Governing body failed to oversee administrator, payroll, and facility bank account
Summary
The deficiency involves the governing body’s failure to provide effective oversight of facility management and financial operations, including payroll and the primary facility bank account into which Medicare, Medicaid, insurance, and private resident payments were deposited. Facility policy dated 10/9/2025 stated that the governing body was legally responsible for establishing and implementing policies for management and operation of the facility, appointing an administrator who was responsible for management, and ensuring a process for the administrator to report on audits, budgets, staffing, and supplies. The facility was unable to produce any governing body policy that was in effect prior to 10/9/2025. Board members and the chairman described their role as mainly policy-making and oversight, with the administrator as the only employee of the board, but they relied largely on verbal reports and limited written financial information from the administrator. Governing body minutes showed that payroll had been brought back in-house after previously being outsourced, and that a new bookkeeping system was implemented. Over multiple meetings, the board received high-level financial reports from a CPA, including reports of profits and losses, but there were gaps in financial reporting, such as a meeting where financials were not reported due to the absence of the administrator and CPA. The minutes also documented that personnel manuals from 2022 and 2023 were never presented to the board for approval, even though earlier manuals had been approved, and that key office positions such as Social Services, Human Resources, and Business Office Manager were vacant. Board members later learned that policy manuals had been revised without board approval and that multiple versions of the policy manual were in circulation. A spreadsheet from CPA Firm #1 covering a 19‑month period showed that the administrator and two bookkeeping staff cashed out a total of $142,627.44 over the maximum benefit allowed by facility policy. An analysis from the CPA identified three employees who far exceeded the window for payroll payouts after payroll was brought back in-house and recommended that the board review prior auditors’ accruals for vacation, holiday, and sick leave and interview prior administrators about vacation restrictions during COVID. The chairman later acknowledged that he did not think the board had reviewed those accruals or discussed the CPA’s letter. Interviews with board members revealed that their primary checks and balances were annual audits and review of summarized financial statements, that they did not have detailed visibility into payroll or individual salaries, and that they were unaware of staff turning in hours worked at home. The board members stated they were blindsided when an external auditor identified significant unexplained salary increases for the administrator and two bookkeeping staff, and they acknowledged that the governing body had “dropped the ball” on ensuring the administrator was held accountable and that policy changes and financial operations were properly reviewed. The failure of the governing body to oversee the administrator, payroll system, and bank account was determined to have the potential to affect all 45 residents in the facility. The chairman reported that during the tenure of a prior administrator, payroll had been outsourced to an out-of-state firm without the board’s knowledge, which contributed to that administrator’s departure. Afterward, the administrator and a bookkeeper recommended bringing payroll back in-house, and the board accepted their assurances that there were no problems. The chairman stated that he questioned the administrator and visited the facility but relied on the information provided and did not receive the level of financial detail he felt was needed. Board members described that they received total salary figures as a blanket line item and general expense breakdowns, but not detailed salary registers or clear tracking of compensated absences. One board member stated that the governing body’s oversight and visibility into operations were limited and that they had not been given copies of the policy manual, despite the policy requiring a process for holding the administrator accountable for reporting on management and operations. Another board member linked the unapproved 2023 personnel handbook changes, including wording that allowed staff to cash in time, to the financial issues, noting that the way the policy was written contributed to increased payouts. Throughout interviews, board members and the chairman acknowledged that they relied heavily on trust in the administrator and did not implement or follow through on robust checks and balances to detect or prevent mismanagement of payroll and the facility’s bank account.
Penalty
Resources
Below are regulatory guidelines relevant to this citation:
DSD Not Approved and Reference Checks Incomplete The facility allowed an LVN to function as DSD and provide CNA orientation and in-service training without Department approval, even though the approved NATPN listed a different DSD. The LVN stated she had not received approval and had not applied for it, while the ADM said the facility had two full-time DSDs and the LVN worked the p.m. shift. The facility also lacked a policy for former employment reference checks and hired staff without properly verifying prior employment. Personnel files showed references from friends, spouses, and co-workers instead of former employers, and the DON stated these sources could not confirm job performance, length of employment, resident abuse history, or rehire eligibility.
The facility failed to develop and implement policies and procedures for residents independently signing themselves out and leaving without supervision. The CQA Director stated nurses ask the resident’s expected return time, check the elopement book, and may send medication, but she was unaware of a specific policy for assessing whether a resident could sign out independently or with supervision. She also stated the decision would rely on resident rights, the MDS, the elopement assessment, and BIMS, and that a refusal to sign out could be treated as AMA if the BIMS score was high enough.
Lack of Governing Body Oversight: The facility failed to have a governing body in place to oversee the Administrator and facility operations. Records showed key program agreements signed by the Administrator as Owner/Administrator, and the Administrator provided a written statement identifying self as the sole governing body. The DON and an RN stated the Administrator handled all banking and monies.
Failure to Timely Report Resident Fall With Fracture: A resident with dementia, OA, and unsteadiness on feet fell and sustained a nondisplaced distal R femur fracture, but the event was not reported to CDPH within the facility’s required timeframe. The admin acknowledged the unusual occurrence should have been reported per policy and was not submitted until much later.
No Licensed Administrator in Place: Record review and interviews showed the facility had no current ADM listed and had been without a licensed ADM for over 30 days. The former ADM stated his license had been pulled from the building and a new ADM had not been officially onboarded, while the HRD, SW, AD, and OM all confirmed there was no ADM currently in place and no clear start date for one.
Failure of Governing Body to Ensure Safe Facility Operations: The governing body did not ensure the facility was managed in a manner that protected the safety, dignity, and overall well-being of 45 residents. Survey findings identified widespread breakdowns involving psychotropic meds, resident rights and grievances, abuse allegations, MDS/PASSR accuracy, care planning, physician notification, bed rail safety, medication management, and storage of drugs and biologicals. Administrator A stated she was told there were serious issues to address and that multiple corporate consultants were being used for support, while the Administrator and DON job descriptions assigned them responsibility for overall compliance and nursing operations.
DSD Not Department-Approved and Employment Reference Checks Not Properly Completed
Penalty
Summary
The facility failed to ensure that the designated Director of Staff Development (DSD) was approved by the Department to serve in that role. The approved Nurse Assistant Training Program Notice identified a DSD other than LVN 1, and the facility was required to notify the Department within 30 calendar days after employing a new DSD. Records showed LVN 1 began working at the facility as an LVN, was later changed to DSD on the payroll action form, and was listed on the facility’s Department Heads listing as the DSD. During interviews, the Administrator stated the facility had two full-time DSDs, with LVN 1 working the p.m. shift, while LVN 1 stated she had been functioning as a full-time DSD and had been highly involved in CNA in-services and training. LVN 1 stated she had not received Department approval to serve as DSD and had not submitted an application for such approval. The facility also failed to develop and implement policy and procedures requiring former employment reference checks before hire. The Administrator stated the facility did not have a policy addressing employment reference checks during the new employee hiring process. Review of LVN 1’s personnel file showed the Reference Check Control Form was blank for employment references, even though LVN 1 had already been hired. The DON stated the references documented were only a friend and former co-workers, and that these sources would not be able to provide relevant information such as length of employment, job performance, history of resident abuse, or eligibility for rehire. Additional personnel files showed the same pattern. LVN 4’s reference check form listed the applicant’s wife and two co-workers as references, but did not identify their job titles or positions. The DON stated the facility should verify work experience and any history of resident abuse through appropriate employment references and document the name and title of the person contacted. The DSD’s own personnel file also showed references from friends and a co-worker rather than former employers. The Administrator stated that friends or co-workers could provide information about whether a potential employee had a history of resident abuse, and that a criminal background check with no adverse findings was sufficient after reviewing the facility’s abuse, neglect, and exploitation policy.
Lack of Policy for Residents Signing Themselves Out
Penalty
Summary
The facility failed to ensure policies and procedures were developed and implemented regarding residents independently signing themselves out of the facility and leaving without supervision. During an interview, the Corporate Compliance Officer/Quality Assurance Director stated that when residents sign themselves out, a nurse asks their expected return time, checks the elopement book to confirm the resident is not a risk, and may administer or send medication if needed. She also stated that if the resident did not return, the nurse would follow up by calling to determine the return time. When asked about a policy for assessing whether residents could sign themselves out independently or with supervision, she was unaware of a specific policy and stated that resident rights included the ability to sign out if capable. She further explained that residents who could sign out independently would be presumed capable of managing ADLs and would be determined by the MDS and Elopement Assessment. She stated that if a resident refused to sign out, it would be considered AMA if the BIMS score was sufficiently high, and that the facility would consult the MD and refer the case to DHR if a resident left and the facility considered it an inappropriate placement.
Lack of Governing Body Oversight
Penalty
Summary
The facility failed to have a governing body in place to oversee the Administrator and the operations of the facility, affecting all residents residing within. Record review showed documents related to participation in Arkansas Medicaid, the Arkansas Nursing Home Program, and a Health Insurance Benefit Agreement, all signed by the Administrator as Owner/Administrator. During an interview, the Administrator provided a written statement identifying the Administrator as the sole governing body of the facility. In interviews, the DON stated the Administrator handled all banking and everything, and RN #2 stated the Administrator handled all monies and was the owner and Administrator.
Failure to Timely Report Resident Fall With Fracture
Penalty
Summary
The facility failed to follow its policy and procedure for reporting unusual occurrences to the State Agency when Resident 1 experienced a fall with fracture on 2/28/26 and the event was not reported to CDPH until 4/30/26. Resident 1 was a [AGE]-year-old female admitted with diagnoses including dementia, osteoarthritis, and unsteadiness on feet. A review of the resident note entry dated 3/2/26 indicated that the resident had a fall on 2/28/26 and x-ray imaging showed a nondisplaced fracture of the distal end of the right femur. The facility policy titled Unusual Occurrence Reporting stated that reportable events affecting resident health, safety, or welfare are to be reported by telephone within 24 hours and followed by a written report within 48 hours. During interview, the administrator agreed the fall with fracture should have been reported according to facility policy and was not reported until 4/30/26.
No Licensed Administrator in Place
Penalty
Summary
The facility failed to ensure its governing body had appointed an Administrator who was licensed by the state to manage the facility and report to the governing body. Record review of the employee list printed on 5/1/26 showed no Administrator listed for the facility. During an interview on 5/1/26 at 8:40 am, the former ADM stated he was no longer the ADM over the building and had his license pulled from the building in March. He stated it had been over 30 days since the facility had had an ADM and that a new ADM had not been officially onboarded. Additional interviews confirmed there was no current ADM in place. The HRD stated the former ADM had pulled his license from the facility and that she did not have information on the next ADM because he had not been hired yet. The SW stated there was no current ADM and she did not know how long the facility had been without one. The AD stated the facility had not had an ADM since March and did not know when one would start. The OM stated he was still in training and would hopefully finish his ADM training in the fall or spring, and he confirmed there was not an ADM currently. He also stated there were no policies for having an ADM.
Failure of Governing Body to Ensure Safe Facility Operations
Penalty
Summary
The governing body failed to ensure the facility was operated in a manner that ensured the safe management and overall well-being of 45 residents. Survey findings from 4/21/26 through 4/23/26 and 4/27/26 through 4/29/26 showed that administrator A and DON B did not ensure management, safety, quality of life, and overall well-being for all residents. The report describes a widespread system breakdown involving resident dignity, informed decisions for psychotropic medications, self-administration of medications, meal choices and preferences, responses to resident concerns after resident council meetings, health information security, grievance filing, allegations of abuse, consent and diagnoses for psychotropic medications, timely reporting of allegations, Ombudsman reports upon discharge, accurate MDS and PASSR assessments, PASSR refiling after new diagnoses, baseline care plans within 48 hours of admission, care plan updates, physician notification of increased blood sugar levels, bed rail hazards, nebulizer and nasal cannula cleaning and storage, bed siderail assessments, orders and consent, call light wait times, controlled substance accountability, medication errors, and storage of drugs and biologicals. During interview, administrator A stated that when she returned to the position she was told by corporate staff that there were serious issues to work on and that corporate consultants should be used for help. She reported that multiple consultants were involved, including social services, dietary, registered dietitian, activities, regional nurse, administrator consultant, area administrators, and the MDS coordinator consultant, with weekly check-ins and standup meetings. The provider job descriptions reviewed stated that the Administrator is responsible for overall direction of facility operations and ensuring compliance with federal, state, and local regulations, and that the DON is responsible for the planning, development, and overall operation of the Nursing Department to ensure quality care 24 hours a day.
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