On May 8, 2009, the Department of the Public Advocate filed a brief last in support of the Department of Health and Senior Services’ position in a case pending before the state Appellate Division regarding Assisted Living Concepts Inc (ALC)., a national assisted living company that operates eight facilities in southern New Jersey.

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ALC filed an appeal last October challenging DHSS’s October 2007 determination that ALC would be in violation of its Certificate of Need if it discharged then 83-year-old Betty Merklinger from Chapin House in Rio Grande, Cape May County.

The company’s Certificate of Need, which is part of the state licensing process, states that the company will not discharge residents who have exhausted – or spent down -- all of their private funds and will need to apply for Medicaid. Specifically, the company’s Certificate of Need states: “Residents will not be asked to move from the Residence because of spend-down situations.”

The Wisconsin-based company operates eight facilities in southern New Jersey, and over 200 facilities in 20 states.  The facilities in New Jersey include: Baker House in Vineland, Goldfinch House in Bridgeton and Maurice House in Millville, all in Cumberland County; Lindsay House in Pennsville, Salem County; Mey House in Egg Harbor Township, Atlantic County; Chapin House in Rio Grande, Cape May County; Granville House in Burlington, Burlington County; and Post House in Glassboro, Gloucester County.

On April 17, 2009, the Public Advocate revealed the results of an 18-month investigation of the involuntary discharge practices of Assisted Living Concepts facilities in New Jersey. The Public Advocate found the company broke its promises to elderly residents by allowing them to believe they could convert to Medicaid when their life savings were depleted. Instead, the company instituted a policy of involuntarily discharging elderly residents once they had spent-down all of their life savings, leaving them essentially destitute.

When the appeal was filed, the Public Advocate sought and was granted permission by the Appellate Division to appear as amicus.

The Public Advocate’s brief filed on Friday, May 8, 2009, makes the following arguments:

1.      The Health Care Facilities Planning Act mandates the Certificate of Need process for the orderly planning by DHSS of health care in New Jersey.  The CN process for certain health care facilities, including assisted living facilities, was reaffirmed in 1998.  The regulations implement the Planning Act and set forth the criteria an applicant must show as part of the CN application process.  Because the ALC CN application was approved by DHSS as “presented and reviewed” and the approval letter from DHSS informed ALC that it would need to apply to DHSS for any change to the project or scope before implementation, it is consistent with the Planning Act and regulations thereunder to enforce provisions of the CN as written by the applicant.

2.      DHSS reasonably held that the original CN application proposed a project for approval which committed to targeting low- and moderate-income residents, including Medicaid eligible residents.  DHSS also reasonably found that the CN application would be violated if ALC involuntarily discharged spend-down residents in violation of the following specific promise: “Residents will not be asked to leave the residence because of spend-down situations.”  These finding by DHSS are consistent with our ALC report findings.

3.      The Public Advocate concurs with DHSS that where a provider wants to change the scope of the CN application as approved, it must make an application for relief (a change in scope) from DHSS before it implements the modification to the project (here, discharging Medicaid eligible spend-down residents).  This is also consistent with our findings in the ALC report – that DHSS be involved with modification prior to implementation so that it can plan consistent with the Planning Act.  Without DHSS involvement, people may be harmed (was we found in our report).

The Public Advocate expects that the Appellate Division will set arguments in the case this summer. The Public Advocate plans to submit an extended brief and participate in oral argument if permitted by the court.

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