Investigating the systematic eviction of Medicaid-eligible assisted living residents, the New Jersey Public Advocate has obtained a court order compelling Assisted Living Concepts, Inc. (ALC), to produce information regarding its residents and practices.  Order, Dep’t of Public Advocate v. Assisted Living Concepts, Inc., C 73-08 (N.J. Superior Ct. 2008).  As the investigation continues, the Public Advocate’s legal leverage appears based in large part on ALC’s initial promises to the State of New Jersey that it would serve a “moderate to low-income population,” with 20 to 30 percent of the facility’s residents to be Medicaid-eligible, and would not evict residents who had become Medicaid-eligible by spending down their life savings for assisted living care.

            According to the Public Advocate, ALC operates eight assisted living facilities in southern New Jersey.  Nationwide, ALC reports that it operates 216 assisted living residences with a total of 9,076 units.

            Despite its initial representations in New Jersey – and potentially in other states also -- ALC currently is pursuing a nationwide strategy to reduce its percentage of Medicaid-eligible residents.  In a 2007 quarterly earnings press release, ALC’s CEO touted the company’s “overall strategy of growing our private pay occupancy and reducing our reliance on Medicaid funding as a percentage of revenue.”  The press release for the first quarter of 2008 pointed to lower Medicaid occupancy and listed as a highlight the fact that private-pay revenues comprised over 90% of total revenue.

            This is the backdrop for the Public Advocate’s investigation of allegations that ALC has evicted residents once they have spent their life savings in the facility and become Medicaid-eligible.  As part of the investigation, the Public Advocate issued a subpoena seeking the names, admission and discharge summaries and contact information for every resident of ALC’s New Jersey facilities whose assisted living care is or was funded by Medicad.  The subpoena also sought the names and addresses of residents who had been discharged, for any reason, during the previous year.

            In its press release, the Public Advocate cited the case of an 83 year-old woman who had lived in an ALC facility for more than five years, paying the facility over $300,000.  She expected to transition to Medicaid eligibility as her savings dwindled, but the facility refused to accept Medicaid from her and instead told her that she would have to leave when her savings ran out.  In looking into this case, the Public Advocate learned of an ALC policy of no longer allowing its residents to convert from private-pay status to Medicaid.

            In the initial investigation, the New Jersey Department of Health and Senior Services (DHSS) blocked the threatened eviction, citing the promises made by ALC in obtaining a Certificate of Need.  However, ALC refused the Public Advocate’s request that ALC change its policies, and indicated its intent to challenge DHSS’s position.

            In ordering ALC to comply with the Public Advocate’s subpoena, the judge ruled that the Public Advocate had authority to investigate the matter even though assisted living facilities are licensed by DHSS.  The judge cited the Public Advocate’s explicit statutory authority to investigate conditions in health facilities.  Also, the judge found that the subpoena sought relevant information in a focused manner.