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New York Nursing Homes Sue State Over Profit Cap Law

As various states continue to crack down on nursing homes amid the ongoing COVID-19 pandemic, New York has taken its enforcement a step further with a new law. N.Y. Public Health Law Section 2828 limits the amount of money nursing homes can take as gross profits to ensure that enough money is spent on patient care.

Unfortunately, the nursing home industry including more than 200 privately owned nursing homes and industry associations, have sued to block the law arguing that it is unconstitutional.

The new law was passed in 2021 and was set to take effect on January 1, 2022, though its implementation has been delayed by Governor Kathy Hochul. It requires that nursing homes receiving government funding must direct at least 70% of their revenues towards direct resident care, with at least 40% of that amount allocated for direct care staff members. It also stipulates that nursing homes implement requirements regarding the minimum number of hours staff members could spend on each patient every day. It also limits profits generated by nursing homes to no more than 5%.

The legislation was a direct response to the deaths of more than 15,000 nursing home residents caused by the COVID-19 crisis. New York State Attorney General Letitia James released a report showing that some of the state’s for-profit nursing homes diverted monies otherwise intended for additional staff and personal protective equipment while the pandemic was still in full swing.

Federal Funds at Issue Regarding New York Nursing Home Profit Cap

Among the arguments being made in opposition to the new law is one noting the State does not have the right to control how Medicare and Medicaid funds are used in nursing homes. Under the new law, the state could confiscate excess revenue and place it into a pooled fund for nursing homes around the state. Had the law been in effect in 2019, nursing homes would have had to pay back $824 million to the state.

However, federal, state and local governments split the cost of Medicaid funding provided to nursing homes. Federal regulations prohibit the states from using federal funds to subsidize their programs.  The nursing homes argue the new law violates the Supremacy Clause of the U.S. Constitution, and some aspects of the Fifth and Fourteenth Amendments, which speak to the seizure of private property.

The nursing home abuse lawyers at Dalli & Marino fully support the new law as it seeks to prevent nursing homes from placing profit before resident safety.

Contact a New York Nursing Home Abuse Lawyer with Concerns About the New Law

The lawsuit seeking to block the new law by nursing homeowners puts vulnerable nursing home residents in the middle as the nursing home industry and the state battle it out. If you feel your loved one’s care is being compromised in a nursing home, consult with the team at Dalli & Marino to learn how we might be able to help. We have a reputation for holding providers accountable for standards of care when it comes to your loved ones. The fight against this new law should not impact your loved ones’ care from a New York nursing home.

Call us today at (888) 465-8790 to schedule a free consultation or reach out to us online to learn more. Se habla Español.