A Fine Mess

Something about a pay bonus for staffers of the Texas Department of Human Services didn't sound right to state Representative Talmadge Heflin, a Republican from southwest Houston, when he heard it discussed at a recent appropriations committee meeting.

One of Heflin's constituents, community activist Sam Perlin, had asked the representative to obtain a report on penalties levied against the state's nursing homes. The report showed that, between June of last year and April of this year, the DHS assessed $1.1 million in penalties against nursing homes for care violations, but collected only $99,615.17 -- a collection rate of 8 percent. Heflin asked why so few fines were being paid.

"I brought up the point that if [the DHS wasn't] performing in this area, why we were giving such nice bonuses to people?" Heflin says. "It's somewhat ludicrous to me to put a bunch of penalties on the books, find you're never collecting them and then say you're doing your job. I'm totally dissatisfied with that part of the arrangement."

Heflin isn't alone. Perlin, president of Texans for the Improvement of Nursing Homes, has been complaining for years about what he sees as the state's inadequate enforcement of nursing home regulations.

"The nursing home industry sits back and lets the state assess penalties, hoping they won't get tough and try to collect them," Perlin says. "Then if they [do] try to collect them, the industry takes them to court and says the penalties are illegal."

This scenario has been played out before. In 1991, a Travis County judge rescinded the state DHS's authority to assess fines after that authority was challenged by Living Centers of America, which has corporate offices in Houston and operates 130 nursing homes statewide. The following year's Legislature addressed what was seen as the difficulty, and in 1993 a revised penalty plan went into effect.

But some of the old problems remain, particularly an extended and complicated appeals process that includes informal and formal appeals, hearings and an eventual recourse to state district courts. Advocates for the nursing home industry describe the procedure as nothing more than due process; critics say it's nothing more than a series of delay tactics. As Heflin sees it, "If we're just using a system that accrues penalties but never demands payment, then we need to go to something else, because that doesn't do anybody any good."

The system is complicated in part because fines assessed against nursing homes are more like contractual actions than simple penalties. The state is basically saying that when an inspector finds a nursing home in violation of a regulation, then the home has broken its contract with the state as a Medicaid provider. That makes the home subject to fines for breach of contract. Depending on the severity of the violation, the fine can range from $2.50 to $10 per bed. That sum is then multiplied by the number of days the violation exists.

For example, last October, Houston's 185-bed Hermann Park Manor was fined $5 per bed for a 46-day violation. That amounts to $42,550 -- but the penalty is yet to be paid. The alleged violations that led to the fine included infractions both serious and surreal. The inspectors' report says one resident wasn't picked up from a routine clinic appointment for five days, that another resident was missing for three days and that the second-floor call lights (used to summon nurses) were inoperative for more than a week.

In a bizarre effort to deal with that last problem, the nursing home staff, according to a state inspector, "[passed] out some New Year's Eve party horns for the residents to use in calling for help." The inspector also observed that many of the home's residents were too weak to blow the horns and that others "did not have the strength to get out of their beds to reach them." It was later noted that the staff realized this and moved the horns closer to the bed-ridden residents.

Admittedly, not all citations are so dramatic. And Sara Speights of the Texas Health Care Association defends the nursing home industry by saying there's confusion over what constitutes a violation, and there's suspicion among nursing home operators that the state inspectors believe the best way to do their jobs is to find a long list of problems. Also, says Speights, inspectors too often apply subjective standards when doing their jobs. If violations were clearly defined and the regulations objectively applied, she says, fewer nursing homes would oppose the fines.

It's not only nursing home advocates who criticize the system of monetary penalties. The state agency running the show has problems with it as well. Mark Chouteau, the state's assistant commissioner for long-term care regulatory, calls it a "cumbersome process." Because the penalty process is a hybrid between a lawsuit and a straight fine, delays in collection are inevitable. "To put it in perspective," says Chouteau, "if I file a lawsuit against you, I can't collect the money in the lawsuit until I get a trial. Even if I win the trial, you get an opportunity to appeal before I get the money."

Chouteau believes that it's only a matter of time before a nursing home goes to court to throw the current penalty system into the same trash can that holds the pre-1991 system. "They've already told us they're going to be suing us," Chouteau says. "I'm hearing that through the grapevine."

Whether the process is tossed out, a simpler appeals process is instituted (as Speights says the industry wants) or the competing factions agree to binding arbitration -- as has been suggested by some activists -- what remains beyond dispute is that the fines presently being levied aren't making their way into the state treasury.

What's also beyond dispute is that Heflin's attempt to hold the DHS staff at bay by questioning their bonuses came too late to have much impact. The bonuses, totaling about $500,000, had already been granted by the time Heflin began wondering whether they were really earned. So now Heflin has focused his attention on next year's rewards. In late April he again raised the question of whether the DHS was doing its job and suggested that if bonuses are again spread around, they be spread around because people have actually done their jobs.

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