Failure to Prevent and Investigate Misappropriation of Resident Funds
Summary
The facility failed to ensure that residents were free from misappropriation and exploitation of their funds. Multiple instances were identified where resident payments intended for care and room charges were deposited into a bank account that only the Business Office Manager (BOM) had access to. This account was unknown to other facility leadership and was used for personal purchases, including cash withdrawals, restaurant, and store charges. The BOM was the sole authorized user of this account, and the facility administrator only became aware of its existence after reviewing a bank statement. The administrator's subsequent investigation revealed that resident checks and insurance payments were being deposited into this unauthorized account, and the BOM closed the account after being questioned. Several residents and their families reported ongoing issues with missing funds, unexplained billing, and inability to access or account for their money. For example, one resident's family continued to receive bills despite having made substantial payments, and another resident was at risk of losing their place at an assisted living facility due to missing Social Security payments. In some cases, checks written from residents' personal checkbooks had signatures that did not match the residents' handwriting, and funds were withdrawn from resident accounts after discharge. Facility staff, including the social worker and administrator, expressed concerns about the whereabouts of resident funds and suspected misappropriation, but these concerns were not promptly or thoroughly investigated or reported to the state agency or law enforcement as required. The facility did not have or could not provide policies related to accounts receivable or resident funds when requested by the surveyor. Interviews with staff and family members revealed a lack of communication and transparency regarding the handling of resident funds. The administrator and other leaders failed to notify affected residents or their representatives about the suspected misappropriation, and there was no evidence of a thorough internal investigation prior to the survey. The facility's failure to act on suspicions of misappropriation and to report these incidents in a timely manner left residents at continued risk of financial exploitation and resulted in a finding of immediate jeopardy.
Removal Plan
- The NHA and member of a governing body conducted an audit of past residents' funds. Credits will be made to families who are owed. The NHA and member of the governing body reviewed the petty cash policy and implemented it.
- The Director of Nursing (DON), Social Service Director (SSD) and Minimum Data Set (MDS) nurse/care plan nurse will review clinical documents to identify any negative outcome that may have resulted from the alleged deficiency. The following documents were reviewed: NAR report, 24-hour summary, order report listing, incident report portal, transfer/discharge log, concern log and resident council minutes.
- The DON/SSD/Nurses will complete assessment of all residents to identify any negative psychosocial outcomes or worsening of overall condition that may have resulted from the alleged deficiency. The attending physician/Nurse Practitioner (NP) of the resident will be notified of any negative findings.
- The NHA/SSD/DON will conduct interviews of interviewable residents to identify if they have any concern related to mishandling, misused and/or misappropriation of their funds. Any identified concern will be reported to the state agency and law enforcement, and investigation will be conducted. For residents who are not able to participate in the interviews, the NHA/SSD/DON will interview the resident representatives.
- The corporate BOM will also audit all residents' status of benefits (Medicaid and Managed Care) to identify any concern. An investigation will be conducted if any concern is identified.
- Any identified misappropriation of residents' funds and exploitation will be reported to the NHA, state agency and law enforcement.
Penalty
Resources
Below are regulatory guidelines relevant to this citation:
A resident with dementia and multiple psychiatric diagnoses relied on a family member, acting as Responsible Party and POA, to manage finances and deliver applied income checks to the facility. The routine process involved the receptionist placing these checks into an unsecured business office mailbox, a procedure known to a CNA who had previously covered the reception desk. One such check, made payable to the facility, never reached the business office; instead, it was later discovered to have been mobile-deposited into the CNA’s personal bank account, with the CNA’s verified signature on the back of the check. This constituted misappropriation of the resident’s funds in violation of the facility’s abuse policy, which prohibits wrongful use of a resident’s belongings or money without consent.
A cognitively intact resident with multiple medical conditions, including diabetic retinopathy, PTSD, and a lower leg amputation, gave an LVN his debit card and PIN so she could buy him food. The resident later learned from his bank that multiple unauthorized transactions totaling $800 had been made, and he reported that the LVN admitted to using some of his money and agreed to repay it. The LVN acknowledged having the card to purchase items but denied using it without the resident’s knowledge. The Activities Director and Administrator stated that only designated staff, such as the Activities Director, were allowed to purchase items or assist with resident funds, and both were unaware that this LVN was handling the resident’s card, contrary to facility policies prohibiting misappropriation and limiting financial assistance to designated staff.
A cognitively intact resident with psychiatric diagnoses had a $900 check cashed by social services and chose to keep the cash on her person after being advised to secure it. After an outing to Walmart and other locations with another cognitively intact resident, she reported that her wallet, containing approximately $400–$450, went missing from her bed. A CNA reported the loss, and staff searched both residents’ rooms, finding the wallet on top of the other resident’s dresser with the cash missing. The other resident denied taking the money or knowing how the wallet got into his room. The facility’s investigation substantiated a theft, constituting misappropriation of resident property under the facility’s abuse prevention policy.
A resident with multiple chronic conditions and significant pain needs had an order for PRN oxycodone, and later two tablets were found missing from the resident’s oxycodone card and replaced with taped‑in pills that did not match the remaining tablets. During a shift‑change narcotic count, an LPN identified the non‑matching, taped‑in pills in two card slots, while another LPN acknowledged she had previously counted the narcotics without removing the card from the drawer. The facility’s investigation, as described by the RDCO, determined the substituted pills were melatonin and confirmed the oxycodone tablets were missing, but could not identify who took them or where they went, despite a policy stating that drug diversion is treated as misappropriation of resident property.
The facility failed to properly inventory and safeguard residents’ belongings and money, leading to missing items and inaccurate or absent inventory records. One hospice resident arrived with personal items documented by ambulance staff, but the facility’s admission inventory listed no belongings, and her representative later reported missing identification, a cell phone, and a debit card, along with unusual financial transactions and phone use after the resident’s death. The Administrator acknowledged a $1,200 monetary transaction between this resident and a CNA for an airline ticket but did not formally document or broaden the investigation. Another cognitively impaired resident was documented by the hospital as being discharged with $3,600 and jewelry, with instructions to facility admission staff to secure these valuables, yet the social worker later concluded the facility was not responsible when the items were reported missing and the admission staff did not recall the valuables. Additional audits found clothing labeled for another person among one resident’s belongings and a resident with multiple clothing items but no inventory sheet, despite a policy requiring admission inventories and safeguarding of valuables.
Multiple residents with cognitive impairment and complex medical conditions had their trust fund accounts used by former administrative and activities staff to make unauthorized online purchases of clothing, electronics, snacks, personal care items, and activity supplies. Required documentation and signatures authorizing withdrawals were absent, and some residents reported not requesting or receiving the items, while searches showed that certain items were missing or located in the activities department instead of with the residents. Former staff reported that they were informed when Medicaid residents’ balances exceeded allowable limits and then ordered items from an online retailer based on lists or general discussions, but without proper consent from residents or their representatives, resulting in misappropriation of resident funds and belongings.
Misappropriation of Resident Applied Income Check by Staff Member
Penalty
Summary
A resident with dementia, psychotic disturbance, mood disturbance, anxiety, bipolar disorder, and muscle weakness had a family member designated as Responsible Party and Power of Attorney who managed the resident’s finances and routinely brought applied income checks to the facility. The resident’s assessment and care plan documented poor memory recall and a need for cues, reminders, prompting, and redirection. The facility’s usual process was for the family member to give the applied income check to the receptionist, who would then place it in an unsecured business office mailbox slot for later collection by the business office. A nurse aide who had previously covered the reception desk was familiar with this procedure. An applied income check from the resident, made payable to the facility and dated 3/9/26, was dropped off by the family member but did not reach the business office as intended. Subsequently, the family member reported to the business office manager that the check was missing and had been deposited via mobile deposit. After the family member provided a copy of the check, the business office manager observed a signature on the back that was identified and verified as belonging to the nurse aide. Further review determined that the bank account numbers associated with the deposited check matched the nurse aide’s personal banking account. The facility’s abuse policy, which prohibits misappropriation of resident property and defines misappropriation as the deliberate misplacement, exploitation, or wrongful use of a resident’s belongings or money without consent, was not followed when the resident’s applied income check, intended as payment to the facility, was wrongfully deposited into a staff member’s personal account.
Misappropriation of Resident Funds by Non‑Designated Staff
Penalty
Summary
The deficiency involves the facility’s failure to protect a cognitively intact resident from misappropriation of funds by a staff member. The resident, an adult male with diabetic retinopathy, lack of coordination, muscle weakness, PTSD, and a left lower leg amputation, had a BIMS score of 15 on a recent MDS, indicating he was cognitively intact. He reported that he trusted an LVN and gave her his debit card and PIN so she could buy him food. Later, his bank contacted him about a declined $300 payment and informed him that multiple small unauthorized withdrawals totaling $800 had been made from his account. The resident stated that only his son and the LVN had access to his card. After learning of the unauthorized transactions, he contacted his bank to stop the card and issue a new one. He reported that he confronted both his son and the LVN; according to the resident, the LVN admitted to using some of his money and agreed to repay it, which the resident stated she did through installments from her paychecks. The resident did not report the incident to the facility and stated this was the first and only time such an incident had occurred. A banker confirmed that the bank’s call center generated a report of declined transactions of $300, $100, $50, and $200 on the resident’s card, and that the resident said he had not authorized those transactions. The LVN acknowledged that the resident had given her his bank card to purchase items but denied using the card or the resident’s money without his knowledge. The Activities Director, who had long tenure at the facility, stated that she was the only staff member designated to purchase items for residents and that she was unaware of any other staff, including the LVN, doing so. The Administrator similarly stated that residents needing items could ask the Activities Director, that only designated staff should assist with resident funds, and that he had instructed staff not to take residents’ money or cards. He reported being unaware that this resident had a credit card in his possession and that he expected the LVN to direct the resident to the Activities Director and notify him so purchases could be tracked. Facility policies on abuse, neglect, and misappropriation, and on residents’ funds, specified that residents have the right to be free from misappropriation and that only designated staff may assist in managing resident funds.
Failure to Protect Resident From Misappropriation of Money
Penalty
Summary
The deficiency involves the facility’s failure to protect a cognitively intact resident from misappropriation of property, specifically the wrongful use of her money. The resident, who had diagnoses including bipolar disorder, borderline personality disorder, and major depressive disorder, had a check for $900 cashed by social services, with staff advising her to keep the money safe or allow the business office to secure it; the resident chose to keep the cash on her person. After going on an outing to Walmart with another resident and spending a portion of the funds, she reported having approximately $400–$450 remaining in her wallet, which she last recalled seeing on her bed. On a subsequent morning, she discovered the wallet missing and reported this to a CNA, who then notified the nurse. Staff searched her room and the room of another cognitively intact resident who had accompanied her on the outing. During the search, staff found the missing wallet on top of the other resident’s dresser, but the cash was no longer inside. The resident whose wallet was taken reported that only the other resident had been in her room and that he knew she had the money. The other resident stated he did not know how the wallet ended up in his room and denied taking the money, though he acknowledged having gone out with the resident to Walmart and other locations before returning to the facility. The facility’s internal financial abuse report documented that the theft was substantiated, and the facility’s abuse prevention and reporting policy defines misappropriation of resident property as the deliberate misplacement, exploitation, or wrongful use of a resident’s belongings or money without consent. The events demonstrate that the resident’s money was misappropriated while under the facility’s care, in violation of the policy requirement to protect residents from misappropriation of property.
Misappropriation and Undetected Diversion of Resident Opioid Medication
Penalty
Summary
The facility failed to protect a resident from misappropriation of property when two oxycodone tablets were missing from the resident’s prescribed opioid medication card and had been replaced with non‑matching pills. The resident had multiple serious medical conditions, including acute kidney failure, end‑stage renal disease, pleural effusion, hypertensive chronic kidney disease Stage V, diabetes, COPD, peripheral vascular disease, atrial flutter, and dependence on renal dialysis, and was care planned for pain related to chronic conditions and procedures. The resident’s orders included oxycodone 5 mg, two tablets every four hours as needed for pain, which was later discontinued. During a shift‑change narcotic count, two pills in the oxycodone card (in slots #2 and #6) were found taped into place, were not uniform in color, and were not scored like the other oxycodone tablets. One LPN reported that when she had counted the narcotics at the beginning of her shift, she did not remove the medications from the cart and only visually checked them in the drawer. Witness statements documented that on a prior count, the oxycodone card had no taped‑in medications, but at a later count the two taped‑in pills were present and did not match the remaining oxycodone tablets. The Regional Director of Clinical Operations stated that the facility’s investigation determined the two taped‑in medications were melatonin and that the two oxycodone tablets were missing, with no determination of who took them or where they went. The RDCO also stated that the pharmacy was notified of the missing oxycodone and that they inquired whether the resident was due any monies, despite the medication having been discontinued. When asked why the allegation of misappropriation was unsubstantiated, the RDCO could not provide an answer. Facility policy on controlled drugs and security stated that drug diversion would be treated as misappropriation of resident property and that the Board of Nursing would be notified as appropriate for known or suspected drug diversion after review and evidence collection.
Failure to Inventory and Safeguard Residents’ Belongings and Money
Penalty
Summary
The deficiency involves the facility’s failure to properly inventory and safeguard residents’ personal belongings and money, resulting in missing property and inaccurate or absent inventory documentation. For one resident admitted under hospice care, ambulance transport records showed she arrived with a bag of supplies, a cell phone, a wheelchair, and a backpack, while the facility’s admission inventory form documented “No Belongings upon arrival” and noted that donated clothes were provided. The resident’s responsible party later reported missing items including a cell phone, driver’s license, and debit card, and described abnormal financial activity and long-distance calls from the resident’s phone and withdrawals from her debit card after the resident’s death. The responsible party stated she had shared this information with the Administrator and requested help in investigating and retrieving the missing items, but reported that the facility had not taken responsibility for safeguarding the resident’s belongings. The Administrator acknowledged awareness of the responsible party’s concerns and confirmed that the resident had transferred $1,200 to a CNA to purchase an airline ticket to Zimbabwe, which he characterized as a highly unusual interaction between a resident and staff member. He stated that he determined the money was refunded when the resident was unable to take the trip and took no further action because there was nothing in the facility’s handbook or policy specifically prohibiting this type of transaction. The Administrator did not comment when presented with ambulance documentation indicating the resident arrived with belongings that were not reflected on the admission inventory, and he stated he did not expand his review to other residents under the CNA’s care and did not formally document the allegations or his investigation beyond some emails. For another resident with a BIMs score indicating severe cognitive impairment, the hospital discharge record documented that she was to be discharged with $3,600 in U.S. currency, a yellow necklace and bracelet, and two pendants, and that hospital staff had discussed these valuables with facility admission staff, who reportedly would document and secure them for safekeeping. The social worker reported that the resident’s family later raised concerns about missing money and jewelry and that, based on the resident arriving without belongings, she concluded the facility was not responsible. She stated she was aware of the hospital documentation and had interviewed the admission staff, who did not recall the conversation or valuables, and that the resident reported giving her money and jewelry to a Vietnamese man, although no such staff member worked at the facility at that time. Additional issues were identified during an inventory audit: one resident’s belongings included a housedress labeled with another woman’s name and room number, and another resident had multiple clothing items in his room but no inventory sheet in either the electronic or physical chart. These findings occurred despite a facility policy stating that residents have the right to be free from theft or misappropriation of personal property and that resident belongings are to be inventoried upon admission and safeguarded from easy public access.
Misappropriation and Unauthorized Use of Resident Trust Funds for Online Purchases
Penalty
Summary
The deficiency involves the misappropriation and unauthorized use of resident trust funds and belongings by former facility staff, including the former Business Office Manager (BOM), former Activities Director (AD), and former Social Services (SS) staff. Facility records showed that multiple residents had debits from their resident fund accounts for online retailer purchases that were not authorized by the residents or their representatives, and required documentation such as signed vouchers or check request forms was absent. The facility’s own abuse policy defined misappropriation of resident property as the wrongful use of a resident’s belongings or money without consent, and the documented actions of staff met this definition. One resident with congestive heart failure, Alzheimer’s disease, and aphasia, who was severely cognitively impaired and dependent for ADLs, had several online purchases charged to her resident funds account, including clothing and snack items, without authorization from her representative. Progress notes contained no documentation of these purchases by the former BOM, AD, or SS. The resident later confirmed that items had been purchased using his account and that he believed a television had been ordered but never received. The Administrator confirmed that the former AD made unauthorized online purchases from this resident’s account and that the facility could not verify that all items, including a cowboy outfit and other clothing, were provided to the resident. Another cognitively intact resident with diabetes, PTSD, and osteoarthritis had large online purchases made in her name for a tablet, tablet keyboard, clothing, personal care items, and nutritional supplements. These purchases were not documented in progress notes and were not authorized by the resident or her representative. The resident reported that a cart of items was brought to her, including a new tablet and clothing she had not requested, and that she sent the items back. The Administrator verified that the former SS placed a substantial order under this resident’s name with the intent that the cost be withdrawn from her account, despite the lack of authorization. A resident with type 2 diabetes, pulmonary hypertension, and generalized anxiety disorder, who was moderately cognitively impaired and required ADL assistance, had debits from his funds account for hearing aids and a television purchased through an online retailer. His representative had not authorized these purchases, and there was no documentation in progress notes of such purchases by the former BOM, AD, or SS. The Administrator confirmed that the former BOM and former AD used this resident’s funds to buy hearing aids and a television without authorization and that the television purchased for the resident was not in his possession and was suspected to be elsewhere in the facility. Another resident with epilepsy, end-stage renal disease, and aphasia following cerebral infarction, who was severely cognitively impaired and dependent for ADLs, had multiple online retailer debits from his resident funds account that were not authorized by his representative. Items purchased included a beanie, body wash, long sleeve shirts, a flannel shirt, a hoodie, jogging pants, fabric labels, undershirts, and wool socks. There was no documentation in progress notes of these purchases by the former BOM, AD, or SS. The Administrator confirmed that these items were purchased without authorization, and a search of the resident’s room with his permission revealed that some of the items ordered were not present. A further resident with Alzheimer’s disease, congestive heart failure, and type 2 diabetes, who was severely cognitively impaired and required ADL assistance, had multiple unauthorized debits from his resident funds account for online purchases. Items included cologne, boys’ pajamas, slippers, socks, various snack foods, soda, a record player, dementia activity items, televisions, a fidget blanket, and a music set. The resident’s representative had not authorized these purchases, and there was no progress note documentation by the former BOM, AD, or SS. A search of the resident’s room showed that some items were missing and some were found in the activities department. The Administrator verified that the former BOM and former AD used this resident’s funds to purchase these items without authorization. Interviews with former staff clarified how these actions occurred. The former BOM stated that she informed the former AD and former SS when Medicaid residents’ account balances exceeded $2000 and needed to be spent down, and that some items purchased were used by the activities department. She reported that the former AD and former SS would talk with residents about their needs and interests and then order items from the facility’s online retailer account. The former AD stated that he placed online orders as directed by the Administrator and former BOM, based on lists of items they provided that were said to be derived from conversations with residents. Across the affected residents, required authorization from residents or their representatives was not obtained, documentation in the medical record was lacking, and some purchased items were not in the residents’ possession, constituting misappropriation of resident funds and belongings. The facility’s own policies required that resident trust fund withdrawals be supported by vouchers or check request forms signed by the resident or designee and an invoice, and that residents be free from misappropriation of property. Despite these policies, the documented practice involved staff initiating and completing purchases using resident funds without the necessary signatures or clear consent, and in some cases items were used by the activities department or not located with the resident. These actions and omissions led to substantiated findings of misappropriation of resident funds for several residents, as documented in the facility’s self-reported incidents and confirmed by the Administrator.
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