Home Away From Home?
Texas’ largest nursing home operator says it provides a “better place to live” for the elderly. Stave investigators tell a much different story, alleging that one woman was underfed to the point of starvation, another was bitten by fire ants from head to toe, and a third, an Alzheimer’s patient, wandered into oncoming traffic and was killed.
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Kern heatedly denies that he ever took money out of the homes at the expense of patients, and he says the budgets at his homes have always been “above average” compared with those of other nursing homes. Furthermore, Kern adds, neither THE nor HEA Management has been profitable since the early nineties; he says that he has not made a cent in salary from either company since 1995. The money he has used to buy his homes and sports teams, he says, has come from the proceeds of the 1987 sale of his nursing homes in Ohio and other eastern states, which netted him $20 million. He says he has taken more than $10 million of the proceeds from that sale and loaned it to THE to keep the nursing homes in business. The real story, Kern declares, is that he has been unfairly singled out by state regulators, “who sometimes do not look at all the facts,” and by greedy plaintiffs’ lawyers who have filed lawsuits against him “and try to make me look like I have a contrived plan to see how many people in Texas we can end up hurting.” Kern told me, “Listen, I’ve devoted thirty years of my life to caring for elderly people. We’ve taken over so many homes that were already in terrible condition, and we spent a lot of money fixing those buildings and doing what we could to make them better. My troops are out there every day trying to help. Yet, whenever we stub our toes, the state investigators treat us like criminals.”
The truth, however, is that far from treating nursing home owners like criminals, DHS officials give nursing home operators several chances to comply with state standards before punishing them. A consultant hired to look into DHS’s Long-Term Care division found that between January 1994 and June 1997, DHS field investigators made more than three hundred recommendations either to revoke or to refuse to renew the licenses of various nursing home owners. But after the appeals process was finished, only one license was actually denied to an owner. Last year the DHS did go to court to have twelve trustees (outside administrators hired by the state) temporarily installed in nursing homes that were deemed by investigators to be a threat to the health and safety of their residents. But after the trustees improved the conditions, the owners were given back their homes and afforded another chance to run them. The DHS rarely imposes maximum fines; though state law allows fines of up to $10,000 a day for each health and safety violation at a home, a 1997 audit found that the agency’s policy has been not to exceed $3,000. And a home that does get penalized by the DHS for violations is often given a certain number of days (at least 23) to correct its problems; if it makes corrections to an investigator’s satisfaction, then the penalty is rescinded. (The DHS is also allowed to impose penalties for violations of federal standards, but this path leads to a classic bureaucratic snarl: The federal agency in charge of collecting those penalties has a far greater case backlog than the DHS does.)
If the DHS does not rescind its penalty, then the home can appeal the decision to a DHS administrative law judge and, if it loses there, keep appealing in civil court. “What kind of punishment is that?” asks David Bragg, an Austin attorney who specializes in nursing home law. “Can you imagine us catching a bank robber and then saying, ‘Hey, we’ll forgive you if you put the money back within twenty-three days’? We should know by now that if you don’t impose serious sanctions on bad owners—and fight to make those sanctions stick—then the owners will never change.”
Jim Lehrman, a social worker and an administrator who took over the DHS Long-Term Care division a year ago, says he is determined to hold Texas Health Enterprises more accountable, and he has initiated action to wrest the licenses of nine THE homes that have had a significant history of violations over the past five years. But Kern’s lawyers have begun the appeals process, arguing that those homes are no longer violating standards. One attorney for the DHS says that Kern could keep those cases tied up for five more years—in part because the agency’s understaffed and already overworked legal and enforcement departments have so many other cases ahead of it. Many of the biggest fines against THE—for instance, $196,000 at Quaker Villa in Lubbock for a series of health and safety violations in 1996 and 1997—are now officially listed by the DHS as “pending.” Meanwhile, the attorney general’s civil suits have had minimal impact. After eight years of litigation against the company, not one case has been set for trial. The cases that went to arbitration resulted in measly fines. A lawsuit filed against Brenham’s Carousel Manor for its abuses in the mid-nineties went to an arbitrator who decided that THE should pay only $20,000. “You can understand how weary people get of having to fight Woody,” says a DHS official who asked to remain anonymous. “Remember, it’s still a bureaucracy here. It’s much easier not to take strong action against a THE facility than to take action, because once you take action, you have to go through so much hassle. It takes a lot less time to settle with THE than to fight them for years in court.”
CONSIDERING THAT THE NUMBER of U.S. citizens older than 65 is expected to double by the year 2005—which will mean twice as many nursing homes will be needed—the state has to figure out a way to better regulate the nursing home owners who operate substandard facilities. Other nursing home owners who have gotten hit with violations are responding like Texas Health Enterprises. Between March 1 and September 9 of this year, DHS investigators levied 135 fines, totaling $2.2 million, against 98 nursing homes. Jim Lehrman of DHS’s Long-term Care division says that at least 90 percent of those fines are being appealed.
In many ways, what has happened is a familiar story in Texas government: An understaffed, underfunded agency is being asked to protect public safety. Lehrman says that if the DHS doesn’t get the money to hire at least 21 new lawyers and legal assistants to add to its existing staff of 14, “then we’ll be in a jam, unable to keep up with all the appeals and delaying tactics now being used by nursing homes.” The DHS will be in a similar jam, he says, if it doesn’t get at least 150 additional investigators to keep the pressure on problem nursing homes. “Every nursing home administrator knows that if his home receives a bad DHS report, then all he has to do is spruce up the home and wait for the investigators’ follow-up visit,” says nursing home consultant Dolores Alford. “Then the administrator can relax and let everything at the home revert back to its old ways, because it’s very unlikely that the investigators will have time to come back for at least another six months to a year.”
One easy fix would be for the Legislature to create a financial incentive for nursing facilities to improve themselves by changing the way it allocates Medicaid payments to the homes. Texas ranks forty-fifth in the nation in the level of Medicaid reimbursement it pays, with its nursing facilities receiving an average of $71.34 a day in 1997, compared with the national average of $96.62. Instead of making a higher flat-rate payment to each home, as most owners would like the Legislature to do, the payment system should reward homes that hire more staffers and more qualified nurses to look after residents. Those homes would not only be given larger amounts of Medicaid money to pay for the extra staffing but also receive a state designation as a top-level nursing facility, giving citizens the opportunity to choose those homes over the ones that maintain only a minimum number of employees.
But even with a new Medicaid policy, there will still be companies that allow their homes to consistently fall below the state’s standards and jeopardize the health of residents. If the DHS really wants to get their attention, then it has to get tougher, and this means shutting down more bad homes on the spot and fighting the owners in court. But the owners know that this is not a policy that can be put to widespread use. Lehrman says that he is reluctant to close nursing homes except for the very worst ones, especially in small towns, because of the problems of relocating residents to other homes, which can be nearly one hundred miles away.
Meanwhile, Texas Health Enterprises continues to grow, despite Kern’s claims that the company is losing money. Last year it purchased another home in Wichita Falls, this one costing $2 million, with an additional $700,000 spent to get the building ready for occupancy. There was some speculation that Kern would be slowed by a couple of verdicts won by plaintiffs’ attorneys in civil trials against THE. Last year jurors awarded $10.7 million to the family members who sued the company over the death of Ruth Simmons, the woman who developed a gangrenous leg at Kern Manor in Pilot Point, and in May a jury hit THE with a $28.3 million judgment in the case involving the death of the 78-year-old man at the Conroe nursing home. But attorneys familiar with the cases predict that the huge judgments will never be paid. Lawyers for THE have been arguing before appeals courts that the company, as an official health provider as defined under state law, is no different from a hospital and thus is only required by state tort law to pay $1.3 million in actual damages per case. In the past two years the company has settled some lawsuits, reportedly costing Kern more than $5 million, but as one attorney says, “Lawyers are not going to run a man that wealthy out of business.” Kern, too, says he is not going to let his opponents drive him out of business. “I’m a little bit stubborn, and I will go to court to defend myself and fight for my rights,” he says. “You can be absolutely assured that my homes are in above-standard condition.”
And so the battle between the DHS and Woody Kern goes on. Earlier this year the DHS filed another deficiency report at Carousel Manor, Kern’s home in Brenham that has been the subject of numerous such reports since 1994. In their most recent visit DHS investigators discovered a woman in a wheelchair with blood on the right side of her dress. According to the DHS report, the staff at the facility had failed to dress a sutured wound. The investigators imposed a fine of $5,800 for substandard care.
Woody Kern has refused to pay. His lawyers are appealing.
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