TRENDS IN LONG-TERM CARE HEARING BEFORE THE SUBCOMMITTEE ON LONG-TERM CARE OF THE SPECIAL COMMITTEE ON AGING UNITED STATES SENATE NINETY-FOURTH CONGRESS FIRST SESSION PART 24-NEW YORK, N.Y. FEBRUARY 4, 1975 Printed for the use of the Special Committee on Aging U.S. GOVERNMENT PRINTING OFFICE 47-104 WASHINGTON: 1975 For sale by the Superintendent of Documents, U.S. Government Printing Office Washington, D.C. 20402 -Price $2.40 SPECIAL COMMITTEE ON AGING FRANK CHURCH, Idaho, Chairman HARRISON A. WILLIAMS, JR., New Jersey HIRAM L. FONG, Hawaii JENNINGS RANDOLPH, West Virginia CLIFFORD P. HANSEN, Wyoming EDMUND S. MUSKIE, Maine EDWARD W. BROOKE, Massachusetts FRANK E. MOSS, Utah CHARLES H. PERCY, Illinois EDWARD M. KENNEDY, Massachusetts ROBERT T. STAFFORD, Vermont WALTER F. MONDALE, Minnesota J. GLENN BEALL, JR., Maryland VANCE HARTKE, Indiana PETE V. DOMENICI, New Mexico CLAIBORNE PELL, Rhode Island BILL BROCK, Tennessee THOMAS F. EAGLETON, Missouri DEWEY F. BARTLETT, Oklahoma JOHN V. TUNNEY, California LAWTON CHILES, Florida DICK CLARK, Iowa WILLIAM E. ORIOL, Staff Director DAVID A. AFFELDT, Chief Counsel VAL J. HALAMANDARIS, Associate Counsel JOHN GUY MILLER, Minority Staff Director PATRICIA G. OaIOL, Chief Clerk SUBCOMMITTEE ON LONG-TERM CARE FRANK E. MOSS, Utah, Chairman HARRISON A. WILLIAMS, JR., New Jersey CHARLES H. PERCY, Illinois FRANK CHURCH, Idaho EDWARD W. BROOKE, Massachusetts EDMUND S. MUSKIE, Maine J. GLENN BEALL, JR., Maryland EDWARD M. KENNEDY, Massachusetts PETE V. DOMENICI, New Mexico CLAIBORNE PELL, Rhode Island BILL BROCK, Tennessee THOMAS F. EAGLETON, Missouri JOHN V. TUNNEY, California Trends in Long-Term Care: Part 1. Washington, D.C., July 30, 1969 Part 2. St. Petersburg, Fla., January 9, 1970 Part 3. Hartford, Conn., January 15, 1970 Part 4. Washington, D.C., February 9,1970 (Marietta Fire) Part 5. Washington, D.C., February 10, 1970 (Marietta Fire) Part 6. -San Francisco, Calif., February 12, 1970 Part 7. Salt Lake City, Utah, February 13, 1970 Part S. Washington, D.C., May 7, 1970 Part 9. Washington, D.C., August'19, 1970 (Salmonella) Part 10. Washington, D.C., December, 14, 1970 (Salmonella) Part 11. Washington, D.C., December 17, 1970 Part 12. Chicago, IlLj April 2, 1971' Part '13. Chicago, Ill., April 3, 1971 Part 14. Washington, D.C., Jund 15, 1971 Part 15. Chicago, 1il., September 14, 1971 Part 16. Washington, D.C., September 29, 1971 (Lil-Haven Fire) Part 17. Washington, D.C., October 14, 19711 Part 18. Washington, D.C., OotobeO 28, 1971 Part 19A. Minneapolls-St. Paul, Minn., November 29, 1971 Part 19B. Minneapolis-St. Paul, Minn., November 29, 1971 Part 20. Washington, D.C., August 10, 1972 Part 21. Washington, D.C., October 10, 1973 Part 22. Washington, D.C.; 'October 11, 1973 Part 23. New York, N.Y., January 21, 1975 Part 24. New York, N.Y., February 4, 1975 Part 25. Washington, D.C., February 19, 1975 (11) CONTENTS Page Opening statement by Senator Frank E. Moss, chairman---------------- 3035 Statement by Senator Charles H. Percy------------------.--------------3037 Statement by Senator Pete V. Domenici!-------------------------------- 3041 Statement by Senator Frank Church------------------------------------_3044 Statement by Senator Harrison A. Williams, Jr ------.---------------- 3045 CHRONOLOGICAL LIST OF WITNESSES Michaels, Harold, counsel, American Bank & Trust Co_____-------. 3050 Shaw, Horton R., counsel, New York State Office of Welfare Inspector General; accompanied by John Ruehle, assistant auditor-------------- 3077 Scarfone, Rocco, Hallandale, Fla-------------------------------------- 3101 Dachowitz, Samuel, CPA; accompanied by Irving Singer and Robert Lazarus ---------------------------------------------------------- 3125 Parker, Frederick J., director of the Bureau of Provider Audit of the New York State Department of Health; accompanied by Marvin Sternm_---- 3129 Lewin, Nathan, counsel for Dr. Bernard Bergman________---------------3135 Stein, Assemblyman Andrew, chairman of the Temporary State Commis- sion on Living Costs and the Economy_______.--_____----------------- 3147 Steingut, Stanley, speaker of the'New York State Assembly; accompanied by Prof. Charles Selexson-------------.______-------------------------3160 APPENDIXES Appendix 1. Material received from American Bank & Trust Co. pursuant to committee subpenas: Item 1. List of documents turned over to the Senate Special Com- mittee on Aging by the American Bank & Trust Co.; dated January 30, 1975_------------------------------------------------------- 3178 Item 2. Letter and enclosures from Samuel Dachowitz, CPA; to Dr. and Mrs. Bernard Bergman, dated May 29, 1974_----------------- 3178 Item 3. Letter and enclosures from Samuel Dachowitz, CPA; to Dr. and Mrs. Bernard Bergman, dated July 20, 1973_----------------- 3180 Item 4. Letter and enclosure from Samuel Dachowitz, CPA; to Dr. and Mrs. Bernard Bergman, dated June 21, 1974_----------------- 3181 Item 5. Application to withdraw subpenas of the American Bank & Trust Co., Bernard Bergman et al------------------------------ 3182 Item 6. Law suit of Bernard Bergman et al. v. Senate Special Com- mittee on Aging et aL, motion for temporary restraining order and preliminary injunction----------------------------------------- 3184 Item 7. Court decision in case of Bernard Bergman et al. v. Senate Special Committee on Aging et aZ-------------------------------- 3190 Item 8. Letter from Harry E. Youtt, attorney; to Kenneth Feinberg, assistant U.S. attorney, dated January 29, 1975_------------------ 3201 Item 9. Letter from Harold Michaels, American Bank & Trust Co.; to Dr. and Mrs. Bernard Bergman, dated February 3, 1975 - -____ 3201 Item 10. Letter from Harold Michaels, vice president, American Bank & Trust Co., New York, N.Y.; to Eric Nelson, law clerk to Judge Lee P. Gagliardi, dated February 11, 1975_--------------------------- 3201 Item 11. Letter from Paul J. Curran, U.S. attorney; to Judge Lee P. Gagliardi, dated February 11, 1975-- ____________ --------- 3201 (m) IV Appendix 1. Material received-Continued Page Item 12. Letter from Val J. Halamandaris, associate counsel, Senate Special Committee on Aging; to Tag Adams, chief of civil division, New York, N.Y., dated February 17, 1975_----------------------- 3202 Item 13. Letter and enclosure from Paul J. Curran, U.S. attorney; to Rex E. Lee, Assistant Attorney General, dated July 14, 1975_------- 3203 Appendix 2. Letter and enclosures from Amram Kass, attorney; to Frank T. Cicero, assistant commissioner, New York Department of Health, dated December 23, 1971_-------------------------------------------- 3205 Appendix 3. Subpena and attached affidavit, National Bank of North America, issued by Frank E. Moss, dated January 16, 1975_----------- 3211 Appendix 4. Statement and attachment of Mary Yankauer, director, Burden Center for the Aging, New York, N.Y--______________ 3213 Appendix 5. Letter from Aryeh Neier and Ira Glasser, executive directors, New York City Civil Liberties Union, ACLU; to Senator Frank E. Moss, dated February 4, 1975, and reply from Senator Moss, dated February 6, 1975 -------------------------------------------------------------- _3218 TRENDS IN LONG-TERM CARE TUESDAY, FEBRUARY 4, 1975 U.S. SENATE, SUBCOMMIrrEE ON LONG-TERM CARE OF THE SPECiAL CoMmrrrEE ON AGING, New York, N.Y. The subcommittee met, pursuant to recess, at 10 a.m., at 14 Vesey Street, New York County Lawyers Association, New York, N.Y. Hon. Frank E. Moss (chairman) presiding. Present: Senators Moss, Percy, Williams, and Domenici, and Con- gressman Edward I. Koch. Also present: William E. Oriol, staff director; Val J. Halaman- daris, associate counsel; John Edie, professional staff member; John Guy Miller, minority staff director; Patricia G. Oriol, chief clerk; and Joan Merrigan and Donna Gluck, clerks. OPENING STATEMENT BY SENATOR FRANK E. MOSS, CHAIRMAN Senator Moss. The hearing will come to order. I welcome all of you here this morning, as a continuation of a series of hearings that the Subcommittee on Long-Term Care of the Senate Special Committee on Aging has been conducting over a protracted period of time now. This is the second one here in New York City within the last 2 weeks. I am very pleased to have sitting with me this morning the Senator from Illinois, Mr. Percy, the ranking Republican member on the sub- committee, and the Senator from New Mexico, Mr. Domenici, also a member of the subcommittee, and although he will be a little late, we expect Senator Williams of New Jersey, who will join us. He is a member of the committee. Two weeks ago we met in this room primarily to receive a large quantity of documents that we had subpenaed. We also gave Dr. Bernard Bergman and his attorneys an opportunity to make a full and complete statement. Today we will recall Dr. Bergman to resume his testimony. We have a great number of questions to ask based upon our examination of records. But at the outset, it is important for our audience to understand that the primary purpose of our hearing is to examine issues related to Federal policy on medicaid reimbursement for nursing home care. We examine the nursing home system in each State. After making a diagnosis, we then prescribe a list of remedies or recommendations. From this preliminary examination of the data I can tell you that the nursing home system in New York is sick. The primary problem (3035) 3036 seems to be the cost-plus reimbursement formula which permits gen- erous gifts of taxpayers' funds to flow into the pockets of nursing home operators. The greedier the operator,