Taxation & Estate Planning

Assisted Living Company Sued for Forcing Out Elderly Residents

By Deirdre R. Wheatley-Liss, Esq.

From NJ Biz.com, a report that the New Jersey Public Advocate has filed papers against Assisted Living Concepts Inc., operating eight assisted-living facilities in southern New Jersey, for "allegedly forcing out elderly residents once they have run out of savings and qualify for Medicaid."

In the Article Assisted-Living Co. Charged with Forcing Out Residents, Scott Goldstein reports that "The Public Advocate is investigating allegations that ALC is involuntarily discharging elderly residents, or threatening to discharge them once they have exhausted all of their own funds, or "spent down" their life savings, and therefore qualifies for Medicaid payments to cover the cost of their assisted-living apartment. "

The company under investigation "owns and operates eight assisted living facilities in New Jersey: Baker House in Vineland, Goldfinch House in Bridgeton and Maurice House in Millville, all in Cumberland County; Lindsay House in Pennsville, Salem County; Mey House in Egg Harbor Township, Atlantic County; Chapin House in Rio Grande, Cape May County; Granville House in Burlington, Burlington County; and Post House in Glassboro, Gloucester County."

Many nursing homes and assisted living facilities have a "key-money" requirement that essentially says that a person must spend $X of their own money before the facility will accept Medicaid for the costs of their care. So if a facility has a 12 month "key-money" requirement, and costs $5000 a month, then they will only accept a person who has at least $60,000 to pay for their care. After it is spent, if the person then qualifies for Medicaid, New Jersey will pay the cost of care, usually at a rate below the private pay rate. Here, the New Jersey Public Advocate appears to be alleging that ALC took the "key-money" and then maneuvered to have residents discharged when Medicaid took over payments.

Full post as published by New Jersey Estate & Elder Planning Blog on June 02, 2008 (boomark / email).