Local nursing home could cost HUD $1.6M, audit says

Oct. 05--The U.S. Department of Housing and Urban Development could be out nearly $1.6 million after an area nursing home mismanaged funds from a federal program under which HUD insured the home's mortgage, according to a recent federal audit.

The audit by the HUD Office of Inspector General reviewed the books of Mary Scott Nursing Center in Dayton from July 2014 through June 2016. It found the facility wasn't collecting revenue from some residents, missed mortgage payments and spent money out-of-line with program requirements.

HUD wants the facility owner to reimburse the nursing home for hundreds of thousands of dollars that were improperly spent, and put better controls in place.

Jeff Singleton, executive director of the nursing home, responded to the audit with a letter saying Mary Scott was taken over by a new management company called Toledoth Rehab in September 2016 -- toward the end of the period reviewed in the audit -- and is working to fix the problems.

"To pay or reimburse accounts for 'oversights,' some as long as three years ago, would put Mary Scott at risk and especially do disservice to the very people we are trying to help," the letter says. "Urban Dayton's poor and under served population count on Mary Scott for care. That is our mission."

Mary Scott is a century-old, 108-bed facility at 39o1 Campus Drive in Dayton's College Hill neighborhood. In 2001, HUD insured a mortgage on the facility for $5 million, which included a regulatory agreement with the home's management.

But Mary Scott ran into financial problems and defaulted on its mortgage in 2012, according to the audit. It remained behind on its mortgage as of June 2017, putting HUD at risk of having to pay $1.6 million to cover the mortgage.

HUD investigators found the facility was not charging for some residents, and spent $542,443 on ineligible expenses such as replacing the roof, settling lawsuits and reimbursing the state for Medicaid overpayments.

The audit also found lacking documentation for $51,261 in credit card purchases, and thousands of dollars in credit card and petty cash expenditures for employee gifts and awards.

The nursing home also didn't receive $390,583 in resident charges, the audit says. It says this is because Medicaid applications weren't completed properly so Medicaid payments weren't coming.

Singleton didn't return calls for comment this week. But his Sept. 14 letter to HUD says the facility operated "in the black" in 2016 and so far in 2017.

"We understand the audit period covers some of the more bleak times for Mary Scott, but 2016 and 2017 have demonstrated that Mary Scott is recovering, moving towards stabilization and preparing to advance," he wrote.

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