Nearly a year ago, I got a letter that made me wonder whether the Occupy protests railing against U.S. corporations shouldn’t also include some scrutiny of our nation’s most lucrative charities.
The letter was from a law firm in Iowa, threatening to sue me, my brother, Chris, and our mother, Betty, over unpaid bills at her nursing home in Knoxville, Iowa.
Our mom, 75, was having difficulty qualifying for Medicaid, the state and federal health-care insurance program for low-income people. A couple of years earlier, she had gotten a small inheritance from her own mother who had lived to be 96 years old. At the time, the money put her over the limit for the amount of assets she could have to receive assistance.
While mom had easily spent the cash from her parents’ estate—nearly all of it going to the nursing home or for other medical expenses—she still had a small stake in 80 acres of pastureland, which the state counted as too valuable for her to receive Medicaid.
But because she had run out of cash and not gotten back on Medicaid, she owed the nursing home about $31,000.
Administrators at the facility had, apparently, gotten impatient. If we didn’t pay the amount owed, the nursing home would not only file a lawsuit but also might discharge our mother, the lawyer’s letter said, forcing her to relocate from the facility where she has stayed for more than a decade.
The letter was, naturally, upsetting to me, and I began to find out everything I could about what I assumed was a giant, for-profit company trying to scare the guardians of an elderly and vulnerable woman, who would be confused and disheartened if she had to move.
Instead, I found that mom’s nursing home was part of a large nonprofit corporation, called Care Initiatives, trying to scare the guardians of an elderly and vulnerable woman.
Care Initiatives, which describes itself as a charitable nonprofit, owns and operates 45 nursing homes, eight assisted-living facilities and four independent-living facilities, according to its Web site.
The company, based in West Des Moines, Iowa, had total revenue of nearly $156-million that year, and after paying all its expenses still earned $9.4-million. The Care Initiatives CEO, Miles B. King, was paid more than $656,000, and at least eight other employees for the company earned six-figure salaries, according to the federal filing.
But in the Form 990, I also found information that seemed to contradict their methods of trying to collect our mom’s debts.
In a section describing their programs and accomplishments, it says: “Those residents who pay privately and become unable to pay full private rates but do not qualify for government assistance were not discharged in following Care’s practice of not denying care to financially limited individuals. ... In the case of bad debts due to inability to pay, Care does not use collection agencies or the courts.”
So was Care Initiatives willing to violate its pledge of charitable care, or were its legal threats hollow and designed only to scare residents or family members to collect a relatively small amount of money? Neither possibility presents a positive picture of a charitable group. Nor does it reflect well on how the Form 990—essentially an accounting of why a group is deserving of the benefits of tax-exemption—reflects the organization’s policy and practices.
The director of the nursing facility in Knoxville, Iowa, seemed unaware that Care Initiatives was required to file such disclosures to the Internal Revenue Service. Even after I read the appropriate section to her, she argued that by going through a law firm, she was not technically using the courts or a collection agency.
Through their legal representative, officials from Care Initiatives declined to answer my questions about whether and how their policies were guided by the statements on the federal forms or if and how often the company has tried legal means to collect debts from residents or their families.
After more than nine months, our dispute is still unresolved. I hired a lawyer who got an assessment of the land’s value-less than $8,000-and I bought my mom’s share of the property. Using that money, my brother paid some of my mom’s nursing-home bill but also sent money to other groups that had contacted us about past-due amounts.
Care Initiatives was not happy with the amount it received, and its lawyers asked for a listing of my mom’s financial assets, which include a small amount of cash in her checking account (less than $2,000), her clothes and a few personal items, and a prepaid burial fund.
Of course, Care Initiatives can’t simply ignore or excuse all of its bad debts. It needs steady and predictable revenues to ensure an adequate level of care and comfort for its residents. And to be fair, my mother has never complained about the care at her nursing home. She adores the staff and, at a time when her memory is quickly fading, feels most comfortable in that environment.
Congress has taken a growing interest in nonprofits over the past several years, motivated, in part, by the overall cost of the federal tax exemptions and tax deductions available to donors. Nonprofit hospitals and universities have also come under increased scrutiny from the Internal Revenue Service, and new rules in the 2010 health-care law restrict aggressive debt-collection practices for low-income patients.
This month, the House of Representatives Committee on Ways and Means held the first of a series of hearings to see if the IRS is providing adequate oversight of nonprofits.
From my view, the methods Care Initiatives used to collect on the debt raise fundamental questions about the nature and role of an organization that benefits financially from claiming a charitable mission.
At a time when corporations are being accused of ignoring or taking advantage of the most vulnerable in our society, shouldn’t a nonprofit that cares for some of the most vulnerable citizens, the sick and elderly, set a higher bar?
For example, instead of using its time and resources to eke out a few dollars to cover their losses, wouldn’t it be more efficient to have an estate lawyer that could help our mom qualify for medical assistance?
Most important, if such an organization ignores the promises it uses to qualify as a charitable organization, does it continue to deserve those benefits?