Nursing homes, in their ideal form, are meant to be sanctuaries of care, compassion, and respect for our loved ones. These facilities are entrusted with the responsibility of providing a safe and nurturing environment for elderly individuals who may require assistance with daily activities, medical care, and emotional support. However, reality often falls short of this noble ideal. Unfortunately, we often hear horror stories about what can occur behind closed doors, where only the vulnerable elderly bear witness. Every so often, stories of physical neglect, emotional isolation, abuse, medication mismanagement, financial exploitation, and more creep into mainstream media. Most recently, following an investigation by the Office of the Attorney General’s Medicaid Fraud control unit, a lawsuit was filed in the State Supreme Court of Manhattan against the owners of four nursing homes throughout New York State. 

What happened?

Kenneth Rozenberg and Daryl Hagler have been accused of defrauding taxpayers of $83 million dollars, according to the lawsuit. The two men illegally used taxpayer money for personal benefit, even purchasing an airline, while neglecting their duties as nursing home managers. Due to severe underfunding and understaffing, the homes deteriorated and became health hazards. Without necessary funding, patients could not get their medication. Without necessary oversight, cases of elder abuse skyrocketed within these facilities. According to testimonies by family members, they were unable to reach their parents who resided in the facilities. In addition, they were not notified of severe injuries they had faced, such as brain bleeding. Another woman said that her father had been so severely neglected that he passed away from sepsis before she was able to pull him out of the home.

According to the Attorney General’s office, Rozenberg and Hagler created LLCs that they used to receive payments from the government and then spent these funds at their personal discretion. Investigations revealed that throughout the COVID-19 pandemic, Rozenberg and Hagler understaffed their facilities to earn more profit. They have also been accused of paying themselves exorbitant salaries for nonexistent work, charging steep amounts for rent which they did not report, and paying their family members $10 million dollar salaries while underpaying their actual staff. It is tragically common to see our most vulnerable population being exploited. There have been many stories throughout the years regarding the nursing home industry being a for-profit scheme that does not have regard for those who rely on the homes. Seeing stories like this one is shocking and it instills in us fear for our aging loved ones. While justice is being pursued in this case, it is important to be informed of steps that you can take to protect not only your loved ones but their assets as well if they end up in a nursing home. 

The Benefits of Long-Term Planning

While not much could have been done to prevent these incidents from the perspective of the victims, there are still helpful conversations that you can have with your aging loved ones, or as you yourself age. Nursing homes are known to exhaust all residents’ individually owned assets before turning to government aid. This strategy, while legal, can leave families grappling with financial burdens and undermine one’s ability to pass down valuable assets to future generations.

One effective way to safeguard your valuable assets is by creating an irrevocable trust. An irrevocable trust allows you to continue the use of your assets during your lifetime while ensuring that they will be passed down to the beneficiary of your choosing. This type of trust establishes a distinct barrier between the ownership and control of assets. Since you are no longer the legal owner of property held in the irrevocable trust, nursing homes cannot target those assets, whether it be residences, liquid assets, or other valuable holdings. These trusts also have tax benefits because the assets held in the trust are often excused from estate taxes. It is important to note that Medicaid has a “look back” period to determine eligibility based on assets, typically spanning five years, so it is necessary to transfer assets well before you anticipate requiring long-term care. Creating an irrevocable trust to become eligible for Medicaid later in life is referred to as “Medicaid planning” and is a very common method of avoiding exorbitant nursing home costs. 

Designating your healthcare power of attorney is another critical step in setting up your estate plan. This document empowers someone that you trust to make your medical decisions for you in the event that you are incapacitated or unable to make those decisions due to medical conditions. Within the realm of medical care, decisions ranging from treatment options to end-of-life choices can be intricate, sensitive, and emotionally charged. Entrusting someone with your healthcare power of attorney is akin to selecting a guardian for your health-related interests, someone who comprehends your values, beliefs, and healthcare preferences. This chosen individual, known as your agent or proxy, is armed with the legal authority to consult with medical professionals, review medical records, and ultimately make decisions aligned with your wishes when you are unable to articulate them yourself.

In addition to safeguarding assets through irrevocable trusts and appointing healthcare proxies, comprehensive long-term planning encompasses a spectrum of critical measures. Advance healthcare directives, financial power of attorney, and guardianship arrangements ensure holistic protection in times of incapacity. Estate tax planning and probate avoidance strategies optimize the legacy you leave behind, while asset protection methods and special needs planning address unique financial considerations. Beyond the financial aspects, the peace of mind derived from knowing that your loved ones are cared for and your values are upheld is an invaluable benefit of robust estate planning. This comprehensive approach not only safeguards assets but also reflects the commitment to providing a secure and dignified future.  

As you craft your estate plan, it is necessary to have an experienced, knowledgeable attorney by your side. If you have any further questions concerning nursing home fraud, Medicaid fraud, or estate planning, please call the Trust and Estate Planning Law Office at (718) 333-2395 to take your next steps.