The Group Home Racket: How a Financial Model Masquerades as a Human Service

Originally published in Dollars and Sense in December 2021.

The Biden administration’s efforts to expand “human infrastructure” in parallel with the “hard infrastructure” of bridges and tunnels aims to alter the texture of daily life for permanently disabled adults. Disabilities come in different forms and degrees. People who carry a “developmental” or “intellectual” disability into adulthood are themselves a heterogenous bunch, but they tend to share diminished capacities to live on their own and to care for themselves. The administration has proposed a change in the formula behind Medicaid reimbursements to U.S. states for their residential care. The change would widen their access to home- and community-based services over and against the “group homes” where they now live alongside residents not of their own choosing, under the supervision of paid caregivers not of their own ilk.

The need to move disabled adults out of group homes reflects the public health exigencies of the pandemic. Congregate care is infectious. The desire of disabled adults to remain in their familial homes or to occupy their own private apartments reflects the assimilationist goals of the disability rights movement. The push for recognition of disabled adults, meanwhile, reflects the moral convictions of progressive Democrats. A population that does not vote, tweet, or shop normally counts for nothing in the calculation of national priorities.

Case closed, then? A clear-eyed analysis of the group home racket as it now operates in the United States yields some misgivings about this latest phase of “de-institutionalization.” A strange and ungainly term that first appeared in the 1970s, de-institutionalization signals a policy preference for smaller, residential dwellings over large, state-operated institutions. The consequences of de-institutionalization have been difficult to assess for a population that struggles to speak for itself and that attracts virtually no attention from journalists. No national history of de-institutionalization has been published. Then, too, whatever the fate of the current federal reform push, U.S. states will continue to exercise discretion over how disabled adults are treated, which means variability under the radar. (Medicaid reimbursements are nudges, not sovereign edicts.) Even more difficult to see is how the private instruments of this enlightened human service concept have hijacked its ideals and turned them toward a financial scheme.

Creating a Care Economy

A lot of Americans know little of the pertinent history of the treatment of disabled adults in the United States. In the 19th century, our forebears interned hundreds of thousands of disabled adults in state-run asylums that resembled internal colonies. Local newspapers and magazines periodically exposed spates of injuries and deaths that ensued from the horrific conditions in the state institutions. The shape of the system changed over the decades. But a consensus on its legitimacy went unchallenged for more than a century. Then, in the 1970s, a rolling fiscal crisis combined with a postwar critique of totalitarian institutions to put the consensus under pressure. State governments from Michael Dukakis’s Massachusetts to George Wallace’s Alabama and Ronald Reagan’s California abruptly manumitted the captives from the institutions and began to resettle them in communities. The goal of de-institutionalization was “normalization.”

That a paradox has dogged de-institutionalization is less well known. The upwelling of shame and anger that engulfed the state institutions in the 1970s reflected a powerful social movement around disability. This conscience-stricken movement, though, found its vehicle in an oxymoron: the “human service corporation.” Until this time, disability provision had been delivered either by state-operated facilities or by private charities. The new service model of the public-private partnership mixed the government’s responsibility of protection with the corporation’s interest in profit. The conflict between care and profit has placed residents at perennial risk for abuse and neglect ever since.

The same kind of paradox has shaped the broader chronicle of American social reform. A burst of shame assails the humanitarian conscience and impels policy reversals, which then wind up serving the narrow class interests of the reformers. The campaign to abolish chattel slavery, for example, followed an arrow of humanitarian sensibility that rose over Europe and America after 1750. Then the growth of industrial methods of production ushered the newly emancipated into “wage slavery” at factories owned by antislavery partisans and agitators.

De-institutionalization, like emancipation, has entailed a vast and inarguable improvement in conditions, by any standard of comparison. Thanks to the social movement behind de-institutionalization, a presumption against coercion has girded the seams of disability law, education, medicine, and policy. Yet this same social movement created the first publicly financed, privately operated proprietorships in the history of American disability provision, yoking disabled adults to a phalanx of human service corporations that incubate self-enriching executives, trammel trade unions, and pinch profits from spheres of social existence previously spared the crucible of commerce.

The combustible mix of care and profit has also enabled an epidemic of violence against disabled adults that de-institutionalization was meant to remedy. In 2015, a ProPublica investigation tracked deaths in group homes operated by AdvoServ, an operator of group homes in several states and an example of how the policy preference for ever-smaller dwellings is compatible with ever-larger corporate providers. “The sprawling system of privately run residential programs is quietly—and with few repercussions—amassing a record as grim as the institutions it replaced,” reporter Heather Vogel concluded of AdvoServ’s track record in Florida, Delaware, and New Jersey. More recently, a series of audits by the Inspector General of the U.S. Department of Health and Human Services (HHS) has found violations of health and safety requirements in provider agencies across the nation—in Alaska, Connecticut, Illinois, Iowa, Kentucky, Louisiana, Maine, Minnesota, Mississippi, Pennsylvania, Texas, and Wisconsin.

A Big Problem for a Long Time

Massachusetts, where I live, opened America’s first state institution for disabled persons in 1851. De-institutionalization began here in 1972. Today, private providers operate more than 90% of its group homes. In 2016, the U.S. Department of Health and Human Services accused the Massachusetts Department of Developmental Services and the group homes throughout the state of neglecting to report and investigate hundreds of clients’ visits to hospital emergency rooms for myriad examples of neglect and abuse, including gangrenous bedsores, second-degree burns, cracked spinal cords, swallowed razor blades, lacerated skulls, and drug overdoses. The pandemic turned the seamy side of agency operations from inscrutable to invisible. Nancy Alteiro, the executive director of the Massachusetts Disabled Persons Protection Commission (DPPC), says the quarantine further hampered her commission’s capacity to police the provider agencies. “Abuse reporting went down as the state closed,” she told me, “and when the state began to open up again last summer, we saw an increase in reporting. When the state closed down again, we saw a decrease in reporting. So that has been a big concern for us.” Then again, the high number of reports of abuse during normal times is also concerning. The DPPC receives approximately 13,000 allegations every year. “There’s no day that goes by that we don’t receive reports,” Alteiro says. “Seven days a week, 365 days a year. When you see the numbers, they’re staggering. It’s been a problem for a long time.”

Diffuse epidemics tend to find a frame in statistics, which paralyze the senses. Then only the most flagrant of cases—a violent death or spectacular act of willful corruption—stands a chance of arresting the attention of the public. But there is another, better way to apprehend the reality of the human services system in disability. Consider, in this respect, Toward Independent Living and Learning (TILL), one of the provider agencies that DPPC monitors. TILL caters to adults with developmental disabilities in 60 group homes located in 27 cities and towns in greater Boston. Receiving all of their funding from the government—which amounts to approximately $40 million annually—and serving as one of the state’s seven Autism Support Centers, TILL is a stable, trusted, middling agency, neither notorious nor celebrated—one of hundreds of similar organizations operating quietly across the country. Beneath its unremarkable reputation lurks a disconcerting truth: Toward Independent Living and Learning exemplifies the quotidian corruption that mars the current, conflicted system.

TILL’s founder, Dafna Krouk-Gordon, is president and treasurer of its board of directors as well as its executive director and highest-paid employee. Krouk-Gordon has occupied these positions since 1980, when she began TILL in a halo of high-mindedness. “TILL was founded in response to the deplorable condition into which we had let our state schools for people with mental retardation get, to the point that over 8,000 people were being warehoused in large institutions all over Massachusetts just because they were seen to be a little bit different and not fitting into society,” Krouk-Gordon intoned at the grand opening of a TILL group home in Charlestown in 2016. “Together with other colleagues who felt equally horrified by the conditions to which the state schools had deteriorated,” she continued, “we began building a new community-based system.”

Krouk-Gordon took a hand in shaping that system. She served two terms as a member of the Governor’s Commission on Mental Retardation, which the executive created in 1993 to monitor de-institutionalization. She served as a member of the board of the Association of Developmental Disabilities Providers and one term as president of the Provider’s Council, the human service industry’s leading professional association in Massachusetts. Boston Magazine toasted her in its 2018 gallery of “faces of women-led businesses.”

Krouk-Gordon, like many executives in comparable human service positions, quadruple-dips as chief executive officer and highest-paid employee as well as president and treasurer of a small, inert, unchanging board of directors. While only Krouk-Gordon knows how much money her benevolence garners her, available records disclose a lucrative compensation package by any standard. The Massachusetts Comptroller’s Office discloses the state’s payroll expenses to the public, but no such mechanism reports the compensation of private contractors, even those nonprofits, like TILL, that depend entirely on state monies. Self-reporting in tax returns on file at the charities division of the Massachusetts Attorney General’s office does afford some partial, belated information. In 2019, for example, Krouk-Gordon reported receiving $483,651 in compensation. State regulations cap the salaries of agency executives. But a loophole permits agency heads to speculate in the real estate where their publicly funded group homes operate. According to the documents on file at the Secretary of State’s office, Krouk-Gordon is a general partner in Specialty Management Services, LP, a real-estate management company. Property records at the Registry of Deeds show that company headquartered at her home in the tony suburb of Lincoln, Mass. Financial statements with the Operational Services Division say the nonprofit TILL (controlled by Krouk-Gordon) pays the for-profit Specialty Management Services, LP (again, owned by Krouk-Gordon), more than $14,000 per month to lease residential properties.

The workers at TILL’s facilities staffing the front lines of the care economy make comparatively little. Job postings set wages at $14.50 for entry-level work as a “Day Support Professional” in a TILL group home. Krouk-Gordon’s hostility to their prospect for collective bargaining reflects a common stance in the industry. Of the human service workers employed by the Massachusetts state government, 50% belong to a union. In the private agencies, like TILL, just 10% of workers engaged in the same fields are unionized. Those employed by the state received hazard pay for pandemic work; those employed by the private agencies did not. The Service Employees International Union (SEIU) has organized approximately 6,000 private agency workers. “We’ve been doing this for 25 years,” Cliff Cohn, the chief of staff of SEIU’s Local 509, told me, “but TILL is one of the worst agencies in running anti-union campaigns.” TILL, Cohn alleged, holds captive-audience meetings telling workers how awful their work lives would become were they to attempt to form a union. TILL’s anti-worker animus is long-standing. In 1992, the Wage and Hour Division of the U.S. Department of Labor sued TILL in U.S. District Court for violating the Fair Labor Standards Act. Krouk-Gordon admitted she cheated 160 employees out of $120,000 in overtime pay.

Krouk-Gordon complains that underfunding by the state encumbers TILL, yet when rates increase, her salary increases out of proportion. TILL’s state funding rose by 15% between 2016 and 2019. Krouk-Gordon’s salary rose by 29% in the same period, and her administrative expenses rose by 31%. Still, the Biden administration’s response to the pandemic has delivered a windfall to TILL, as well as to many other privately run human services agencies. The American Rescue Plan yielded a $300,000 grant from the HHS Provider Relief Fund and another $7 million in forgivable Paycheck Protection Program loans.

Time will tell where the money goes—or maybe not, if TILL’s record of financial misreporting holds true. In 2002, the Massachusetts State Independent Auditor accused TILL of improperly charging a range of costs to state contracts, including gardening supplies, silk flowers, an $800 table, a sofa from Pier 1 Imports, a lease on a new Jeep Grand Cherokee, and a $25,000 check to an unidentified person. The auditors also found hundreds of improprieties implicating all of TILL’s program services. They identified $1 million “in unallowable and questionable related-party relationships and transactions,” $3 million in “undocumented payroll costs,” and $300,000 in “questionable salary and vehicle expenses for TILL’s President.” They found that Krouk-Gordon had concealed the existence of private businesses that she controlled and that enjoyed contracts with TILL. In one case, they found, Krouk-Gordon used state money for a down payment on a property purchased by a private company she controlled. “TILL’s President used funds generated from state contracts for the benefit of the President and other related-party organizations owned by the President,” the auditors charged.

Krouk-Gordon blamed glitches in TILL’s software for the findings. Although she pledged to provide documentation for the $4.3 million that the auditors accused her of misappropriating, she failed to do so. The auditors referred their findings to law enforcement. Yet allegations of misuse of funds persisted. In 2013, another independent state audit “found problems with all $528,681 of TILL’s accounts-payable-period transactions, including inadequate documentation to substantiate that services were properly authorized, inadequate documentation to support billings, and contract funding not being used for its intended purposes.” And a third audit in 2019 by MassHealth’s Office of Long-Term Services and Supports accused TILL’s Personal Care Management program of violating a half-dozen financial laws and regulations. TILL could not demonstrate that it had performed all the work for which the state had paid, according to the audit.

No Discipline, No Punishment
This pattern of unpunished financial transgressions mirrors the handling of neglect and abuse accusations against TILL. The DPPC received 79 allegations against TILL in the two years before the pandemic. The most numerous by far were classified as “injuries of unknown origin.” These were often discovered during a shift change or a transition between a day program and a group home. They run the gamut from lacerations, contusions, bumps, and burns to sprains, fractures, and protuberances found from head to toe. Typically, by the time a witness noticed, the bruises were yellowed, the lacerations scabbed, the burns festered with pustules.

According to the allegations filed with the DPPC, one woman disclosed “a large hematoma on the back of her head” and pleaded for help from her caretaker, who “screamed at her and told her to return to bed.” Hours of internal bleeding later, the wound warranted emergency treatment in a hospital. Another woman with a contracture deformity in her legs grew “fearful, crying to a point of only being able to shriek” as her caregiver lifted and lowered her legs maladroitly in and out of her bed. A man finished eating his Friday lunch and rose unsteadily from his table. Tangling his legs in his chair, he tripped and fell, pinioned to the floor. He visited the emergency room for treatment. The following Thursday, a caretaker asking him in front of a group of residents whether he planned to fall again the next day triggered a burst of ridicule. “The victim felt really bad,” the report states. “It hurt his feelings.”

The variety of the allegations throws cold light on the rosy picture of residential life painted in its brochures. A TILL staffer edged a woman’s wheelchair into a patch of grass, causing it to tip forward and propel her out. The ground broke her collarbone. A caregiver treating conjunctivitis placed a boiling hot cloth over a man’s eyes, scalding his eyelids. Afterward, according to the allegation, the man “does not have feeling in his face and can’t give off any sign that his eyes are burning.” A TILL driver left an autistic woman standing alone on the porch of her group home for an hour. On March 20, 2020, a week after the governor’s Declaration of Emergency and Stay-at-Home Advisory, a nonverbal, autistic man walked through an unlocked, unsupervised front door at a TILL group home. The Lowell Police Department found him perambulating the streets and returned him to the home before anyone there knew he had gone missing.

Each of the allegations described is vitally important to the aggrieved party. Of interest from a more general standpoint is how TILL’s management structure makes it possible for these abuses to continue at TILL with practical impunity. Krouk-Gordon enjoys total personal control over a nonprofit corporation funded entirely by taxpayers yet untouched by auditors, shareholders, unions, independent directors, or regulators. She exploits the salary cap loophole for her personal benefit, while the Department of Developmental Services (DDS) turns a blind eye.

These abuse and neglect allegations pile up with no consequence. The doctrine of charitable immunity—which was entered into law in the 19th century to protect private philanthropists from liability—effectively gives government-funded boondoggles like TILL a pass in a handful of states, including Massachusetts, which still affords nonprofits limited immunity from civil liability, capping tort damages at $20,000. But because the doctrine also protects big hospitals from medical malpractice, the statute is likely to stay in place. And this little hiding place in the law gives TILL no financial incentive to undertake measures that are known to reduce abuse and neglect—such as increasing pay or improving staff retention. Docket reports in the Massachusetts Trial Courts show that the small number of civil lawsuits filed against TILL leave pro se litigants’ prayers unanswered; the claims are quickly settled or dismissed. At every point of conflict, a mechanism springs to the fore to protect unaccountable executives from any meaningful consequences.

Licensed and Certified for Abuse

A close examination of TILL’s 2019 licensure and certification report—the last before the pandemic—discloses fault lines in the state’s regulations that ensure additional injuries will occur. The report, which focuses on identifying sources of potential harm for patients, shows TILL’s group homes failed to meet the state’s threshold of compliance in half of the indicators reviewed. One of the deficient indicators, “Medication Treatment Plans,” stands out.

DDS’s inspectors found 41% of the Medication Treatment Plans—required written records on each client’s medications and their possible side-effects—on file in TILL’s group homes contained erroneous or insufficient information. DDS followed up and found that the percentage of deficient plans was actually closer to 45%. DDS, in other words, found that TILL did not meet the state’s requirement to maintain Medication Treatment Plans. By this time, the DPPC had received five allegations of harm stemming from TILL’s deficient Medication Treatment Plans. In one report, a TILL caregiver gave a client four wrong medications—and as a direct result, the person “likely faces a lengthy hospital stay.” According to another report, “The alleged victim was given incorrect medication. The medication was meant for another resident. The alleged victim’s heart rate and blood pressure were noted to be low. The alleged victim kept repeating the word ‘scared.’ The alleged victim was transported to the hospital, and a medication was provided. The first medication list had errors, and another was provided later. The alleged victim was admitted to the ICU.” According to a third report, a TILL caregiver force-fed pureed meals that contravened the client’s dietary restrictions. The client contracted aspiration pneumonia and “passed away at the hospital from an unknown cause of death.” DDS followed up and found the number of deficient plans had increased. Yet DDS recertified TILL.

I asked DDS whether its agency licensure and certification processes include individual allegations on file at the DPPC (which records allegations of actual harm). “I’m not sure what you’re asking,” spokesperson Christopher Klaskin replied. “DDS licensing and certification processes apply to agency operations and site locations—not individual employees.” There you have it: Individual injuries, assaults, and errors, no matter how predictable, numerous, or grave, are apprehended in isolation from operations. Accusations of specific abuses by individual TILL employees are never blamed on the failure of TILL’s leaders to comply with general regulations. So, TILL sees no incentive to prevent abuse and suffers no consequence when it happens. With minor variations, the same regulatory sieve passes for accountability throughout the disability provider industry in the United States.

Profits vs. Dignity

Massachusetts legislators have not undertaken a comprehensive review of group homes in this millennium. When last they looked, in 1997, an oversight committee bemoaned “problems of substandard care and abuse” enabled by obstructionist agencies who “used client confidentiality as a means to obscure the facts” and to hinder police inquiries. “Despite its public commitment to community placement,” the committee report observed, the privatized system “has in many cases created an artificial, contained, and isolated environment that does not include the local community.”

De-institutionalization was not a mistake, in other words, but a misnomer. Massachusetts, like other U.S. states, transferred persons with disabilities from a few large public institutions to many smaller, private ones under cover of the magic word, “community.” The asymmetry of power in the state institutions replicated itself on a smaller scale in group homes. Clients depend on the provider agencies to keep them safe, furnish them quarters, and to learn and implement their treatment protocols. The agencies cluster them by diagnosis and regiment their social activities. A disenchanted resident may voice a concern and even elect to fire an agency in order to be rid of abuse—an important prerogative—but only upon the peril of not finding another place to live. In 2015, as if to illustrate this burden, the mother of a young woman with a rare genetic disorder living in one of TILL’s group homes in Danvers, Mass. complained that her daughter’s residence looked grimy and smelled filthy. Her daughter, she further alleged, did not receive sufficient food and water. Krouk-Gordon retaliated by barring the mother from visiting. The daughter, threatened with eviction, suffered a concussion and black eye upon falling during a fire drill in the middle of the night.

The proposed federal investments in “human infrastructure” may indirectly reform agencies like TILL. Legislation debated in Congress this fall aimed to improve the bargaining power of direct care workers and to create opportunities for ombudsmen to answer directly to clients and families. But additional reforms are desperately needed: Establish a mechanism to disclose the full compensation of industry executives. Forbid them from owning the real estate beneath their publicly funded operations. Create a metric for staff turnover and decree that an agency falling below the standard shall forfeit government contracts.  Introduce an exception in charitable immunity statutes everywhere they exist for nonprofits that accept Medicaid.

Such fixes—even if they came to pass—are doomed to uneven enforcement. Agency leaders have learned how to stay upwind of the abuse and neglect accusations that swirl around their operations. For example, last year Massachusetts Governor Charlie Baker signed Dana and Nicky’s Law, which established a blacklist of workers who have been fired for abusing people with developmental or intellectual disabilities. The law intends to prevent abusers who have been fired for cause at one agency from rejoining the workforce at another one, and an agency that flouts the law can face sanctions. But the law adds just one level of penalty to a passive investigative process that is preoccupied with scapegoating individual workers—not holding the agencies themselves accountable. I asked Matthew Ritter, the Legislative Director for the State Senator who sponsored the bill, about its narrow scope. “Everyone who worked on the bill agreed that this legislation alone is not enough to prevent abuse,” Ritter told me, confirming that the bill applied “solely to the individual disciplinary process.” Attempts to incorporate mechanisms to expand oversight of the agencies ran into obstruction by state legislators, Ritter added.

Will patching up the “innovation gap in caregiving” through the tactical placement of body sensors, video cameras, and surveillance apps help reduce abuse? Maybe so. But the underlying dilemma shall stay in place. As long as social relations between providers and clients take the form of a transaction, an axiom of efficiency prevails. Neglect is always cheaper than care, and cruelty is a tolerable cost of doing business. A more comprehensive and lasting program of policy preferences for direct spending (such as child tax credits and stimulus payments) over investments in institutional intermediaries would reduce reliance on provider agencies like TILL. A single-payer health-care system that abolished them would be even better. Until then, it is difficult to see how “human infrastructure” in disability will not remain hostage to the corruption endemic to the political economy that succeeded the state institutions. Reforms that are made with the best of intentions fall under the shadow of a grim expectation that, left alone, some workers will inevitably prey on persons with disabilities—battering, stealing, raping, ridiculing—while most executives will inevitably exploit them both. What kind of society devalues and discounts disabled people, as if their lives bear no intrinsic dignity?