, which are licensed to operate 49 skilled nursing facilities.  Country Villa Service Corp. is a management company.  The suit alleged patient care suffers when control of the homes is turned over to management companies that charge exorbitant fees.

CANHR, along with the daughter of Minnie Bell Green, contend Green died at a facility operated by Country Villa Service Corp. after she allegedly received inadequate care.  The complaint alleged the management agreement for the nursing homes in the chain are five percent of gross revenue, far in excess of actual costs, according to the suit.

CANHR argued the management agreements improperly delegate operational control of nursing homes from owners with state licenses to companies that are unlicensed.

Tiger found the CANHR did not “identify any injury suffered by residents of nursing facilities resulting from the execution of third-party management agreements.”

CANHR has failed to show a “direct causal connection between the execution of nursing home management agreements and the provision by nursing homes of substandard care,” he wrote.

Tiger also found there is no standard of what an “excessive” expense might be for management fees.

But Tiger did give CANHR 30 days to file an amended complaint that would resolve the legal shortcomings.

Case: CANHR v. Chapman, No. 12-cv-6408JST