Conversion of Senior Living Operations from Non-Profit to For-Profit – What are the Limits?

A recent New York Times article sheds light on a frequent topic I’ve encountered in my own research on the convergence of elder law, contract law, and nonprofit organizations law:  when will a nonprofit nursing home or similar senior living operation be “allowed” to convert or sell-off to a for-profit operation?  And what if the “real” plan is to convert to an entirely new type of for-profit operation? 

The potential for conversion appears to be the heart of a dispute over two nonprofit nursing homes in Manhattan, where State and City authorities are seeking to prevent their purchase by a for-profit company known as Allure Group.  From the New York Times:

Citing misrepresentations and broken promises, the New York State attorney general’s office is seeking to prevent the purchase of two nursing centers by a company that was involved in transactions that put a Manhattan nursing home in the hands of luxury condominium developers….

 

“Allure made clear and repeated promises to continue the operation of two nursing homes for the benefit of a vulnerable population — promises that proved to be false,” said Matt Mittenthal, a spokesman for the attorney general, referring to Rivington House and a nursing home bought by Allure in the Bedford-Stuyvesant section of Brooklyn, which were closed within a year of a court petition’s being filed. “Until we conclude our investigation, we will object to Allure buying additional nursing homes.”

 

In New York, any nonprofit seeking to sell its assets must petition a state court for approval; the attorney general reviews all such requests and can object if there are grounds to do so. The court has the final say….

For more, read New York Attorney General Seeks to Halt Sale of 2 Nursing Homes Amid Inquiries.