Judge Splits the Baby in Landmark COVID-19 Case

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Background

This is the story of Life Care Center – Kirkland (LCCK), a skilled nursing facility (SNF) located in Kirkland, Washington. LCCK was the “index facility,” meaning it was the first known nursing facility in the U.S. – if not the world – that had a COVID-19 outbreak. Federal surveyors descended on LCCK from March 6 to March 16, 2020. At the conclusion of the survey, they alleged that there were seven distinct violations of Medicare’s Requirements of Participation for SNFs. Of those seven regulatory violations, three were alleged to have caused “immediate jeopardy,” which is the most serious level of noncompliance with Medicare’s requirements.

The survey was primarily focused on LCCK’s infection control practices, especially since LCCK reported an unusual outbreak of a respiratory illness the week before the survey began. CMS imposed a civil money penalty (CMP) of $611,325 and also imposed a Denial of Payment for New Admissions (DPNA). Separately, Washington State imposed a “Stop Admissions” order and also imposed “conditions” on LCCK’s license.

Notably, on February 26, 2020, LCCK’s infection control nurse called the County Health Department in Washington to report an outbreak of an unknown respiratory infection. The infection control nurse persisted in trying to reach someone at the County Department of Health and called again on February 27, 2020. Significantly, the infection control nurse, the medical director, and a physician assistant implemented the following aspects of LCCK’s infection control and prevention plan, also on February 26, 2020: the dining area would be closed, which required that residents would be served meals in their rooms; group activities were ended; items in common areas and the gym were wiped with bleach; the County Health Department was notified as was the administrator and staff; staff was educated about items such as the signs and symptoms of respiratory viruses; proper hand hygiene and the use of personal protective equipment (PPE), as well as the prevention of disease transmission. The use of disposable utensils was implemented, and the flu vaccine was offered to residents. The above list of interventions is not exhaustive of what LCCK implemented. For example, signs were posted admonishing visitors not to visit if they exhibited symptoms such as a fever or a cough. LCCK also provided screening for signs of respiratory infections for all visitors, vendors, and volunteers. Unfortunately, the Centers for Disease Control and Prevention (CDC) did not permit testing for COVID-19 until February 27, 2020, unless the suspected individual had a connection to Wuhan, China. Thus, at the time, LCCK’s infection control nurse reached out to the County Health Department, LCCK was not permitted to test any resident for COVID-19.

On February 26, 2020, LCCK allowed a previously scheduled Mardi Gras party to occur. Although testimony revealed that social distancing was observed during the party, it was nonetheless contrary to the decision to restrict group activities. That party served as the basis for the deficiency. Interestingly, as the ALJ noted, neither the surveyors nor CMS based the alleged noncompliance on the Mardi Gras party.

Notwithstanding, LCCK’s voluntarily disclosing the apparent outbreak of an unknown pathogen and activating its infection control and prevention protocol, the surveyors cited the seven deficiencies noted above, including the infection control deficiency.

The Appeals

As a result of the survey’s allegations, Washington imposed “conditions” on the facility’s license as well as imposing a “Stop Admissions” order. For its part, the Centers for Medicare and Medicaid Services (CMS) imposed a CMP and a DPNA. LCCK appealed both the State enforcement action and the one CMS invoked, and the two cases were separately tried before a State and a Federal ALJ, respectively. The State ALJ determined, after a full evidentiary hearing, that the State had indeed abused its discretion in imposing the “Stop Admissions” order. That favorable decision for LCCK was upheld on further appeal. Tellingly, the State ALJ noted that there was nothing more that LCC could have done to prevent infections.

Because the issues concerning the alleged deficiencies were fully litigated at the State level and the salient facts were identical in the federal appeal, counsel for LCCK asserted that there is no need to re-litigate those issues anew in the federal forum since an independent trier of fact had already made a judicial determination. The theory upon which that position relies is known as collateral estoppel, or issue preclusion, addressed below.

Collateral Estoppel

Briefly stated, collateral estoppel is a legal doctrine that prevents a party from relitigating an issue already decided by a court of competent jurisdiction. Counsel for LCCK urged the federal ALJ to grant summary judgment, thereby deciding the case in LCCK’s favor based on the State ALJ’s prior decision and findings of fact. However, the federal ALJ refused to grant LCCK’s motion noting that there were “differences between the state ALJ’s proceeding and the case before me.”

The Issues

The issues decided by the federal ALJ were: 1) whether there was a basis for the imposition of enforcement remedies (i.e., were there any deficiencies?); 2) whether the allegation of “immediate jeopardy” was clearly erroneous; and 3) whether the CMP and DPNA were reasonable sanctions? There were seven deficiencies cited, and any one standing alone would be sufficient to uphold the CMP.  As noted below, the ALJ seemed to “split the baby.”

The Witnesses

There are two kinds of witnesses – fact witnesses and expert witnesses. Each side presented both at the trial in this matter. Essentially, the ALJ found LCCK’s expert witnesses “credible and entitled to greater weight than those of [CMS’ medical expert witness] or the surveyors.” Likewise, the ALJ found that one of the surveyors who was a witness “was not considering resident outcomes reflected by evidence available to him.” Regarding another surveyor who testified for CMS, the ALJ determined that her “findings and conclusions are rebutted by the weight of the evidence.” Overall, LCCK’s witnesses – and the facts – presented a more compelling version of what occurred than that of CMS’ witnesses, with the exception of one alleged deficiency.

Splitting the Baby or, You Win Some – You Lose Some

The ALJ Decision appears to offer something for both CMS and LCCK. Of the seven deficiencies, the ALJ only upheld one – the deficiency related to infection control and the Mardi Gras party as a basis for the enforcement action. Although the ALJ determined there was a technical violation of the regulation regarding QAPI and the obligation to have a QAA committee meet quarterly, he determined that alleged deficiency could not serve as a basis for an enforcement action. So, only one of the seven alleged deficiencies supported the CMP and DPNA. (The DPNA issue became moot because the facility regained substantial compliance before it went into effect.)

Take-Aways

Based on the outcome of both the State ALJ proceeding and the federal ALJ case, it is evident that providers can indeed prevail when the facts and the law favor them. Competent and highly experienced counsel is an essential component of any successful litigation. There are a number of practical considerations when appealing CMS’s allegation of regulatory violations. For example, the ALJ emphasized that, “However, I make no findings or determinations that the errors of Petitioner’s staff resulted in the spread of COVID-19 or the death or injury of any resident.” (Emphasis in original.) Further, the ALJ stated that, LCCK’s staff “made a heroic effort to care for and save residents.” Official judicial determinations such as the ones above, as well as the favorable findings by the State ALJ, may go a long way to mitigate – or possibly thwart – collateral wrongful death and negligence suits.

The fact that only one of seven cited deficiencies was able to support the enforcement remedy illustrates that alleged deficiencies that are neither factually nor legally supportable can be defeated at trial.

Epilogue

The ALJ reduced the CMP to $421,135 based on him setting aside the “non-immediate jeopardy” deficiencies. Since the ALJ essentially “split the baby” in his Decision, either CMS or LCCK may appeal the Decision. At the time of this writing, it is unknown if either, or both, sides will appeal, and it remains to be seen if further appeals will follow. Regardless, LCCK’s staff has been recognized by the ALJ for their “heroic” efforts to save lives, which alone is a huge victory.

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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