The Nursing Home Reform Law of 1987 guarantees certain rights for nursing home residents.  It requires nursing homes to protect the rights of each resident by caring for them in a way that promotes individual dignity, self-determination, and choice.

The financial well being of nursing home residents is protected under this law.

Nursing homes that are Medicare and/or Medicaid certified must adhere to rules regarding the residents’ finances, which include allowing residents the right to manage their own money, or choose someone they trust to manage it for them.  Here is the specific language from the Medicare website listing additional resident financial rights:

• If you deposit your money with the nursing home or ask them to hold or account for your money, you must sign a written statement saying you want them to do this.
• The nursing home must allow you access to your bank accounts, cash, and other financial records.
• The nursing home must have a system that ensures full accounting for your funds and can’t combine your funds with the nursing home’s funds.
• The nursing home must protect your funds from any loss by providing an acceptable protection, such as buying a surety bond.
• If a resident with a fund passes away, the nursing home must return the funds with a final accounting to the person or court handling the resident’s estate within 30 days.¹

According to a recent USA Today article², nursing homes often set up accounts for their residents, called a trust.  Funds from Social Security, pension checks, and personal gifts from friends and family are deposited into these trust accounts.  Trust accounts are set up to function like a conventional bank account with accrued interest, regular statements and reliable oversight.  Residents’ bills are paid from their trust accounts.

In many nursing homes, all the trust funds for all the residents are combined into one large account.  All accounting functions from this combined account – issuing checks for resident’s medical care and incidentals, maintaining receipts, transferring funds to pay for the nursing home bill, reconciling accounts – are often handled by one person.

A one-person accounting department makes for poor oversight.  It also paves an easy path for greedy individuals to skim money from residents’ accounts for their personal use.

Stealing from the Vulnerable

Medicare and/or Medicaid certified nursing homes are inspected roughly once per year to ensure they maintain federally mandated standards of operation.  Financial records are a required part of those inspections.  However, because nurses and other healthcare professionals conduct most of the inspections, the main focus tends to be on health assessment, not on uncovering financial exploitation.

Most often, financial abuse in nursing homes is exposed when the person committing the theft grows bolder, steals larger amounts of money, or gets careless and makes a mistake.

The USA Today investigation contains details of eight instances of nursing home trust fund thefts.  The most shocking case happened at Renfro Healthcare Center in Waxahachie, Texas.  Office manager Judy Putnam was accused of forging 145 checks from 110 resident trust accounts for an astronomical $350,000.  She was finally caught when bank officials noticed the endorsement signature on a check she was cashing did not match bank records.  Putnam pleaded guilty and received a 10 year suspended prison sentence with 10 years supervised community release.  Of the $350,000 she stole, she was ordered to pay only a small portion of that in restitution.  Merely $38,000.

This example of how one person can so brazenly took advantage of the elderly begs for federally mandated oversight of nursing home trust funds.  Currently, there is not federal requirement for nursing homes to audit their residents’ trust fund accounts.

Consumer Vigilance

There is a way to curb, maybe even prevent, this type of elder financial abuse.  When researching nursing homes, first check for prior inspection violations on the Medicare Nursing Home Compare website.  After entering the name of a nursing home you want to research, click the “inspection results” tab, then click “resident rights deficiencies.”  If the facility has been cited for financial deficiencies, it will be explained.  For example:

“Inspectors determined that nursing home failed to properly hold, secure and manage each resident’s personal money which is deposited with the nursing home.”

Visit nursing homes and speak with the administrator.  Ask if resident trust fund accounts are audited, and how often.  Always check statements and reconcile all expenses.  If there is a discrepancy, contact the administrator, or a long-term care ombudsman.

Michigan nursing home residents or family members who believe there is financial abuse can get help by calling the long-term care ombudsman at 1-866-485-9393 or by visiting the Office of Services to the Aging.

1. //www.medicare.gov/what-medicare-covers/part-a/rights-in-nursing-home.html

2. //www.usatoday.com/story/news/nation/2013/10/16/nursing-home-trust-fund-thefts/2967925/