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Nursing Homes and the Advancing Tide of Regulations and Investigations

By: J. David Morrissy, Robert W. Ray, and David B. Chenkin

Nursing homes’ COVID-19 related challenges have been widely publicized over the past year – from the tragic loss of life among both staff and resident populations, to the strained, contentious, and often public disputes with elected officials, nursing home owners and operators have grappled with unprecedented public relations and liability concerns.

Now, as the country emerges from the pandemic, and nursing homes begin to regain their footing within the communities they serve, private owners and operators may be facing another set of complex and costly legal challenges, as they are now confronted with heightened scrutiny from federal, state, and local governments.

In the early stages of the pandemic, New York and several other states afforded privately held nursing homes immunity for certain harm incurred at the facilities in an effort to forestall litigation relating to pervasive damage outside of their control. However, as time passed, state legislators sought increasingly to narrow the scope and shorten the duration of those protections. Recently, New York’s Governor Andrew Cuomo signed a bill that repealed the previously proffered liability protections in New York in their entirety. In addition, earlier this year, the Office of the Attorney General of New York issued a press release revealing that the New York Department of Health publicly reported data that drastically undercounted COVID-19 related nursing home deaths, that “many nursing homes failed to comply with critical infection control policies,” and that the New York Attorney General’s Office is currently conducting investigations into dozens of facilities. Finally, the New York Department of Health mandated that providers offer staff and residents a vaccination by April 29, 2021, or within two-weeks for newly admitted residents and new hires, and admonished that failure to abide by the directive could result in steep fines.

This groundswell underscores the piqued interest in nursing home regulation of New York’s politicians and enforcement agencies. That same concern exists on a national level as well: it is widely known that the Department of Justice has been investigating long-term care facilities in the context of COVID-19 since the outset of the pandemic and that federal officials have indicated further infection prevention and control guidance is forthcoming.

Indeed, although state executive, legislative, and administrative action has garnered the most public attention, the federal government – including, specifically, the Justice Department under its National Nursing Home and Elder Justice Initiatives begun under the Trump Administration – remains poised to act under the new Biden Administration where there is evidence of grossly sub-standard or systemically inadequate care. While federal law offers private providers limited immunity protection from civil negligence lawsuits, such safe harbor provisions specifically exclude protection from conduct that was intentional, reckless or grossly negligent. Moreover, federal authorities have broad powers when Medicare or Medicaid funds are in play to request, if not demand, information and documents to establish whether care at facilities fell below contractual, statutory, or regulatory minimums. In such cases, if nursing homes are found, for example, to have ignored or failed to meet CDC guidance for infection prevention during the pandemic, owners and operators may well have exposure under the federal False Claims Act, including for treble damages. In addition, audits under the auspices of federal regulatory authority, e.g., the Department of Health and Human Services, may create a separate civil – and potentially criminal – liability risk for explicitly or impliedly false certifications submitted by responsible nursing home parties to the federal government.

As such, owners and operators would be well served to confirm that policies and procedures are in place to effectively:

  • Monitor developments in legislation, guidance, and executive action;
  • Analyze trends in investigations, prosecutions, and civil lawsuits;
  • Assess and implement strategies to comply with governmental mandates and reduce civil damages and criminal exposure;
  • Record actions taken in furtherance of compliance and risk mitigation; and
  • Compile data evidencing hindrances for compliance and risk mitigation.

The confluence of the current regulatory and legislative landscape with the looming specter of the virus that continues to grip the world’s attention creates a perilous minefield to navigate. While forging their course, it is important for owners and operators to simultaneously prepare for investigations into past activity while assuring compliance with current and future guidance and legislation – at the same time caring for our nation’s most vulnerable populace.

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David B. Chenkin is the managing partner of Zeichner Ellman & Krause LLP, and a Certified Anti-Money Laundering Specialist. Mr. Chenkin represents global companies and individuals in civil, criminal, regulatory, and compliance-related investigations initiated by The U.S. Congress and federal, state, and local prosecutors and regulators. He also provides financial crime training to law enforcement, the private sector and other law firms. Mr. Chenkin also is a recipient of Homeland Security Investigation’s New York Citizen’s Legacy Award.

Robert W. Ray is a prominent litigator and former federal prosecutor, Independent Counsel for the Whitewater investigation, and counsel to former President Trump during his first Senate impeachment trial.  Mr. Ray is a respected courtroom veteran who aggressively advocates his clients’ interests in white collar criminal defense matters, corporate governance and compliance issues, internal investigations, and general litigation, including civil RICO and commercial fraud.

J. David Morrissy is recognized throughout the country for his skillful navigation of complex commercial transactions, powerful litigation strategies, and insightful management of regulatory compliance matters.  Mr. Morrissy has earned a reputation as a trusted counselor and legal and business resource for corporations and their principals, including nursing home owners and operators.