Judge rules that contract fee for 'free' nursing home bed rights is valid

A federal judge has ruled that the transfer of dozens of nursing home beds among nursing home operators must go through as originally planned, despite the would-be buyer's claim the contract was invalid. The two Indiana operators duked it out in federal court earlier this month over the sale of certification rights. The buyer contended the transfer should have been free under a state moratorium on new certifications.

At the time Lock Realty Corp. purchased 35 beds at $10,000 apiece from Lutheran Homes Inc. (LHI), the state had a moratorium on granting new certifications. During the moratorium, however, the state continued allowing facilities to transfer certifications among themselves. Lock, which operates Courtyard Healthcare Center in Goshen, refused to complete the purchase and LHI sued for breach of contract. LHI operates Lutheran Life Villages in Fort Wayne.

In early March, U.S. District Court Judge Jon E. DeGuilio, rejected Lock's argument that the contract was invalid, since the moratorium gave it permission to obtain those rights for free directly from the state. DeGuilio held that Lock was contractually obligated to buy them as agreed.

Indiana requires a bed to be certified in its Medicaid program in order to reimburse a facility for services provided to the bed's occupant, according to published reports.

Meanwhile, the state is considering a three-year moratorium on nursing homes following the Senate's Feb. 3 approval of the bill. An earlier study found that the state's 527 skilled nursing facilities had an average occupancy rate of 76%, compared to the national occupancy rate of 86%. Ten new homes are scheduled for construction over the next few years while nursing home resident populations are expected to remain stable.