State regulators allow nursing home companies to siphon money away from patient care to pad corporate profits, alleges a lawsuit filed by a longtime foe of the industry.
Glendale attorney Russ Balisok, who has made a career of suing nursing homes, brought the suit seeking to invalidate parts of state law that allow nursing facilities to contract out their own management. The suit, filed last month, targets Country Villa Health Services, which runs a chain of 50 skilled nursing and assisted-living facilities throughout California.
Balisok's strategy is to attack the industry's business model. At issue are state-approved agreements in which Country Villa homes contract out their operations to another Country Villa entity. The management company gets a percentage of revenues from the homes it operates. Balisok contends that the management company doesn't actually run the facilities and instead consumes money needed to care adequately for patients.
"It’s just their way of taking 5 percent off the top and leaving the nursing home with insufficient resources so that nursing homes limp along with poor care for patients," he said. "I want the 5 percent back."
Country Villa provided a statement that it is in full compliance with state authorities and federal law.