The nursing home, based in New York, is being sued by a family member of an 85 year old woman who is living at the residence.
They are allegedly seeking a 'seven-figure' sum in damages.
Bernice Youngblood, who suffers from dementia, was allegedly victim to 'disgraceful sexual perversion' when she was given a lap dance by a male stripper whilst at the home.
The 85-year-old's family have decided to sue the residence after Bernice's son discovered a picture of a semi-naked man gyrating in front of her - whilst she stuffed dollar bills into his white underpants.
According to the family, her money was meant to be kept locked away, and were concerned when a nurse tried to take the photo back when her son found it.
The Lawsuit reads: 'Bernice Youngblood was placed in apprehension of imminent, offensive, physical harm, as she was confused and bewildered as to why a muscular, almost nude man, was approaching her and placing his body and limbs, over [her].'
Despite this, Ms Youngblood cannot recall the details of the incident.
The Nursing home on Long Island have said that they paid the $250 fee for the entertainment event.