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Governor Signs Weinberg/Van Drew/Whelan Bill To Protect Residents From Assisted-Living Facility Scams

A view of the Senate Chambers from the 2010-2011 Senate Reorganization.

Law Prompted By Assisted Living Concepts Inc. Move To Skirt State Court Ruling, Involuntarily Discharge Elderly Residents Who Had Depleted Their Life Savings

TRENTON – Legislation sponsored by Senators Loretta Weinberg, Jeff Van Drew and Jim Whelan to close a loophole in state law that a company used to scam residents out of their life savings has been signed into law by Governor Chris Christie.

“The deceptive practices employed by this company were inexcusable,” said Senator Weinberg (D-Bergen), Chair of the Senate Health, Human Services and Senior Citizens Committee. “This law will ensure that people who spend thousands upon thousands of dollars to live in a facility are not left homeless because the company decides taking in a different resident would be more profitable.”

“This company’s business model was built entirely around bilking senior citizens out of their personal savings. Their actions are absolutely indefensible,” said Senator Van Drew (D-Cape May/Cumberland/Atlantic). “This law will ensure that when companies tell residents they can stay in a facility, even if they utilize Medicaid, they are forced to keep their promise or pay a hefty price for their residents’ future care.”

The law (S-2284) was prompted by a matter involving Assisted Living Concepts Inc., which promised prospective residents that once they had spent down their private resources on facility living expenses, they would be permitted to convert to Medicaid. An investigation launched by the Public Advocate’s Office in 2007 found that when the time came for residents to switch to Medicaid, the company – then operating eight assisted living facilities in southern New Jersey – moved to involuntarily discharge them.

The state filed a complaint in Superior Court to halt one discharge in particular, that of an 83-year-old resident, Betty Merklinger, who had spent down more than $300,000 in private funds at Chapin House in Rio Grande, Cape May County before becoming eligible for Medicaid, according to the Public Advocate’s Office. Last April, the Appellate Division of the Superior Court upheld a Department of Health and Senior Services decision that the facility was in violation of its certificate of need application – part of the state licensing process – that said it would not discharge private pay residents who spend down their savings and become eligible for the Medicaid program. Rather than comply with the court order, the company in June announced its intent to surrender the licenses of four of seven existing facilities it owns in southern New Jersey, and essentially convert them to apartments. According to published reports, more than a dozen residents of the company’s facilities received notification that month that they would be evicted because they qualified for Medicaid.

The law would address the issue directly, by requiring an assisted living residence or comprehensive personal care home that opts to surrender its license after having promised not to discharge residents who become Medicaid-eligible to escrow sufficient funds to pay for the care of the residents in an alternate facility for as long as needed. This law is intended to ensure that Medicaid-eligible residents can reside in another State-licensed assisted living residence.

“This law will ensure that owners of assisted living facilities are not able to swindle elderly residents in the future,” said Senator Whelan, who co-sponsored the legislation. “Under this law, any company that decides it wants to change the rules mid-game will be held financially responsible for the care of its residents in another facility for as long as they require it.”

The Wisconsin-based company operates seven facilities in southern New Jersey, and over 200 facilities in 20 states. The facilities in New Jersey include: 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; Granville House in Burlington, Burlington County; and Post House in Glassboro, Gloucester County. Chapin House in Rio Grande, Cape May County, has since closed.

The bill passed the Assembly in November by a vote of 79-0. It was approved in the Senate in December by a vote of 39-0.

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