HHS Sued Over Policy That Eases Nursing Homes Non-Compliance Penalties

Two groups who advocate on behalf of nursing and long-term care patients have filed a lawsuit on Monday in the District of Columbia District Court against the federal government claiming that a July 2017 policy change eliminating certain per-day penalties is unlawful. The rule, propounded by the Centers for Medicare and Medicaid Services’ (CMS), a branch of the U.S. Department of Health and Human Services, allegedly contravenes the express intent of the Nursing Home Reform Act of 1987 (NHRA) in violation of the Social Security Act and Administrative Procedure Act.

Plaintiffs National Consumer Voice for Quality Long-Term Care and California Advocates for Nursing Home Reform explained that in order to enforce federal regulations, CMS contracts with states in order to supervise long-term care and nursing facilities. States do so by conducting periodic, unannounced surveys, reporting deficiencies to CMS regional offices, and recommending appropriate enforcement actions, which can include the imposition of civil money penalties (CMPs) “for each day, over a previous period, that a facility was found out of compliance with federal standards.” Reportedly, the NHRA’s per day penalties were intended to deter and punish care facility “gross misconduct and dereliction.”

Allegedly, the rule change removes the discretion for states to recommend and CMS to levy per-day CMPs. Instead, “CMS regional offices—regardless of findings and recommendations from state survey agencies—will impose a CMP for past non-compliance based only on each instance of non-compliance that occurred but was corrected before the state survey is conducted.”

To illustrate the harm inflicted by the rule change, the plaintiffs contend that when a facility has corrected non-compliance just before the state survey team shows up for an inspection, even if the facility has broken rules for several months, the facility will evade penalties for each day of non-compliance and walk away with a mere “slap on the wrist.” They argue that the new rule stands in opposition to Congress’s intent to enable the infliction of harsh penalties on NHRA rulebreakers and “eliminates the incentives for facilities to self-police and take remedial measures at the earliest point possible.”

The plaintiffs also note that the COVID-19 pandemic has aggravated harms caused by this policy. They point to a Government Accountability Office report that “identified the ways in which lax enforcement and oversight, especially around critical issues like infection control, have contributed to the dangerous conditions that resulted in the pandemic taking such a perilous toll on nursing facility residents.”

The plaintiffs seek declaratory and injunctive relief setting aside the July 2017 rule.

The advocacy groups are represented by the AARP Foundation and Constantine Cannon LLP.