San Francisco Sues HHS Over Deadline Imposed to Local Hospital

The City of San Francisco filed suit Wednesday in the Northern District of California against the Department of Health and Human Services (HHS) and its secretary, Xavier Becerra. The complaint for declaratory and injunctive relief alleges that Laguna Honda Hospital and Rehabilitation Center was given an unreasonable deadline to discharge all patients after a certification failure.

The hospital is located in San Francisco and treats many Medicare and Medicaid beneficiaries, meaning that around 67% of its operating budget is federally funded, the complaint said.

Recently, the California Department of Public Health cited Laguna Honda for deficiencies in healthcare and the defendants terminated the hospital’s Medicare and Medicaid provider agreements. Despite these terminations, the complaint explains that “Laguna Honda is on its way to correcting all deficiencies and is confident that it will submit an application allowing it to be recertified as a Medicare and Medicaid provider by the end of the year.”

The plaintiff alleges that the defendants recently told the hospital that it had to either transfer or discharge all of its 610 patients by September 13, 2022. The complaint notes that in addition to knowing this deadline is unrealistic, “there are not enough skilled nursing beds or facilities in the San Francisco Bay Area,” for the patients, many of which have behavioral health challenges, substance abuse disorders, and other complex social and medical needs.

Federal funding will stop being provided to the hospital on the September 13 deadline, at which point the hospital will not be able to operate, the city said. Although the hospital is currently involved in an appeals process regarding their status as a Medicare and Medicaid provider, the decision will not be made prior to the September 13 deadline.

As a result of all of the aforementioned circumstances, which the plaintiff argues are the result of an impossible situation created by the defendant, the complaint contends that “Laguna Honda faces the very real prospect of having to provide services to over 600 Medicaid and Medicare patients, without the funding and resources necessary to provide quality care.”

The complaint cites a violation of the Administrative Procedure Act (arbitrary and capricious) as well as a violation of procedural due process under the United States Constitution. The plaintiff is seeking favorable judgment on each count, an injunction against the implementation and enforcement of the September 13 deadline imposed by the defendants, an injunction requiring the defendants to extend funding until the situation is resolved safely, litigation fees, and any other relief deemed fit by the court.