Wednesday, August 29, 2007

PA AG Fines "Homeward Bound" Provider

On August 22, 2007, the Pennsylvania Attorney General's Office issued a press release entitled "Attorney General Corbett announces $259,000 settlement with Homeward Bound for defrauding elderly", which reported a negotiated resolution of consumer protection charges against a company which allegedly defrauded elderly customers.

A Pennsylvania-based home health care provider has reached a $259,000 settlement with the Attorney General's Elder Abuse Unit for defrauding elderly consumers by misrepresenting the actual service it provided to its customers.

Attorney General Tom Corbett said the agreement was reached with Homeward Bound Services, Inc., which is based in Drexel Hill, and its affiliates. From 1999 to 2005, Homeward Bound allegedly deceived elderly Pennsylvanians into purchasing a non-medical home health care service program by marketing it as a long-term care insurance policy.

"Homeward Bound deliberately deceived elderly Pennsylvanians living on a fixed income by selling them a product they believed would keep them from entering a nursing home or assisted living facility," Corbett said. "It is appalling to believe that a company could prey on the fears of some of our most vulnerable citizens to line its own pockets."

Corbett said Homeward Bound allegedly used current and former insurance agents to market and sell its non-medical home care program to elderly consumers who did not qualify for or were looking for a cheaper alternative to long-term care insurance. * * *

This case demonstrates the confusion -- and also the deception -- that can occur regarding long-term care coverage versus home health care provisions. This case was resolved under charges of "Consumer Protection Law violations", rather than regulatory violations.

According to the Assurance of Voluntary Compliance (AVC), the "Assisted Living Service Agreement" promised to provide similar benefits and protections as long-term care coverage, such as meal preparation, cleaning, laundry, grooming, bathing, etc., but with easier access. However, Homeward Bound did not directly provide these services, and instead contracted with third-party providers and would only pay for services that were pre-authorized.

Corbett said Homeward Bound convinced consumers that the product was like long-term care insurance, but represented to the Commonwealth that the product was fee-for-service, creating confusion among consumers that would decrease the likelihood that they would request services. * * *

What is not clear from a quick reading of the the press release is whether the "fine" would ever be paid.

This was pointed out in an article posted by on August 24, 2007, entitled "Delco health firm fined 249G", by William Bender. It noted: "The company can avoid paying the $249,000 fine if it complies with a strict set of demands outlined by the state."

Such compliance may be a problem for this company. That article also reported enforcement actions being conducted in other states against "Homeward Bound":
Last week [August 14, 2007], New York Attorney General Andrew Cuomo sued the company and obtained a restraining order to prevent it from selling its health plans there.

Cuomo said the company entered into agreements with more than 600 New York seniors and didn't deliver on its promises.

Similar cases have been filed against the company in Florida, Washington, Illinois, Wisconsin and California, according to Shonna Clark, a spokeswoman for Corbett.

"They're pretty much doing this across the country, it seems," Clark said.

The Post-Standard (Syracuse, NY) reported about New York state's separate enforcement action against the "Homeward Bound" company, in an article entitled "Company accused of cheating elderly", by J. Mulder, posted on August 14, 2007:
[New York state Attorney General Andrew Cuomo]'s office announced today it is suing Homeward Bound Services of North America and its owners. The lawsuit contends the Drexel, Pa., company used deceptive and fraudulent practices to sell agreements to seniors.

A temporary restraining order barring Homeward Bound from selling or renewing agreements across the state was signed today by Supreme Court Justice Joseph D. Mintz in Buffalo. * * *

The lawsuit said elderly consumers like [Mildred] Butterworth thought they were pre-paying at discounted rates for a variety of home care services that would keep them out of nursing homes. Very few seniors, however, benefited from the agreement, according to Cuomo's office. * * *

The victims cumulatively paid more than $1.2 million to Homeward Bound for agreements that proved to be virtually worthless, the office said. * * *

I am reminded of the lyrics written by Paul Simon for the 1966 hit pop song "Homeward Bound", performed by Simon & Garfunkel, which invoked the loneliness of a stranded entertainer.

But now it is some seniors, who thought they were comfortably "homeward bound", who instead are stranded.