Some experts have identified that one of the key reasons for the uptick in nursing home abuse has been the corporatization of nursing homes. Others wonder how the corporate structure of nursing homes decreases the quality of care. Both sides of the debate acknowledge that nursing home abuse, neglect, and dangerous conditions are surprisingly (and troublingly) common. Below, we’ll discuss how a nursing home’s bizarre corporate structure may impact that.
Companies Within Companies
The law makes it very difficult for an injured party to sue a parent company for the actions of a subsidiary. In cases where this is possible, the plaintiff must be able to show a direct form of negligence from the parent company. It becomes possible for parent companies then, to set up chain LLCs that are contained within larger conglomerates. While not exactly shell companies, these chain LLCs do provide some degree of asset protection.
For instance, let’s assume that there is a nursing home called Shady Acres. Shady Acres Nursing Home is owned by MegaCorp. Any profits that Shady Acres receives can be transferred from their own coffers into Megacorps. Megacorp is insulated from liability due to staffing issues at Shady Acres. When a nursing home abuse lawsuit is filed against Shady Acres, the plaintiff has to sue against Shady Acres’ assets. While MegaCorp might foot the bill in the event of a successful lawsuit, MegaCorp doesn’t have to. If the state health inspector comes in and dissolves Shady Acres for the health violations, that money is untouchable.
Most corporate nursing homes are run and operated in this manner. They pay exorbitant rental fees to parent companies that drain the nursing home of much of excess profits. The nursing homes themselves run at minuscule profit margins. The entire point of this corporate structure is to insulate the nursing home from liability.
How Do For-Profit Nursing Homes Make Money?
When compared against non-profit nursing homes, for-profit nursing homes consistently underperform. One of the major ways that they do this is by limiting staff hours. Patients are found unwashed, neglected, and with bedsores all over their bodies. Patients aren’t given the correct medication or their charts haven’t been analyzed properly. Nursing home staff is overworked, has too many patients to look after, and the quality of patient care suffers.
When that happens, it’s possible to sue the nursing home for injuries or deaths that they cause. In some cases, it’s possible to get the state of Missouri to sanction these nursing homes or have the federal government to threaten to withhold Medicare and Medicaid funding until the nursing home improves the quality of care, fixes health violations, and properly staffs their nursing home.
Talk to a Kansas City, Missouri Nursing Home Abuse Attorney Today
Contrary to what you may believe, these lawsuits do act as catalysts for change. Corporate nursing homes should not be allowed to get away with failing their patients simply because it increases their bottom line. Their duty of care is to their patients, not their stockholders. The Krause and Kinsman Law Firm can help.
Adam Krause is a personal injury, mass tort, business litigation, and employment discrimination attorney who practices in Kansas City, Missouri. He graduated from the University of Missouri Kansas City School of Law and has been practicing law for several years now. Adam Krause has made a career of taking complicated litigation and presenting it in the most elementary terms for a jury of your peers to understand. Learn more about his experience here.