Is Purchase of Directors and Officers Liability Insurance by a Nursing Home An Allowable Cost ?
In Mercy-Douglass Center, Inc. v. Department of Public Welfare, 144 Pa. Commw. 451, 601 A.2d 913, 916 (Pa. Cmwlth. 1992), a medical assistance (MA) nursing home provider appealed the Department's disallowance of reimbursement for the cost of directors' and officers' liability insurance.
This Court found the disallowance unreasonable because under the Department's Provider Reimbursement Manual, the purchase of such coverage was a common and accepted expense for nursing homes.
Such liability coverage is encouraged by the Pennsylvania Non-Profit Corporation Law, 15 Pa.C.S. 5741-5747, and its purchase was considered an allowable cost under the Department's regulations.