Nursing home management agreements may run afoul of federal law, but it’s hard to argue that having a third-party manager hurts resident care. This was the message from Judge Jon S. Tigar, who recently dismissed a suit against a management company. 

Management agreements create a middleman between the administrator and the governing body of a facility, consumer rights group California Advocates for Nursing Home Reform claimed in a suit against Country Villa Service Corp (CVSC). As a management company, CVSC contracted with 40 skilled nursing facilities in California, taking over practically all operations, including hiring and firing, the suit stated. 

This type of business arrangement violates the federal Nursing Home Reform Act, CANHR argued. The reform act says that every Medicare- or Medicaid-certified nursing facility must be directly overseen by a governing body that appoints an administrator, and the administrator must be “directed by and answerable to” the governing body alone.

By disrupting the administrator-governing body relationship, contracting with management companies causes resident care to decline, the suit stated. 

To make the point about resident care, Gail Dawson joined CANHR as a plaintiff. Dawson’s aunt died in a CVSC-managed facility after a period of alleged poor care.

It’s possible that CANHR’s claims about management company agreements are justified, Judge Tigar wrote. However, CANHR is not in a position to bring these charges, if nursing home residents — not CANHR members — are the ones injured by the breach of law. 

The plaintiffs also did not make a convincing case that management agreements lead to resident harm due to substandard care, the judge said.

Tigar dismissed the complaint on June 3 and gave the plaintiffs 30 days to file an amended version addressing the grounds for dismissal.