10 Lawless Government
GOVERNMENT EMERGES as the ultimate villain. We
have pointed out in the preceding chapters many examples of government
indifference to patient abuse and to swindling of the taxpayer by
nursing home operators. Since government has taken the responsibility
for regulating nursing homes, it must ultimately be held accountable
for what happens in those homes. The smell of urine in a filthy
nursing home is, therefore, the smell of corrupt regulators, and
the silence that answers the cries of abused and neglected patients
is the silence of government indifference.
has failed us at all levels. At the lowest level, it is the caseworker
who continues to send patients to a nursing home where she knows
they will be beaten and starved, because, when Christmas rolls around,
the operator will give her a fur coat. (The patient wouldn’t
give her a fur coat for sending him to a better home.) At the other
extreme, the failure is in state and federal regulators, and the
elected officials who appoint them, who refuse to hear the truth
about the scandalous state of the industry because its lobbyists
are shouting in their ears and contributing to their campaigns.
(The patients’ shouts cannot be heard because they don’t
make campaign contributions.)
however, is not the whole story. It would be tempting to attribute
all of government’s inaction to the buying of influence, but
in my experience plain indolence is equally important. The government
employee, whether he is a county caseworker or a Washington bureaucrat,
is under constant pressure from the operators to see things their
way. He is under no pressure in the other direction. If he does
his job well, he has to work harder, he faces the antagonism of
the operators with whom he has to deal every day—and he gets
no reward. It is easier then, even if he is not on the take, to
find ways to avoid doing his job as a regulator.
tactic used frequently is to demand impossible amounts of information
before acting. If someone brings in a complaint against a nursing
home, the regulator will require more evidence than the person can
supply as a condition for looking into the case. This, of course,
amounts to asking the other person to do the bureaucrat’s
job for him. This tactic was used on me in Cleveland in 1970, after
I had met with a group of senior citizens who had been organized
into a government-financed project to reach out to elderly people.
The group had extended its contacts into a nursing home, and its
members did not like what they had found. I quote from a report
written, painfully, by one of these senior citizens. She is describing
a patient in the Euclid Manor Nursing Home in Cleveland, certified
for Medicare, which supposedly puts it in the highest category of
nursing homes. She writes:
When I reached the second floor, I had to wait
for somebody to unlock the gate for me, then they told me she [the
patient] was in the second room to my left. When I opened the door
after knocking, to get permission to get in, I found a very frail
woman crying very hard, wishing she could die. I got her quieted
down a little bit and then asked her why she was unhappy. She told
me how a white nurse and a colored nurse dragged her to the bathroom
and threw her in the bathtub.
one other occasion when they were giving her a bath after throwing
her in, they broke her tail bone, which hurts her very much, when,
sitting her in a hard chair, they tie her in that chair. The meals
are very poor, she is parlized [sic] in the left arm and chronic
arthritis in the hands and is unable to walk, she begged me not
to tell on her as she does not want to be spit on and beaten anymore.
This lady is 81 years of age and has very little company.
delegation presented me with several similar reports of neglect
and cruelty. They pleaded with me for help. They were older citizens
and they were frightened. I could offer nothing more than a promise
to call the director of the state health department licensure division.
I was forced to admit to them that, based on previous experience,
I didn’t expect much to be done.
called the director of licensure. I told him only that a delegation
of senior citizens had come to my office to deliver some complaints
about the Euclid Manor Nursing Home. He did not ask me to enumerate
any of their complaints. Unless, he said, there is a witness other
than the patient willing to sign his name to a complaint, the health
department would not investigate. The health department would not
even listen to the senior citizen delegation. Of course, by the
very nature of the business, the only witness is the attendant who
himself created the agony for the patient. Only in a most unusual
situation would anyone else be around to witness a patient being
“spit on and beaten” by an aide or nurse. Thus, officialdom
has comfortably shielded itself from the necessity of action by
requiring nearly impossible documentation of claims of cruelty.
in Washington, the Securities and Exchange Commission staff used
exactly the same tactic to avoid conducting an investigation. The
crime division of the Justice Department sent me over to the SEC
when I reported some of my findings about nursing home chains. During
our meeting, the SEC’s special corps in the crime division
left their yellow note pads discouragingly blank. They did not,
they explained, have time for the nursing home industry. But they
had a proposition to make to me: if I would bring them a case all
prepared for legal action they then would act. Obviously I myself
could not collect all the legal data of fraud; they were safe. Having
transferred their responsibility to me, they no longer had to worry.
justice authorities behave in much the same way. I have already
described, in Chapter 3, the mishandling of the case of Eugene Woods,
and in Chapter 4, the lackadaisical “investigation”
of the charges concerning Max Strauss’s Riverside Nursing
Home, resulting in an aborted grand jury presentation. Those were
not my first experiences with lax prosecution of cases concerning
the nursing home industry. Two years earlier, I had made my first
investigation of nursing homes in the Cleveland area.
data, collected from the welfare department, based on reading records
and reviewing monthly journals of vendor payments, were ultimately
put into a report, one that suggested areas of fraud and disclosed
case histories. These histories would not provide a legal proof
of fraud, that being beyond my sphere of investigation, but they
did illustrate the areas in which malpractices occurred to an extent
suggesting fraud; they did describe countless violations of nursing
home regulations that explained the delivery of reprehensible nursing
care. The report begged for official investigation. Submitted to
Senator Frank Moss, it formed at his request the nucleus for an
investigation by the General Accounting Office. To the extent that
the GAO was authorized to investigate, it substantiated my findings.
By 1967 both my general findings and the GAO report had been released
to the public. But my narrative report, consisting of case histories
and names of vendors and of informants, was not made public. The
report released by the General Accounting Office was statistical
and free of any names.
Cleveland news media clamored for names. Ultimately the county prosecutor,
goaded into action, subpoenaed me to appear before his grand jury,
to which I presented my two-hundred-page report. The whole procedure
was a rout: it was either a comedy of inefficiency or a contrived
situation aimed at protecting the nursing homes and discrediting
the General Accounting Office investigation along with me.
my first scheduled appearance before the grand jury, I arrived,
but the jury had gone home. An unknown person had reported that
I was ill. The next time, with my appointment protected somewhat
by advance notice in the news media, the jury and I met. I presented
them with my report, with the names decoded for the first time.
I was the only person in the room who had seen the report before.
Nevertheless, the prosecutor settled back on the sidelines and said
in effect, “Tell your story.” With no help from him,
the jury had to labor through the complicated maze of that re¬port
for three hours. Prosecutor Corrigan never called any of my informants,
never requested any of the supportive data.
foreman of the jury, apparently finding public pressures great,
eventually issued an interim report to the presiding judge. The
foreman stated that he had made “detailed investigations too
numerous to relate.” But he named only one witness other than
myself; the other witnesses remain unknown, if in fact there were
any others. None of the people to whom I referred in the report
as sources of information said they were questioned.
paragraph in the foreman’s letter deserves quoting because
it illustrates the incredible inaccuracy of the jury’s findings:
Among those who appeared before the Grand Jury
in addition to Mrs. Mendelson was Mr. William Veigel of Columbus,
Administrator of Nursing Homes for Ohio, who explained the rules,
regulations and laws affecting the operation of nursing homes in
the State. He also discussed new legislation in recent years to
improve the homes. It is quite significant that from January 1,
1965 to October, 1966, 81 nursing homes were closed in Cuyahoga
County for not conforming to standards set by the State.
The closing of eighty-one homes would indeed have
been significant, since there were only ninety-one homes in the
area. In fact, however, exactly five homes had gone out of business—only
one of these being closed for “not conforming to standards.”
Yet this absurd claim was the foreman’s answer to a two-hundred-page
report detailing cases and areas of malfeasance.
grand jury report summarily dismissed the General Accounting Office
report and mine without subpoenaing my records or my informants,
ranging from the director of the Aid for the Aged Office to health
department personnel, and without consultation with the General
Accounting Office. The jury neither investigated malpractices nor
weighed an indictment of any individual. They were given no case
for specific action. And that was the end result of those two investigations,
the GAO’s and mine.
government seems to sleep through the working day, the nursing home
industry vigorously pursues its interests. We saw in Chapter 6 how
Joseph Kosow made political alliances in Massachusetts. In Ohio,
several years ago, I watched a state reform effort turn into a victory
for the industry. The deaths of sixty-three patients in the Fitchville,
Ohio, fire and the nomadic escapade of Eugene Woods focused public
attention on nursing homes long enough for the state legislature
to agree to reexamine its laws. On the surface, the desire of the
state was to strengthen the laws regulating nursing homes. With
a tighter code, implemented by regulations enforced by inspectors,
the appalling conditions existing in nursing homes would be alleviated.
Or that was what the public thought.
new bill, proposed by the administration of Governor James Rhodes
and sponsored by the state health department, strongly indicated
that the nursing home industry had gotten there first. That bill
proposed to substitute a permanent license for the then annual license
and to drop the requirement for annual inspections. The bill was
sold to the legislators as an improvement.
health department justified a permanent license on the grounds that
the annual renewal procedure was a “harassment” of nursing
home operators. It ignored what years of experience must surely
have taught: it is easier to deny a license than it is to revoke
one. Under the proposed bill, which was to become the law, a license
could only be revoked, whereas formerly a license could be denied
during the annual renewal.
for mandatory inspection, the department argued that since it inspected
homes anyway, a law requiring in¬spection was unnecessary.
became involved in the struggle in the Ohio State Legislature over
the bill, and in that struggle I learned why so many people, seeking
redress for a nursing home abuse, have been denied help by a callous
government. The nursing home industry is well organized, and the
philanthropic homes joined the proprietary homes to fight strengthening
amendments to the proposed bill. Though the philanthropic-homes
gave different reasons, and the “good guys” in the proprietary
groups espoused different arguments from those of the “bad
guys,” they were all in fundamental agreement on one point:
the nursing home industry is entitled to police itself without government
intervention. And the government, at great cost to its wards, the
patients and the taxpayers, joined hands with the industry behind
friendly Ohio state senator told me that money openly passed from
the industry to legislators to influence their votes on the nursing
home regulatory bill. Certainly Ohio did finish with a law essentially
weaker than its original law—and all in the name of progress.
The department of health had worked closely with the industry in
drawing up a bill which would meet the industry’s approval.
Any proposal to improve the protection of patients through strengthening
the policing powers of the state was anathema to both the state
and the industry. The
comment on money passing from the industry to the proper people
is beyond my ability to prove. Yet a system of payoffs is the repeated
explanation I am given of why government fails to respond to pressures
to enforce its minimal regulations, to strengthen existing legislation,
or even to understand the industry.
shadow of bribery loomed once again in the spring of 1970. The Ohio
State Legislature joined the rush by state legislatures to investigate
abuses of Medicaid money. Despite the fact that nursing home care
absorbs one-third of the total Medicaid budget, the state officials
testifying before the committee at first scrupulously avoided mentioning
nursing homes. Finally, forced to respond to inquiries by the legislators,
the state welfare assistant director, Robert Canary, declared that
the Welfare Department was totally satisfied that nothing was amiss.
He even wished aloud that the other programs under Medicaid were
as well administered as the nursing home program. I then testified
before the committee, giving numerous examples of misappropriation
of money. All my cases were documented, but all were glossed over
by Mr. Canary when he was questioned about my testimony. Mr. Canary
did admit that there had been no auditing of nursing home financial
records and that he was aware of a few of the glaring examples I
offered of the mishandling of tax dollars. He added that if mistakes
were detected, the government pursued no punitive course. Both the
legislators and the administration behaved uncomfortably when supplied
with facts about Medicaid abuses committed by nursing home operators.
the investigation neared its end, I met with Patrick Sweeney, a
member of the committee, who told me of a callhe had just had from
a nursing home operator. The operator, speaking for his organization,
offered Mr. Sweeney $20,000 for his assistance in raising reimbursement
rates once again. Mr. Sweeney considered this an idle gesture, being
convinced that the nursing homes, unable to make money, could not
pay the $20,000. Mr. Sweeney was unaware of the lucrative nature
of the nursing home business. He, like most people, did not realize
that the owners of nursing homes include many wealthy people.
outcome was that Governor Rhodes requested and received a 40 percent
increase in the rates—a raise from $10 to $14 daily for maximum
care. The following year, in 1971, the nursing homes won a vote
for still another rate increase from the Ohio House of Representatives.
The good news was conveyed by letter to its members by the Ohio
Nursing Home Council. The letter describing how the legislature
was won was punctuated with upper-case headlines beginning with
OUR PREDICTION OF AN INCREASE COMES TRUE. This, however, was not
achieved without WEEKS OF ANXIETY. The council reported that its
lobbyist, one J. F. Farmer, had been working on the legislature
for the past several weeks, and one member had been particularly
helpful: MR. NETZLEY GETS THE CREDIT. State Representative Robert
Netzley, who opposed “wasteful” welfare programs, nonetheless
favored adequate payment to nursing homes. Netzley felt the opera¬tion
had to be done quietly, so the nursing home lobbyist was SWORN TO
SECRECY. The reason was that publicity about a nursing home rate
increase might incite other groups to try to get more money, and
after all, as the letter explained, “the goal was the money,
not the publicity.” In any event, they got the money and the
members were advised to thank Mr. Netzley by letter.
happy outcry indicates why the most active nursing home lobbying
is in the state legislatures: that is where the Medicaid rate, the
single most important fact of life in the industry, is set. But
ultimate responsibility for regulatingnursing homes must be considered
to lie in Washington. That is where most of the money comes from;
even though the states set the Medicaid rate, Washington pays from
50 to 80 percent of the bill. It was the federal government that
adopted Medicaid and Medicare. And, of course, it is only in Washington
that a national policy on nursing homes can be framed.
Department of Health, Education, and Welfare, which administers
Medicare and the federal share of Medicaid, is by far the most important
federal agency involved with nursing homes. You would hardly know
that, to listen to HEW spokesmen, for much of their effort goes
to fobbing responsibility off on others—the states, the Congress,
and even, on one occasion, the public. That was when then Assistant
Secretary (later Secretary) Wilbur Cohen was discussing with me
the department’s position on proposals opposed by the industry.
If the press ran enough stories critical of nursing homes (presumably
indicating public interest), HEW could oppose the industry; if not,
the industry’s will would prevail. In reality, most action
(more accurately, inaction) by HEW tends to favor the interests
of the industry over those of the patients or the taxpayers. (Among
many other examples in this book, we saw in Chapter 8 how HEW tiptoed
away from a collision with both the nursing home and brand-name
drug interests over the issue of generic drugs.)
policy HEW consistently has followed is that of secrecy. The department
has not varied over the years in its opposition to giving the public
information about nursing homes; when its opposition was not overt,
it was dragging its feet. In Chapter 5, we cited the time HEW evaded
the intent of a congressional directive to find out who owns Medicaid-certified
nursing homes. Similarly, the Medicare authorities in HEW do not
feel the public is entitled to know who owns Medicare-certified
homes. The peculiar reason they give is that many physicians own
such homes, and would be embarrassed to have it known, since that
ownership would appear to be a conflict of interest. In my own experience,
I have not found many homes that are in fact owned by doctors—but
if they are, and if there is a possible conflict of interest, why
withhold that information from the public?
most blatant form of secrecy practiced by HEW has to do with the
reports of nursing home inspections. If there is any single piece
of information to which the public should be entitled, it is the
inspector’s current report on a nursing home. Any member of
the public should have the right to see that report before he chooses
a nursing home, not to mention the taxpayers’ interest in
what the home is doing with their money. The only effect of hiding
that information is to protect the operator who runs a bad home
(and the inspector who lets him get away with it). That fig leaf
was at last ripped (or so it seemed) from the industry in 1972 by
the courts: a successful suit by a newsman, Mal Schechter, of the
magazine Hospital Practice, forced HEW to grant access to Medicare
inspection reports. The federal policy of secrecy on Medicare has
its counterpart in the states’ position concerning Medicaid
inspections. Also in 1972, Michigan was forced to make public its
inspection reports by a court action brought by a Detroit-based
patient advocacy group, Citizens for Better Care. Other cases were
under way in California and Florida.
bureaucracies resisted stubbornly. HEW interpreted its defeat in
the courts to mean only that Schechter himself could have access
to the eight reports on which he had brought his suit—not
that the public at large had any right to see Medicare inspection
reports. In Michigan the state appealed the decision ordering Medicaid
reports into the open. Then, in 1972, the Congress adopted legislation
requiring HEW to make public both Medicare and Medicaid reports.
That seemed to be that—but it wasn’t, because, as always,
it is up to the agency, not Congress, to implement the law, and
HEW was far from giving up the struggle to keep the public in the
dark. As of this writing, the regulations proposed by HEW would
only make public an “extract” from the inspector’s
report, not the full report. According to Mal Schechter, an HEW
official said this was because the public “wouldn’t
understand” the full report. Furthermore, that extract in
the case of Medicare could only be seen (not ordered by mail or
phone) at the local Social Security office; in the case of Medicaid,
one can inspect the extract at the local welfare office. Thus a
member of the public can see those “extracts”—if
he is willing to find his way to the proper office no matter how
far, and if (the biggest “if” of all) he happens to
find out that he is entitled to the information. As of this writing,
no one is broadcasting the news.
distance between HEW’s policy of secrecy and a policy of protecting
the public interest can be most clearly measured by contrasting
what the agency did with what it has not done. At no time did HEW
take the simple, effective step of ordering operators of all nursing
homes receiving federal money to post the latest inspection report
prominently in the home, with copies available to potential applicants.
That would make available to those most concerned the inspector’s
judgment on the home, and would also enable someone reading the
posted report to contrast what the inspector said with the reality
around him. That, in my opin¬ion, is what HEW should have done
policy of secrecy seems, at times, to be directed as much against
itself as against the public. The department evidently does not
want to know much about nursing homes. Not only does it not want
to collect information on nursing home ownership, it does not inform
itself about profits—and it does not accumulate any systematic
knowledge about conditions in nursing homes. (Several years ago
Senator Frank Moss asked HEW to do a study of profits in the industry
similar to the later study, described in Chapter 2, commissioned
by my organization. HEW’s response was to do nothing.) Elementary
statistics—like the amount spent on ancillary services for
nursing homes—are often befuddled. Apparently the facts about
the industry HEW regulates are none of its business. Perhaps such
facts would disturb the bureaucracy’s sleep.
of HEW’s role in overseeing the spending of its money has
been in effect abdicated to the health industry. This has happened
in the choice of what are called “fiscal intermediaries.”
When Medicaid and Medicare were created, it was obvious that they
would cause a flood of paper work in the form of millions of individual
bills being presented to government for payment. Existing organizations
were retained by Medicare, and in some states Medicaid, to process
the papers—to audit and pay the individual bills for the government.
This lightened the government work load, but it also removed from
government much responsibility for the newly created programs.
organizations selected as fiscal intermediary in most parts of the
country are Blue Cross and its sister organization, Blue Shield.
Blue Cross is itself part of the health industry. Controlled by
hospitals and doctors, it was founded to help hospitals collect
their bills. It has always defended the interests of the health
industry in conflicts with those who pay the bills, whether consumers
or government. Nursing homes are first cousins to hospitals; their
financial practices are similar, and so are the ways in which their
costs are unnecessarily inflated and passed on to government. So
when government chose Blue Cross as a fiscal intermediary, it was
to a large extent allowing the health industry to regulate itself.
results were soon visible. As noted in the case of California in
Chapter 8, the transfer of auditing to Blue Cross greatly reduced
the amount of regulation to which nursing homes (and other parts
of the health industry) were subject—just at the time that
much more money was being pumped into the system. In Ohio at one
time Blue Cross was almost three years behind in its auditing of
nursing home bills: for all that time, the bills were being paid
without the simplest examination of the nursing homes’ claims.
The logical conclusion came when, after a number of scandals showed
that the Medicaid administration was in trouble, HEW did the inevitable:
it appointed a committee to study the problem. The chairman of the
committee was Walter McNerny—president of the Blue Cross Association.
The industry was being asked to evaluate its own regulation of itself.
insurance companies retained as fiscal intermediary have a different
kind of conflict of interest. In some states Prudential acts as
a fiscal agent, but Prudential also holds mortgages on nursing homes.
It is not in Prudential’s interest to crack down on payments
to nursing homes when those payments will ultimately go to paying
off Prudential’s mortgages. Traveler’s also acts as
a fiscal agent. As reported in Chapter 7, the Traveler’s then
director of Medicare operations appeared at one time on the board
of Geri-Care, the nursing home chain linked to Joseph Kosow.
contrast to most bureaucracies, HEW is diligent in avoiding power,
at least when it comes to regulating nursing homes. If it had more
regulatory power, it would presum¬ably have to use it, and that
would go against the interests of the nursing home industry. So
the department has stalled, opposed, or watered down proposals intended
to give it more regulatory responsibilities. Nursing home representatives
within HEW have collaborated in that effort.
example involves the Moss Amendments of 1967 and Harold Baumgarten,
the professor-nursing home operator-consultant introduced in Chapter
9. The Moss Amendments were designed to tighten federal regulation
of nursing homes, and one of them directed HEW to write standards
that nursing homes would have to meet in order to qualify for Medicaid.
The content of those standards became an issue on which the nursing
home lobby, led by the American Nursing Home Association, showed
its teeth. A key question was the role of the licensed practical
nurse (LPN). Homes are required to have a registered nurse on duty
at least forty hours a week; the issue was who should be in charge
the rest of the time. Some felt it should be an LPN; the industry
held that a less-trained person was adequate. It was important to
the patients whether the person in charge of their care for most
hours of the week had any professional training at all; it was equally
important to the operators to avoid having to pay the difference
between an LPN’s salary and that of a less trained employee.
assigned to draft the standards a three-person group headed by Frank
Frantz, then at HEW and formerly with the Senate subcommittee that
had written the Moss Amendments. As “consultant” to
Frantz, HEW hired one Harold Smith, a former official of the Louisiana
Nursing Home Association and at that crucial moment chairman of
the Legislative Committee of the American Nursing Home Association.
The appointment was defended by Frantz’s superior, Dr. Francis
Land, on the grounds that Smith was an expert and that all experts
suffered some conflicts of interest.
conflict was pretty clear. He is named in the ANHA legislative news
report, for June 26, 1967, reporting on the association’s
efforts to dilute the Moss Amendments. The report stated that:
Because of the testimony of Mrs. Mendelson
of the Cleveland, Ohio, Welfare Federation, the General Accounting
Office report on Cleveland, Ohio, and on several situations in the
various states, there is mounting pressure for additional federal
legislation to regulate nursing homes. The staff of the Select Committee
on Aging has used these unfair reports in an equally unfair way
to promote the Moss Bill. . . . Because of the impression which
Mrs. Mendelson’s testimony and the GAO Report left on members
of the House Ways and Means Committee we were forced to attempt
to prove that these alleged conditions generally were not true and
not widespread. In previous legislative letters and other reports,
we have discussed what was done to combat the bad publicity. Last
year, the present Chairman of Legislative Committee (Harold Smith)
and others had several conferences with members of the staff of
the Senate Select Committee on Aging to suggest changes in the Moss
Bill. . . .
the presence of Harold Smith, the Frantz group came up with draft
standards that included the requirement that an LPN be in charge
when the RN was absent. That roused the opposition of the nursing
home lobby, opposition which was quickly felt within the ranks of
HEW. Dr. Land was approached by Charles Cubbler with a proposal
that he, Cubbler, be allowed to rewrite the standards. Cubbler,
as noted in Chapter 9, was an HEW employee and staff man for the
advisory council headed by Harold Baumgarten; he was also a member
of the board of directors of Baumgarten’s Cranford, New Jersey,
nursing home operation. With Dr. Land’s permission, Cubbler
brought in Harold Smith, the nursing home lobbyist, to rewrite the
standards. In the new version, the LPN requirement was gone, along
with other provisions that would have improved patient care at the
expense of the operators’ profits.
new version, in effect written by the industry, was brought before
Baumgarten’s advisory council for its approval—though
the council in fact had no legal jurisdiction over the standards.
Fortunately, the attempt to get the council’s approval was
blocked by a minority of council members, who were opposed to the
industry’s version of what the standards should be. (Later,
apparently uneasy about the whole episode, Baumgarten twice denied
that the standards had come before his council.) In this case, the
public interest won a rare victory: after another year of internal
struggle, a set of standards came out that was close to the original
Frantz version. But it took that long, and the fight was almost
lost, because industry representatives like Harold Smith and Harold
Baumgarten, and industry-connected civil servants like Charles Cubbler,
were permitted to take part in the department’s supposedly
impartial decisions. On May 7, 1970, Senator Frank Moss surveyed
the wreckage of the amendments adopted twenty-nine months earlier.
Some had been diluted to the point of meaningless-ness; others had
been evaded. Not much was left of the original intent of Congress.
As he opened a subcommittee hearing, Senator Moss observed to the
We say to our young people that a citizen may
not choose which laws he will obey and which he will not. As I review
the performance of the Department of Health, Education and Welfare
on implementing these provisions of law designed for the protection
of nursing home patients, the question is inescapable: Are government
officials asserting the right to choose which laws they will obey?
Evidence of government lawlessness is not lost on our young people
whom we admonish about law and order.
Moss’s statement is a fair summary of HEW’s performance.
I would add only that you do not have to be young to be made cynical
by government lawlessness.
agencies whose actions affect nursing homes have a record similar
to that of Health, Education, and Welfare. We saw in Chapter 6 that
the Federal Housing Administration, which insures loans for nursing
home construction, is lax enough to have insured a second loan for
Joseph Kosow’s associate, Dr. Frank Romano, after Romano had
gone bankrupt without paying off earlier FHA-insured loans.
FHA also practices the standard policy of secrecy. When I was investigating
the Harold Baumgarten operation in New Jersey (Chapter 9), I called
the Newark office of FHA to get some basic data about the mortgage
FHA had insured on the Baumgarten nursing home. The representa¬tive,
then a Mr. Crowdy, refused to give out the figures, asking: “Why
should I tell you?” I had thought the public
was entitled to know how a government agency spent its money, but
Mr. Crowdy evidently shared the HEW view that the interests of nursing
home operators should prevail over those of the public. The Securities
and Exchange Commission, as we noted in Chapter 7, fails to gather
easily available evidence that would help protect investors from
the nursing-stock hustlers.
a word should be said here about the Internal Revenue Service. This
book is filled with examples of nursing home operators beating the
government with methods that are frequently illegal. Do they always
pay their income taxes on their illicit profits? When a nursing
home operator pockets the personal expense money of his patients,
when he gets a Cadillac as a kickback from his pharmacist—does
he report it? It seems reasonable to guess that most often he does
not, yet I have heard of no income tax convictions of nursing home
operators. Perhaps, if it were motivated, Internal Revenue could
do what the other agencies are unwilling or unable to do—just
as they were finally able to jail Al Capone for tax evasion.
has shown occasional bursts of interest in the nursing home problem,
although the legislature’s record is good only when compared
to that of the executive branch. Much of the information available
on nursing home abuses was dug up by congressional committees and
by the investi¬gating arm of Congress, the General Accounting
Office. In the Senate, the Subcommittee on Long-Term Care, chaired
by Frank Moss, and its staff have been active in trying to dig into
the nursing home mess. The Senate Finance Committee held some hearings
that brought out information on nursing home financing back in 1969,
when John Williams was still in the Senate; but Williams is gone
now, and since his departure the committee has failed to pursue
its investigations in this area with the same thoroughness.
House has been less active than the Senate. The Ways and Means Committee
did respond to my original investigation by sending the GAO into
Ohio, but it let the subject drop after that. David Pryor of Arkansas,
a lonely figure in the House (he left in January 1973, after losing
a Senate primary race), had persistently, and without success, sought
the formation of a special House committee on nursing homes with
authority to conduct a full investigation of the industry. As we
have already noted, Pryor had become a crusader after he had, his
identity concealed, worked as an aide in a nursing home in Washington,
D.C. By the time I interviewed him in 1970, he was deeply pessimistic.
He said that, after he had become known for his interest in the
field, he had heard from many state and local bureaucrats who said
they were prevented from doing their jobs as regulators because
of the political power of the nursing home associations. They told
the congressman they would lose their jobs if it were known they
had been in touch with him. Pryor was also afraid to turn over to
HEW letters he had received describing nursing home conditions.
He explained why:
The Social Security Administration has asked
us to turn over our files to them, but I have not seen fit to do
so. If I felt it would do any good I would be glad to. I think there
is such a close relationship between the various levels of the bureaucracy
on the local, on the state and on the Federal level—there
is such a close relationship, personal and political, to the nursing
home owners, to the nursing home industry and to the nursing home
associations. There is such intertwinement here of people, and the
relationships are so close that I think I might be jeopardizing
the positions of the patients and the relatives who have written
me and complained.
General Accounting Office, as reported in earlier chapters, has
conducted several productive investigations of the nursing home
industry. The public has learned far more from the GAO than it has
from the Department of Health, Education, and Welfare, although
the latter has far greater resources to call on. But the GAO, itself
an arm of Congress, and the staffs of congressional committees operate
under severe limitations. For one thing, their staffs are small
compared to those of executive agencies. Secondly, they can only
devote those limited resources to what Congress wants investigated,
and the legislative interest in nursing homes, while greater than
that of the bureaucracy, is still slight. Finally, no matter what
Congress might legislate, actual enforcement is up to the executive,
and those agencies, notably HEW, have made it clear over the years
that enforcement is not what they intend to do.
have spent a decade talking to bureaucrats about nursing homes,
from caseworkers in small towns to state officials to agency heads
in Washington. As I look back on meetings without number in a hundred
anonymous offices, they all begin to look alike. (There are honorable
exceptions to the following description, that is, the outraged employees
who risked their jobs to give me information. But they remain only
exceptions. I am writing here about the people who set the tone
of government.) I am in that office with three or four bureaucrats.
We are sitting around a table, and they all have yellow lined pads
in front of them. I have my briefcase by my chair. I have come either
to seek informa¬tion or to offer it. If I seek information,
there are two standard answers: what I want is “confidential”
or it is “unavailable.” If I am there to offer information
on which they might act, there are several possible responses. Their
staff is limited, so they can’t look into it. If I brought
them an airtight case, they could act, otherwise not. If I leave
my information, months and years go by—and nothing happens.
I have heard them all, and I am profoundly cynical.
is this background of government that is indifferent to human suffering,
too lazy or corrupt to obey its own laws, that makes me skeptical
of all the panaceas currently being offered as solutions to the
nursing home scandal.