Nursing Home Legal Alert - 7/08/2020

An important message from the Hurwitz & Fine COVID-19 Response Team

Tolling of Statute of Limitations Extended
On July 6, 2020, New York Governor Andrew Cuomo signed Executive Order 202.48, extending the provisions tolling the Statute of Limitations until August 5, 2020.
 
FCA Litigation Against Nursing Homes Is Likely
Even before COVID-19 took hold of the country, the U.S. Department of Justice (DOJ) announced an enforcement focus on nursing homes, including False Claims Act (FCA) cases against those that fail to deliver adequate services to care for their residents. As the death toll from the virus has grown, Congress and multiple state entities have announced investigations specifically looking at COVID-19 issues in nursing homes, which is fertile ground for developments in the law of “worthless services” unfavorable to such facilities.
 
Reports of systemic failures at nursing homes suggest the DOJ may use the aggressive theory that nursing homes provided so-called “worthless services” – that is, services which are so insufficient that they provide no value to the government at all, rendering claims for reimbursement by Medicare or Medicaid false. The consequences of such liability are severe: if the services were entirely worthless, actual damages equal the entire value of the claims and the government can recoup treble damages under the FCA’s penalty provisions.
 
Though case law in this area is scarce, courts have imposed a high bar as to when service insufficiencies rise to the level of being “worthless” for FCA purposes. It has been held that “the performance of the service [must be] so deficient that for all practical purposes it is the equivalent of no performance at all. It is not enough to offer evidence that the defendant provided services that are worth some amount less than the services paid for.”
 
Current regulatory warnings suggest that FCA litigation against nursing homes is likely, and also suggests that future litigants might struggle to build a defense based on government inaction, which has been helpful in prior cases. However, courts will inevitably bring their own judgment and experience to bear on what constitutes negligence or expected performance when analyzing new cases, and the pandemic has altered collective views about reasonable precautions. Nursing homes and skilled nursing facilities should therefore examine regulatory guidance for steps that they can take to mitigate their risk, including active and robust compliance plans and practices, the prompt handling of any complaints, and the attentive response to government standard-of-care guidance.
 
CMS Announces End of Emergency Blanket Data Waiver for Nursing Homes
Federal officials with the Centers for Medicare and Medicaid Services (CMS) have announced that they are ending the emergency blanket waiver intended to reduce administrative burden on nursing homes amid the continuing COVID-19 pandemic. Effective August 14, nursing homes nationwide will again be required to submit staffing data through the Payroll-Base Journal (PBJ) system, which allows the agency to collect staffing information which impact the quality of care residents receive.
 
The first initial submission to PBJ must cover the second quarter of the calendar year.
 
A memorandum also issued by CMS provides updates related to staffing and quality measures used on the Nursing Home Compare website and the Five Star Rating System.
 
New York’s Nursing Home Policy was Not Fully in Line With CDC
New York Governor Andrew Cuomo has faced intense criticism for the state’s handling of COVID-19 in nursing homes, responding that his administration followed guidance from the U.S. Centers for Disease Control and Prevention (CDC). Under particular scrutiny has been his Executive Order dated March 25, 2020 requiring nursing homes to admit COVID-19 positive patients – a measure which was later withdrawn amid the backlash.
 
The CDC’s guidance at the time of the Order was that COVID-19 patients who are medically stable could be discharged from a hospital to a nursing home, but only if the nursing home could implement all of the recommended infection control procedures. The Centers for Medicare and Medicaid Services (CMS) issued similar guidance, and also stated that it was preferable for coronavirus patients to be cared for in a dedicated unit. The Cuomo administration also pointed to state and federal regulations that predate the pandemic, which require facilities to accept only those patients they can care for.
 
However, once the March 25 Order was issued, nursing homes reported that they felt pressure to accept coronavirus patients regardless of whether they could adequately care for them, due to language in the Order that stated they “must comply with the expedited receipt of residents.” On April 9, the head of a Brooklyn nursing home asked stated health officials if COVID-19 patients could be transferred to the Javits Center of the Navy hospital ship and was denied permission. In late April, when questioned about the directive, Cuomo repeatedly said that nursing homes should find other beds for the patients if they could not care for them and said that facilities “don’t have a right to object” to the state’s policy. The influential Politifact has therefore rated Cuomo’s claim that the policy was fully in line with CDC guidance as “Mostly False.”
 

A Note from Stephanie L. McCance

As we have shifted into the summer months, so too have we seen a shift from lawmakers and organizations to resuming a sense of normality through both the healthcare and legal systems, as evidenced by the announcement of the end of the emergency blanket waiver. We anticipate that — in New York at least — we will see more preparations for COVID protections drawing to a close in the coming weeks as the state’s numbers continue to improve. Given the anticipated ending of certain protections and the likelihood of FCA litigation against nursing homes, it is paramount that facilities continue to take robust steps to mitigate their risk. We are vigorously monitoring the guidance and statements coming from the relevant government and regulatory bodies, as these will inevitably inform the defense of any such COVID-related actions that may be filed – particularly when this guidance appears confusing or contradictory, as displayed in the interplay between Governor Cuomo’s Executive Orders and CDC recommendations.

As a public service, we are pleased to present this legal alert, which aims to provide our clients and subscribers with timely information on how the COVID-19 pandemic may impact medical and nursing home claims.  In some jurisdictions, newsletters such as this may be considered: Attorney Advertising.
 
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Your COVID-19 Medical & Nursing Home Defense Team
is here to answer your questions:
V. Christopher Potenza, Esq. ([email protected])
Patrick B. Curran, Esq. ([email protected])
Stephanie L. McCance, Esq. ([email protected])

For more information on our COVID-19 Legal Response Team,
including Business Services, Coverage, and Labor & Employment, click here.

For more legal updates regarding the coronavirus, click here.