Heightened Risk of Criminal and Civil Liability for Nursing Homes in the Time of COVID-19

Manatt, Phelps & Phillips, LLP

Nursing homes and other post-acute healthcare providers have long been the focus of both government investigations and private plaintiffs focusing on quality of care, staffing and billing issues. Now that such facilities have become ground zero in the COVID-19 pandemic,1 they are attracting even greater scrutiny from various government agencies (as well as, inevitably, the private plaintiffs bar) in regard to whether they were prepared for and provided adequate care to their vulnerable residents during the current health crisis.

The federal government—namely the Office of Inspector General at the Department of Health and Human Services (OIG)—has focused on nursing home quality since well before the pandemic was recognized and became widespread in the United States. The Department of Justice (DOJ) appears to have started to focus on this area coincidentally at the very start of the pandemic. On March 3, Attorney General William Barr announced the launch of the DOJ’s National Nursing Home Initiative, “which will coordinate and enhance civil and criminal efforts to pursue nursing homes that provide grossly substandard care to their residents.”2 Assistant Attorney General Jody Hunt noted that “[t]he Department of Justice has a long history of holding nursing homes and long-term care providers accountable when they fail to provide their Medicare and Medicaid residents with even the most basic nursing services…. Through this National Initiative, we will more effectively and quickly pursue nursing homes that are jeopardizing the health and well-being of their residents.”3 Via the Nursing Home Initiative, the DOJ makes very clear its intention to focus on enforcement actions against nursing homes and other post-acute providers that, among other things, fail to adhere to basic infection control protocols in responding to the pandemic.4

Following the March 3 announcement, and in response to the impact of the COVID-19 pandemic on nursing homes, the federal government took several actions. On April 10, the U.S. Attorney’s Office for the District of Massachusetts and the DOJ’s Civil Rights Division announced an investigation into Soldiers’ Home, a state-funded nursing facility for military veterans in Holyoke, Massachusetts, for allegedly failing to provide adequate medical care to patients, both generally and during the COVID-19 pandemic.5 On March 23, OIG updated its Work Plan in response to COVID-19, identifying nursing home life safety and emergency preparedness reviews as a focus area of the OIG Office of Audit Services.6 On April 19, the Centers for Medicare & Medicaid Services (CMS) announced that it will require nursing homes to report cases of COVID-19 to all residents and their families, as well as directly to the CDC, and codified this guidance on April 30.7 Also on April 30, CMS announced a new independent commission that will conduct a comprehensive assessment of the nursing home response to the COVID-19 pandemic.8 The commission will include leading industry experts, family members, clinicians, resident/patient advocates, medical ethicists, administrators, academicians, infection control and prevention professionals, state and local authorities, and other selected experts, and will provide independent recommendations reports to CMS to help inform immediate and future responses to COVID-19 in nursing homes, including enhancing strategies to improve compliance with infection control policies in response to COVID-19.

Governors and state attorneys general are also taking aggressive action to investigate what happened in nursing homes during the COVID-19 crisis. On April 23, Governor Andrew Cuomo of New York announced that the state Department of Health (NYSDOH) is partnering with Attorney General Letitia James to investigate nursing home violations of executive orders requiring communication with families on COVID-19 test results and deaths. They are directing nursing homes to immediately report to the NYSDOH actions that they have taken to comply with all NYSDOH and CDC directives. The NYSDOH will inspect the facilities that have not complied with the NYSDOH and CDC directives. If the inspector determines that the facilities failed to comply with directives and guidance, not only will NYSDOH immediately require the facility to submit an action plan, but facilities could be fined $10,000 per violation and/or face licensing proceedings. On May 10, Governor Cuomo issued another executive order, requiring all nursing home facilities to test personnel, report positive cases to the NYSDOH and file certificates of compliance.9 Nursing homes that do not comply are subject to daily penalties of $2,000 per violation per day, “and any subsequent violation shall be punishable as if it is a violation of section 12-b of the public health law, with a penalty of $10,000 per violation per day.” The Commissioner of Health has authorization to suspend or revoke operating certificates for noncompliance.

Similarly, the New Jersey attorney general opened an investigation into nursing home deaths in the state after 17 bodies were discovered in a makeshift morgue and over 100 residents were infected with COVID-19 at Andover Rehabilitation and Subacute Care I and II.10 Also in New Jersey, the mayor of Elizabeth recently called on the state’s attorney general to investigate whether a nursing home facility in the city failed to properly notify authorities that a large number of residents had recently tested positive for COVID-19.11 Indeed, Governor Phil Murphy recently announced a rapid response partnership effort with Manatt Health, working alongside the Department of Health, to undertake a rapid review and provide actionable recommendations aimed at protecting residents and staff at New Jersey long-term care facilities in light of the continued impact of COVID-19. As part of that effort, the team will be advising on potential state or federal actions the State may consider.12

While prosecutors in Northern California are investigating a nursing home in Hayward where 13 people have died after contracting the novel coronavirus,13 California’s Department of Health has ordered nursing homes to develop a mitigation plan.14 Due to an outbreak of COVID-19 at a nursing home facility in West Virginia, the secretary of West Virginia’s Department of Health and Human Resources noted that it is investigating deaths at the nursing home facility from COVID-19-related infections.15 The Massachusetts Attorney General’s Office has also instituted an investigation to assess what went wrong at the same Soldiers’ Home nursing facility the federal government is reviewing as noted above and whether legal action is warranted.16

Private plaintiffs are also attempting to hold nursing homes liable—in New Jersey, the children of a now deceased resident of the Andover Subacute Rehabilitation Centers have brought a class action against the home on behalf of all persons on and after January 1, 2020, who were residents and/or patients of Andover who died as a result of the COVID-19 outbreak at those facilities.17 In North Carolina, a new lawsuit filed by the family of a COVID-19 victim, and previous resident of a nursing home, claims that chronic neglect and a botched response by a Salisbury nursing home fueled one of North Carolina’s largest outbreaks of COVID-19.18 Private plaintiffs may have a harder time prevailing in some states because of the immunity afforded to nursing facilities for certain actions; albeit immunity is rather limited.19

The various states and the federal government have various avenues to hold nursing homes accountable. On the federal level there are a host of criminal healthcare fraud statutes, as well as simple mail and wire fraud statutes.20 Further, there are state and federal False Claims Act statutes historically used by prosecutors to bring civil actions against healthcare providers for fraud, false claims and quality of care issues. The expectation is that the same authorities will now avail themselves of these provisions against nursing homes.

These new initiatives, task forces, investigations and class actions are likely just the beginning. Nursing homes and other post-acute providers with high numbers of COVID-19 infections should take steps now to respond to incoming questions and investigations from government agencies and whistleblowers questioning whether these facilities took appropriate steps to manage the spread of COVID-19 in these facilities.

First, while precious time should be spent taking care of residents, nursing homes should ensure that their staff and residents are being frequently tested to identify infected persons, make a record of such testing, and take swift action to isolate or cohort. In addition, nursing homes should consider more robust training for staff on infection control procedures, and not assume that the annual training provided is or was sufficient for that purpose. Nursing homes should ask for help from their state Department of Health and trade associations and coordinate testing, training, staffing, and cohorting solutions. Documenting steps being taken, such as separating infected patients and requiring calls to family when learning of infection, may also be useful; updating current compliance programs and protocols to incorporate these new rules would also be prudent. To be able to handle the crisis while at the same time follow new executive orders, regulations and guidances as they come out will be a balancing act. For example, just a few days ago, CMS issued guidance regarding nursing homes reopening.21 Bringing in expert counsel may relieve the burden and bolster compliance. To explore these issues more, on June 8 Manatt will be offering a webinar geared to the challenges long-term care providers are facing. Learn more and register for the webinar here.

1 Trump Administration Announces New Nursing Homes COVID-19 Transparency Effort, available at https://www.cms.gov/newsroom/press-releases/trump-administration-announces-new-nursing-homes-covid-19-transparency-effort (April 19, 2020).

2 Department of Justice Launches a National Nursing Home Initiative, available at https://www.justice.gov/opa/pr/department-justice-launches-national-nursing-home-initiative (March 3, 2020).

3 Id.

4 Id.

5 Federal Investigation into Conditions at a Nursing Home for Veterans in Massachusetts Announced, available at https://www.justice.gov/usao-ma/pr/federal-investigation-conditions-nursing-home-veterans-massachusetts-announced (April 10, 2020).

6 https://oig.hhs.gov/reports-and-publications/workplan/summary/wp-summary-0000453.asp.

7 CMS Announces Independent Commission to Address Safety and Quality in Nursing Homes, available at https://www.cms.gov/newsroom/press-releases/cms-announces-independent-commission-address-safety-and-quality-nursing-homes (April 30, 2020).

8 Id.

9 New York Executive Order No. 202.30, available at https://www.governor.ny.gov/news/no-20230-continuing-temporary-suspension-and-modification-laws-relating-disaster-emergency (May 10, 2020).

10 Noah Higgins-Dunn, William Feuer and Down Kopecki, New Jersey AG opens probe of nursing home deaths after finding 17 bodies in facility hit by coronavirus, available at https://www.cnbc.com/2020/04/16/new-jersey-ag-opens-probe-of-nursing-home-deaths-after-finding-17-bodies-in-facility-hit-by-coronavirus.html (April 16, 2020).

11 Voreacos, D., and Young, E., Covid Nursing Home Deaths Prompt N.J. Mayor to Request Probe, available at https://www.bloomberg.com/news/articles/2020-04-08/covid-nursing-home-deaths-prompts-n-j-mayor-to-seek-state-probe (April 8, 2020).

12 https://www.manatt.com/insights/press-releases/2020/manatt-to-partner-with-state-of-new-jersey-to-supp.

13 Matt Hamilton, Prosecutors are investigating a Bay Area nursing home where 13 have died of coronavirus, available at latimes.com/california/story/2020-04-15/coronavirus-bay-area-nursing-home-investigation (April 15, 2020).

14 https://www.cdph.ca.gov/Programs/CHCQ/LCP/Pages/AFL-20-52.aspx.

15 West Virginia Nursing Homes Continue Coronavirus Tests, available at https://www.weirtondailytimes.com/news/local-news/2020/04/west-virginia-nursing-homes-continue-coronavirus-tests (April 25, 2020).

16 Krueger, Hanna, AG Maura Healey launches investigation into coronavirus outbreak at Holyoke Soldiers’ Home, available at https://www.bostonglobe.com/2020/04/08/nation/attorney-general-maura-healey-launches-investigation-into-coronavirus-outbreak-holyoke-soldiers-home (April 8, 2020).

17 Estate of Joseph Maglioli, Bernard Maglioli and Dante Maglioli v. Andover Subacute Rehabilitation Center I et al., No. SSX-L-000176-20 (Sup. Ct. NJ April 28, 2020).

18 Gordon, Michael, Family of Covid-19 victim sues NC nursing home; police say they don’t find neglect, available at https://www.charlotteobserver.com/news/coronavirus/article242196961.html, April 22, 2020).

19 As of the writing of this alert, governors in Arizona, Connecticut, Hawaii, Illinois, Kansas, Michigan, Mississippi, Rhode Island and Vermont have issued executive orders providing limited immunity to nursing homes related to their response to the pandemic; New Jersey, New York, Massachusetts, North Carolina, Utah and Wisconsin have passed similar legislation, and nursing homes and their advocates in states including California, Florida and Pennsylvania are pressing their states’ governors to issue and/or pass similar legal protections. Amy Julia Harris, Kim Barker and Jesse McKinley, Nursing Homes Are Hot Spots in the Crisis. But Don’t Try Suing Them., NYTimes, available at nytimes.com/2020/05/13/nyregion/nursing-homes-coronavirus-new-york.html?referringSource=articleShare (May 13, 2020). Often these orders require evidence of good faith and routinely deny immunity for acts involving willful misconduct or gross negligence. See, e.g., NY Immunity Law Shields Nursing Homes As Virus Toll Soars, available at https://www.law360.com/articles/1264434/ny-immunity-law-shields-nursing-homes-as-virus-toll-soars (April 17, 2020); Emergency Or Disaster Treatment Protection Act, Bill No. S07506, available at https://assembly.state.ny.us/leg/?bn=S.7506-B; Sharma, Amita, Senior Care Facilities Seek Legal Immunity During Coronavirus Pandemic, available at https://www.kpbs.org/news/2020/apr/21/senior-care-facilities-seek-broad-legal-immunity-d/ (April 21, 2020). See also, https://dredf.org/wp-content/uploads/2020/05/Joint-Letter-Opposing-CA-Immunity-Executive-Order.pdf.

20 See, e.g., False Claims: 18 U.S.C. §287; False Statements/Healthcare Programs: 18 U.S.C. §1035;
False Statements in Connection with a Claim: 42 U.S.C. §1320a-7b(a); Kickbacks: 42 U.S.C. §1320a-7b(b); Healthcare Fraud: 18 U.S.C. §1347; Misbranding: 21 U.S.C. §331, 333; Mail and Wire Fraud: 18 U.S.C. §§1341 and 1343; Money Laundering: 18 U.S.C. §§1956 and 1957; False Statements: 18 U.S.C. §1001; Obstruction of an “Official Proceeding”: 18 U.S.C. §1512(c).

21 Nursing Home Reopening Recommendations for State and Local Officials, CMS, guidance available at https://aboutblaw.com/QUO (May 18, 2020).

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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