Workers steal from residents’ accounts
Investigation discovers 1,500 cases where facilities were cited for mishandling funds
The administrator at the Vicksburg Convalescent Center knew something was wrong when she saw the receipt: a $90 debit from a resident’s trust fund account for a pair of designer jeans.
Of all the elderly residents at the 100-bed nursing home, Amy Brown figured, this one was especially unlikely to spend his savings on pricey pants.
Both of his legs had been amputated.
Brown pored over the trust fund books. There were receipts to back up every charge, so audits had found nothing amiss, but she spotted “receipts for things I knew the residents wouldn’t buy” — North Face jackets and Ugg boots, hair dryers and makeup, even a baseball bat. “I felt sick,” Brown recalls.
Suspicions fell on Lee Martin, an office staffer at Vicksburg Convalescent and an affiliated nursing home across town. Martin was charged in 2012 with billing $101,000 in personal expenses to the trust accounts of 83 residents at the two facilities. She pleaded guilty in August to multiple counts of exploitation of vulnerable adults.
“The nursing home is supposed to take care of them,” says Phyllis Foster, 67, whose 89-year-old mother-in-law had an account raided by Martin. “I was surprised there wasn’t more oversight.”
Savings stolen
Thousands of residents in nursing homes and other longterm care institutions for the aged and disabled have had their personal savings stolen or mismanaged after relying on the facilities to safeguard the money in special trust fund accounts, a USA Today investigation shows.
These trust funds, which most long-term care providers are required to maintain for residents who request that the facility handle their money, are supposed to work like conventional bank accounts, with accrued interest, regular statements and reliable oversight. But USA Today found more than 1,500 recent cases in which nursing homes have been cited by state and federal regulators for mishandling the funds.
In scores of cases, employees or administrators siphoned huge sums of money from trust accounts. In hundreds more cases, facilities failed to pay interest on the funds, could not account for their holdings, or did not carry adequate insurance.
Trust fund thefts “can be hard to detect,” says Lori Smetanka, head of the National Long-Term Care Ombudsman Resource Center. “It can take a long time before anyone figures out that someone is stealing the money.”
When a case does come to light, the victimized residents usually get reimbursed because nursing homes are supposed to keep the trust funds insured. But the worry, confusion and emotional damage can linger.
Officials at the Centers for Medicare and Medicaid Services, which regulates almost nearly all of the nation’s nearly 16,000 nursing homes, were unavailable to comment due to the federal government shutdown. But state officials acknowledged that trust fund thefts and mismanagement are a growing problem.
“There aren’t a lot of safeguards,” says Ken Moore, a senior assistant attorney general in South Carolina.
“A lot of these cases involve an office manager or a business or finance manager, and they’re the only ones at the facility who really know how much money is coming in and going out of these accounts, Moore adds. A lot of these people get caught just by happenstance.”
In 2010, Moore’s office convicted a nursing home business manager caught forging checks from the trust fund after she dropped a check in the parking lot. A co-worker found it, triggering an investigation into the theft of $50,000 in residents’ funds.
“If she hadn’t dropped that envelope, I’m not sure she ever would have been caught,” Moore said.
What we found
USA Today reviewed thousands of pages of nursing home inspection records, court files and prosecution reports to identify cases of mismanagement or theft. Findings include:
» Since 2010, state and federal inspectors issued more than 1,500 citations to nursing homes for mismanaging trust funds or failing to protect them from theft, according to data from the federal Centers for Medicare and Medicaid Services. Most “deficiencies” involved failing to pay interest, inadequate accounting or not giving residents proper access to their money.
» Among more than100 prosecutions for theft, more than 30 percent involved tens of thousands of dollars or more. Most involved funds for multiple residents so thousands were affected. At least 10 thefts exceeded $100,000.
» Lax oversight often allows trust fund thieves to operate for months, even years, without detection. While federal regulations require nursing homes to maintain trust fund accounts, the rules do not mandate any sort of regular, independent audits. Some states have imposed such mandates, but many have not.
» State and federal inspections at nursing homes and other long-term care facilities typically focus on health and safety, devoting relatively little attention to trust funds. USA Today surveyed 36 state and local ombudsmen and nearly 90 percent said tighter oversight is needed.
“These crimes are clearly crimes of opportunity,” the office of Texas Attorney General Greg Abbott said in written responses to questions.
“It doesn’t happen very often and when it does, it’s tragic,” says Greg Crist of the American Health Care Association, the main industry trade group. “There are restrictions on how we collect, hold and disperse these funds….But even in light of that, there are people who are able to game the system.”
Anatomy of a scam
Lee Martin knew how to cover her tracks.
Like many nursing homes, Vicksburg Convalescent keeps trust funds in a single account. A resident’s money is deposited — everything from Social Security and pension checks to money from relatives — and the resident can tap the account to pay for care and incidentals.
And like many nursing homes, a single person — Martin — managed all aspects of the trust account,.
“She knew how everything worked,” says Brown, administrator of the home. “She’d been here a long time…. I trusted her totally.”
Martin began billing personal purchases to the trust funds in 2010, disguising her receipts as resident expenses, court records show. Her thefts ran for nearly a year, victimizing residents at both Vicksburg Convalescent and Shady Lawn Health and Rehabilitation, where she also managed trust funds..
Martin targeted residents who “didn’t have family (monitoring their finances) or who maybe had a little dementia,” Brown says.
Efforts to reach Martin for comment were unsuccessful.
Nursing homes often get cited for mishandling trust funds, but it generally isn’t the type of oversight that’s likely to catch someone stealing.
Annual nursing home “surveys” are governed by federal standards, but the inspections themselves usually are delegated to state health departments.
“A lot of the time, these are nurses doing the surveys, so they’re geared towards making health assessments,” says Patricia McGinnis of California Advocates for Nursing Home Reform.
The federal guidance for surveyors dictates that they consult with nursing home management and interview residents to confirm that trust accounts are provided and that residents receive interest and regular statements.
“Their training is in health care management ... not so much in accounting,” Crist says. “They have to place a certain amount of trust in everyone ... and that includes (business) office staff.”
By the time Lee Martin was caught, she was skimming increasingly large sums from the resident trust account. She had escaped detection during a par-
‘‘ The nursing home is supposed to take care of them. I was surprised there wasn’t more oversight.”
whose 89-year-old mother-in-law had an account raided while she was in a nursing home tial audit by state surveyors. But she got careless.
One day, Brown went to use the business office printer and found a petty cash check drawn on the trust fund of the resident who had lost his legs. She checked the receipt.
“It was for a $90 pair of designer jeans,” she recalls. “I thought, ‘Why would he want that?’ So I started going through books and it just hit me. I immediately put a hold on everything and called the authorities.”
Mississippi’s oversight of resident trust funds actually is tougher than the norm.
Federal rules do not require audits of the accounts. Some states — including Mississippi — do partial or occasional audits during facility inspections, and some nursing home operators do their own audits. But many nursing homes, don’t do any independent accounting.
In fact, the people handling resident trust funds often are among nursing homes’ least scrutinized staff. Hands-on caregivers — nurses and nursing aides or assistants — typically must be licensed or certified by the state and able to pass a criminal background check. Office staff often face no such requirements.
“I do think there’s often a failure to properly oversee the business offices in these facilities,” says Moore, the assistant attorney general in South Carolina.
Crist says his organization has put increased emphasis on training nursing home administrators to watch over business operations.
He recommends that residents “should be getting regular statements (for trust accounts), and the more that family members can watch these funds and be aware of what’s happening with their loved ones, the better.”