Nursing homes in New York face a high risk of lawsuits from residents and their families who allege abuse or neglect. These lawsuits can result in costly settlements, verdicts and regulatory sanctions. Nursing home investors, who may not be directly involved in the day-to-day operations of the facilities, may also be held liable for the actions or omissions of the staff or management. However, there are ways to structure the nursing home’s entity to minimize investor liability.
Choose the right business entity
Different types of business entities offer different levels of investor protection. For example, a limited partnership allows investors to be passive partners who are not liable for the debts or obligations of the partnership beyond their capital contribution. A limited liability company provides similar protection, but also allows investors to participate in the management of the business without losing their limited liability status.
A sub-entity structure, where a parent company owns multiple subsidiaries that operate different nursing homes, can also limit the exposure of the parent company and its investors to the liabilities of each subsidiary. A combination of these strategies can also be used to maximize investor protection.
Maintain adequate insurance coverage
Nursing home investors should ensure that their facilities have sufficient insurance coverage to cover potential claims arising from abuse or neglect. This may include general liability insurance, professional liability insurance, umbrella insurance and directors’ and officers’ liability insurance. Review them regularly and update them as needed to reflect changes in the law and industry standards.
Proactive steps to prevent issues
Nursing home investors should also take proactive steps to prevent abuse and neglect from occurring in their facilities. This includes hiring qualified and trained staff, conducting background checks and drug tests, providing ongoing education and supervision, establishing reporting and investigation protocols, enforcing disciplinary measures and complying with all applicable laws and regulations. Investors should also monitor the performance and quality of care of their facilities regularly and address any issues or complaints promptly.