#2002-05
March 2002
Termination and Closure of Poor Quality Nursing Homes:
What Are the Options?
By
Erica F. Wood
The AARP Public Policy Institute, formed in 1985, is part of the
Policy and Strategy Group at AARP. One of the missions of the
Institute is to foster research and analysis on public policy issues
of importance to mid-life and older Americans. This publication
represents part of that effort.
The views expressed herein are for information, debate, and
discussion, and do not necessarily represent official policies of
AARP.
 2002, AARP.
Reprinting with permission only.
AARP, 601 E Street, N.W., Washington, DC 20049
Acknowledgements
I am grateful for the support I received throughout this project. All of the study contacts listed in
the Appendix generously lent their time and expertise. Karen Gaddy, formerly of the American
Bar Association Commission on Legal Problems of the Elderly, contributed research on
receivership issues. Toby Edelman, Center for Medicare Advocacy, Inc., helped to shape the
project’s approach, suggested important contacts, and reviewed earlier drafts. Joseph Bianculli,
Esq.; Alison Hirschel, Michigan Poverty Law Center; Rebecca Morgan, Stetson University
College of Law; and Ed Mortimore, CMS Center for Medicaid and State Operations, also
provided helpful comments. Faith Mullen of the AARP Public Policy Institute offered insight,
useful suggestions, and valuable guidance.
Erica F. Wood
Table of Contents
FOREWORD................................................................................................................................ II
EXECUTIVE SUMMARY........................................................................................................ III
I.
BACKGROUND.................................................................................................................... 1
A.
B.
C.
Objective of the Study...................................................................................................... 1
Overview and Study Rationale ........................................................................................ 1
Legal and Regulatory Framework .................................................................................. 4
II. METHODOLOGY.................................................................................................................. 8
A.
B.
Project Tasks ................................................................................................................... 8
Note on Enforcement Data.............................................................................................. 9
III. FACILITY PROFILE SUMMARIES ............................................................................... 10
A.
B.
C.
D.
E.
F.
G.
IV.
Cobbs Creek Nursing Center......................................................................................... 10
Venoy Nursing Center.................................................................................................... 10
Belle Woods Continuing Care Center ........................................................................... 11
Audubon Healthcare Center........................................................................................... 11
Snapper Creek Nursing Home ....................................................................................... 11
Laurel Glen Convalescent ............................................................................................. 12
Greenbelt Nursing and Rehabilitation Center ............................................................... 12
FINDINGS FROM PROFILES AND INTERVIEWS ................................................... 13
A.
B.
C.
D.
E.
Terminations and Closures............................................................................................. 13
Intermediate Sanctions ................................................................................................... 20
Temporary Management.................................................................................................. 25
Long-Term Care Receivership ........................................................................................ 34
Resident Relocation ......................................................................................................... 40
V. STUDY RECOMMENDATIONS ....................................................................................... 51
VI. APPENDICES..................................................................................................................... 54
Appendix A.
Appendix B.
Appendix C.
Appendix D.
Appendix E.
Scope and Severity Grid For Nursing Home Enforcement ............................ 54
Facility Profiles .............................................................................................. 56
Long-Term Care Receivership Statutes in Profiled States .............................. 68
Long-Term Care Receivership Statutes........................................................... 69
List of Study Contacts ...................................................................................... 70
List of Tables
TABLE 1: NURSING HOME TERMINATIONS ................................................................................ 16
TABLE 2: USE OF INTERMEDIATE SANCTIONS ............................................................................ 22
I
Foreword
As states and the federal government turn their attention to improving nursing home
quality, they face the difficult question of how to deal with poor providers. The federal Nursing
Home Reform Act (also known as OBRA ’87) mandates sanctions when nursing homes fail to
provide care that complies with federal standards. Those sanctions range from requiring nursing
homes to develop a “plan of correction” at one extreme or to terminate them from participation
in the Medicare and Medicaid programs at the other.
Terminating providers who fail to meet federal standards is not without risk. Because
federal funds often account for a major portion of operating monies, termination inherently
jeopardizes resident care and the stability of a nursing home. As policy makers consider taking a
tougher stance with poor quality nursing homes and using termination as a remedy more
frequently, it is important to understand the alternatives to and the consequences of terminating
facilities. To that end, this paper was commissioned by the Long-Term Care and Independent
Living Team of the Public Policy Institute of AARP, and prepared by Erica Wood of the
American Bar Association Commission on Legal Problems of the Elderly.
This paper selected seven (out of 33) facilities throughout the country that were
involuntarily terminated from participation in the Medicare/Medicaid program and then closed
between 1997 and 2000. This paper explores what led to termination of these nursing homes,
how termination might have been avoided, and the consequences for the residents. This report
makes a valuable contribution to the discussion of nursing home enforcement by:
!"Identifying the steps leading to termination
!"Describing the value of temporary management and receivership as an alternative to
termination
!"Identifying models for the orderly closure of nursing facilities and transfer of the
residents
!"Providing clear recommendations to state and federal officials on how to protect residents
in troubled facilities
As policy makers look for ways to ensure high quality care in nursing homes, termination of
facilities from the Medicare and Medicaid programs will become even more important. This
report should contribute to understanding that issue.
Faith Mullen
Senior Policy Advisor
AARP Public Policy Institute
II
Executive Summary
Involuntary termination of Medicare/Medicaid payments, corporate mergers, changes in
Medicare reimbursement, bankruptcy and financial pressures, and charges of fraud and abuse can
put nursing facilities at risk of closure. These developments may combine in a complex chain of
events that can compel closure and affect the lives of hundreds of nursing home residents at a
time. This report focuses on one aspect of this scenario -- instances in which involuntary
termination from the Medicare or Medicaid program leads to closure of troubled facilities and
relocation of the residents. Because federal funds often account for a major portion of operating
monies, such termination inherently jeopardizes resident care and stability of the home. While
the total number of involuntary terminations and subsequent closures in a given year is low, the
impact on residents is serious.
The report presents the findings of a study by the American Bar Association Commission
on Legal Problems of the Elderly on use of intermediate sanctions, involuntary termination,
facility closure, and resident relocation. It seeks to examine how often this chain of events
occurs, why it occurs, with what variations, and how it could be addressed in ways that do not
put nursing home residents at risk of poor care.
Methodology
The study identified seven facilities throughout the country (out of 33) that were
involuntarily terminated from participation in the Medicare/Medicaid program and closed
between 1996 and 2000. Selection factors included geographic location; size; ownership; state
laws; varying approaches and experiences in the termination or closure process; and availability
of information. For each facility, the study obtained survey and enforcement documents and
interviewed a range of key informants, including state and federal officials, long-term care
ombudsmen, attorneys, long-term care consultants, and others involved in the process. The
study also reviewed print media stories for the most recent information on the closing of local
facilities, as well as relevant published research. In addition, the study included background
interviews and collection of relevant data from regional offices of the Health Care Financing
Administration (now know as the Centers for Medicare and Medicaid Services), and a range of
experts in long-term care. Through these approaches, the study examined: (1) the federal-state
decision-making that led to the termination, closure, and removal of residents, including use of
intermediate sanctions; and (2) the relocation procedures and the impact on residents (3) the
range of opinion and conclusions of key informants interviewed for the seven case studies. The
study concludes with recommendations based on the findings.
Major Findings
(Note: Since this report was written, the Health Care Financing Administration changed its
name to the Centers for Medicare and Medicaid Services.)
III
Involuntary Terminations and Closures
•
•
•
•
•
•
•
There is no consistent and readily available central source of data on terminations of federal
funding, nursing home closures, and use of intermediate sanctions. This impedes an
understanding of the issues.
Troubled facilities frequently cycle in and out of compliance with the requirements imposed
by the Nursing Home Reform Act. They may be bought and sold, suffer financial strains,
undergo bankruptcy, and even go through termination more than once before closure.
Since 1997, HCFA has involuntarily terminated a total of approximately 128 facilities, and of
these approximately 33 were closed.
The number of terminations due to immediate jeopardy and the number due to the federal
“six-month rule” (the failure to achieve substantial compliance within six months) is not
known, but it appears the six-month rule is the most frequent reason for termination.
Respondents differed as to whether HCFA has any discretion in implementation of the sixmonth rule.
Several respondents found the six-month rule (termination is used if the facility does not
achieve substantial compliance within six months of the date of the first survey that found it
to be out of compliance) problematic in that it results in a rote removal of residents without a
weighing of the real costs and benefits.
Respondents differed as to whether closings as a result of involuntary terminations could be
justified as part of a strong enforcement system or could not be justified in that the closings
forced residents to relocate.
Intermediate Sanctions
•
•
•
•
•
•
•
Little research exists on the use and effectiveness of intermediate sanctions.
In 1999, approximately 1193 civil monetary penalties and 1155 denials of new admissions
were imposed on nursing homes nationwide.
While intermediate sanctions are used to some extent, it appears that the full authority of the
states and HCFA has not been employed consistently to address troubled facilities in which
residents are at risk. A number of respondents maintained there is very little involvement of
HCFA during the six months prior to termination.
While the remedy of temporary management may be useful in protecting residents and
preventing inappropriate closures, it is used infrequently. In 1999, only four temporary
managements were imposed by HCFA nationwide.
Barriers to the use of temporary management include: ambiguity in the triggers, lack of
funds, lack of full operational authority to manage resources in some cases, lack of time
(especially in situations of immediate jeopardy), lack of clear definition, confusion about
state versus federal temporary management remedies, lack of experience, unwillingness of
regulators to risk possible failure, lack of qualified candidates, lack of judicial understanding,
and lack of HCFA authority to enter into a temporary management directly independent of
the states.
At least 27 states have long-term care receivership statutes.
There are no data on use of long-term care receivership, and little study of its effectiveness.
IV
•
•
Long-term care receivership appears to be used infrequently, and may often be used for the
purpose of closing facilities rather than as an intermediate sanction for enforcing standards
and improving the quality of care.
Barriers to use of long-term care receivership are similar to temporary management,
including lack of clarity about use of the remedy, as well as lack of time, experience, funds,
qualified candidates, and judicial understanding.
Resident Relocation
•
•
•
•
Many gerontological studies on resident relocation show adverse health consequences.
Others show little significant effect. This may reflect the amount of advance preparation or
other factors such as degree of resident choice, degree of dementia, resident age and
condition, and quality of care in the new facility.
Judges in a number of leading cases concerning nursing home terminations and closures have
recognized the potential effect of transfer trauma.
Several states have developed plans for the orderly closure of nursing facilities and transfer
of the residents. There has been little study on the implementation of these plans.
Few data exist on what happens to nursing home residents when a facility is terminated and
closed. States have no consistent approach to tracking these residents.
Study Recommendations
!"Strengthen data on nursing home enforcement and public access to these data.
!"Study effectiveness of intermediate sanctions.
!"Initiate a temporary management demonstration project.
!"Develop a protocol for federal and state use of temporary management.
!"Develop a national database of temporary managers who are able to assist troubled facilities
on short notice.
!"Couple limited flexibility in the six-month rule with temporary management.
!"Strengthen state long-term care receivership laws to make them more responsive to the needs
of residents in troubled facilities.
!"Encourage judicial education on temporary management and receivership.
!"Provide funds for the operation of temporary management and receivership and for resident
relocation when necessary.
!"Provide guidance and promote best practices on resident relocation.
V
!"Develop and require use of a uniform protocol for tracking residents following relocation.
!"Convene a roundtable on nursing home termination and closure to make recommendations
for action.
VI
I.
Background
A.
Objective of the Study
This report presents the results of a study by the American Bar Association Commission
on Legal Problems of the Elderly on involuntary termination of Medicare/Medicaid payments to
nursing homes, and resulting relocation of residents and closure of the facilities. The study
sought to: (1) spotlight selected cases in which facilities were decertified and then closed; (2)
analyze the federal-state decision-making process involved, including the use of intermediate
sanctions; (3) examine the impact on residents; and (4) make observations for regulators and
policymakers about the implementation of federal standards that safeguard the interests of
residents.
B.
Overview and Study Rationale
Scattered news stories over the last several years tell of a troubling pattern: “Shutdown
Forces Residents Out of Md. Nursing Home,” “State Closes Nursing Home Following Repeated
Citations,” “Nursing Home Patients Pose Relocation Challenge.”1 In this pattern, a nursing
home has critical care problems that cause harm to residents or put them at risk; the home is cited
for deficiencies but fails to correct the problems or cycles in and out of compliance with
regulations; federal regulators terminate Medicare/Medicaid payments; the home teeters
financially; distressed personnel leave and care problems intensify; the state moves to revoke the
license or the home is forced by financial and regulatory pressures to close voluntarily; there is
an outcry by the facility and often by alarmed family members – but ultimately the residents are
relocated, breaking ties with familiar staff and surroundings. This pattern does not occur in a
vacuum. It occurs in a context of related developments in the nursing home field:
•
Financial Pressures. While the nursing home industry thrived in the 1990s, some companies
recently have faced financial crisis.2 In July 1999, Business Week reported that “last year,
the seven leading publicly owned companies had a market capitalization of $35 billion.
Now, they’re worth less than $5 billion. Some may not survive.”3 Some were hit hard when
the Balanced Budget Act of 1997 enacted fixed rates for Medicare-covered stays and capped
federal payments for therapy.4 In other cases, rapid expansion and related debt could be a
1
“Shutdown Forces Residents Out of Md. Nursing Home,” Goldstein, Avram, The Washington Post, January 10,
1999; “State Closes Nursing Home Following Repeated Citations,” Rogers, Peggy, The Miami Herald, B-1, August
20, 1996; “Fighting a Nursing Home’s Closing,” Moss, Michael, The Wall Street Journal, A-13, January 4, 1999;
Umhoefer, Dave, “Nursing Home Patients Pose Relocation Challenge,” Wisconsin Journal Sentinel (March 3,
2000); and “Nursing Home Shuts Down After U.S. Finding of Danger,” The New York Times, NY Region, p. 23
(August 23, 2001).
2
Sparks, D., “Nursing Homes: On the Sick List,” Business Week (July 5, 1999); “Troubled Times in Nursing
Homes: A Journal Special Report Reprint,” Albuquerque Journal (August 1-5 and September 5, 1999); Mattson,
Marcia, “Nursing Homes in Crisis,” The Times-Union, Jacksonville, p. A-1 (June 4, 2000); Parrott, Susan “Texas
Nursing Home Shutdown,” Associated Press, Newsday.com (April 11, 2001); and Salganik, M. William, “UM to
Shut Nursing Unit,” The Baltimore Sun (June 21, 2001).
3
Sparks, D., Business Week.
4
See “Troubled Times,” Albuquerque Journal. Also see Hilzenrath, D., “Medicare Change Hurts Nursing Home
Firms,” The Washington Post, A-1 (February 3, 2000).
1
factor. A report by the General Accounting Office (GAO) examined two large chains in
trouble, and concluded that they had expanded too quickly, taking on heavy debt.5 A
Congressional hearing identified a mix of factors including “business decisions based on a
belief that Medicare payments would continue to increase without limit, as in the past, the
overuse of therapies and related services at inflated costs,” tough contracts with HMOs,
competition from the burgeoning assisted living industry, and litigation and related insurance
costs.6 Companies facing a financial squeeze may cut costs and reduce staff, putting the
quality of care at risk.7 This in turn may increase the likelihood of deficiencies that
ultimately may lead to termination of federal payments.
•
Bankruptcies. In 2000, the financial crisis led to bankruptcy for some of the nation’s large
chains, and a number of smaller companies as well. The U.S. Senate Special Committee on
Aging reported bankruptcies in five of the nation’s ten largest nursing home chains,
representing 10 percent of the nation’s nursing homes.8 The American Health Care
Association, a major trade association for the nursing home industry, reported that almost
2,000 skilled nursing facilities – caring for nearly 200,000 residents – had gone into
bankruptcy in the past year.9 The Florida Agency for Health Care Administration noted that
it was monitoring 154 facilities “because their owners are bankrupt or considered financially
unstable.”10 Some reorganizations under bankruptcy have resulted in closures and forced
relocations of residents.
•
Fraud and Abuse Claims. At the same time, both private and government litigation alleging
fraud, abuse, and neglect in nursing homes is on the rise,11 and this can bring added pressures
5
U.S. General Accounting Office, Skilled Nursing Facilities: Medicare Payment Changes Require Provider
Adjustments But Maintain Access, December 1999.
6
U.S. Senate Special Committee on Aging, Press Release, “Grassley: Bankrupt Nursing Home Chains Must Justify
Funding Requests,” Washington DC (September 5, 2000), based on Committee hearing entitled “Nursing Home
Bankruptcies: What Caused Them?” See also U.S. General Accounting Office, Statement of Laura A. Dummit
before the U.S. Senate Special Committee on Aging, “Nursing Homes: Aggregate Medicare Payments Are
Adequate Despite Bankruptcies,” (September 5, 2000).
7
See Hilzenrath, D., “Nursing Home Industry’s Financial Crisis Threatens Patent Care,” The Washington Post, E-1
(June 19, 1999), stating that “much of the nation’s nursing home industry is in such dire financial straits that
regulators and others are worried about the care elderly residents will receive.”
8
U.S. Senate Special Committee on Aging 2000. Also see U.S. General Accounting Office, Statement of Laura A.
Dummit before the U.S. Senate Special Committee on Aging, “Nursing Homes: Aggregate Medicare Payments Are
Adequate Despite Bankruptcies.”
9
Major chains in bankruptcy included Texas Health Enterprises, Vencor, Inc., Sun Healthcare Group, Inc,
Integrated Health Services, Inc., Mariner Post-Acute Network, and Genesis Health Ventures. (Close to 160,000 of
the residents were in the top 10 bankrupt chains.) See, for example, Freudenheim, Milt, “Vencor Files for
Bankruptcy Citing Cuts in Medicare Fees,” The New York Times, September 14, 1999; Conklin, J., “Sun Healthcare
Files for Chapter 11 Due to Heavy Debt and Medicare Cuts,” The Wall Street Journal, B-3 (October 15, 1999).
Note that Vencor Inc. has now been reorganized under a new name, Kindred Healthcare. See Schreiner, Bruce,
“Nursing Home Company Starts Over,” The Associated Press (April 21, 2001).
10
Mattson, p. A-8.
11
According to Aon Worldwide Actuarial Solutions, the number of claims against nursing homes nationally has
increased nine percent each year for five years, through 2000, while the average dollar amount of claims has risen
substantially. www.aon.com. “Increases in frequency and severity of claims [in the long-term care industry] have
outpaced those of other providers. . . . Long-term care liability is clearly is crisis.” Aon Healthcare Alliance,
Healthline, Vol. VIII, No. 1 (February 2001).
2
and possible closure as well. In 1999, the Department of Justice began examining a range of
enforcement actions against poor care, including use of the False Claims Act.12 In January
1999, the Texas Department of Human Service took control of a chain of 13 homes because
of alleged Medicare fraud,13 and three of these were closed. In May 2000, prosecutors
indicted a Northern California facility, charging criminal abuse and neglect.14 Families
increasingly have brought suit as well,15 and in Florida increased claims led to a widespread
liability insurance crisis, and eventually to legislation capping punitive damages.16
Involuntary terminations of Medicare/Medicaid payments are not frequent, but
terminations may compel closure and affect the lives of hundreds of nursing home residents. Yet
termination by itself does not always lead to closure. In fact, facilities that are terminated from
the Medicare/Medicaid program often gain re-certification and continue operating, sometimes
changing ownership and operating under another name.17
Recently, then, a number of facilities have been terminated and a number of facilities
have closed, although the two events are not always related. This study sought to examine those
facilities in which termination did result in closure and resident relocation. Observations about
this fairly narrow but critical set of closures within the nation’s over 17,000 nursing homes may
be useful for understanding the larger number of facilities that are experiencing or are at risk of
either termination or closure.
Because federal funds often account for a major portion of operating monies, termination
inherently jeopardizes stability and resident care. Therefore, federal and state officials confronted
with non-compliant facilities may face a dilemma. They must not tolerate poor care, and must
abide by law and regulations on termination of federal funds. Moreover, termination ultimately
may remove a provider of chronically poor care from the market, and thus protect current and
future residents. Yet termination -- which can mean high risk of closure -- may bring trauma for
residents, upheaval for families, and disruptions for staff, as well as the loss of needed nursing
home beds, especially crucial in poor urban or rural areas. Forced closure evicts residents from
their home, and in essence punishes the victim.18
12
31 U.S.C. §§3729-3733. In 1999, the Department of Justice held four regional conferences on “Nursing Home
Abuse and Neglect Prevention.” The Attorney General directed that information on “indications that health care
providers are rendering inadequate care, or harming or abusing patients . . . should expeditiously be disseminated to
the appropriate authority.” Holder, Eric, Jr., Deputy Attorney General, Memorandum to United States Attorneys;
Director, Federal Bureau of Investigation; Assistant Attorney General, Criminal Division; Assistant Attorney
General, Civil Division, “Referral of Quality of Care Allegations Concerning Health Care Providers’ (May 18,
1998).
13
Texas Department of Human Services Long Term Care Regulatory Section communication (September 2000).
Two of the homes remain closed, but one has reopened.
14
Pope, Ed, “Nursing Homes to Shut or Be Sold,” San Jose Mercury News, May 24, 2000.
15
Fisk, Margaret Cronin, “Juries Treat Nursing Home Industry With Multimillion Dollar Verdicts” and “Nursing
Home Case Gets $5 Million,” The National Law Journal (April 23, 2001).
16
Ulferts, Alisa, “Nursing Home Bill Raises Staffing, Limits Lawsuits,” St. Petersburg Times (May 5, 2001). S.B.
2001 included both a cap on damages and an increase in staffing requirements.
17
U.S. General Accounting Office, Nursing Homes: Additional Steps Needed to Strengthen Enforcement of Federal
Quality Standards, GAO/HEHS-99-46 (March 1999), p. 18.
18
Edelman, Toby., “Recent Trends in Enforcement Litigation,” Nursing Home Law Letter (February 22, 1999).
3
Thus, this report focuses on the pattern in which termination leads to relocation and
closure -- and seeks to examine how often it occurs, why it occurs, how it varies from nursing
home to nursing home, and how it could be addressed to advance quality care for nursing home
residents. The report sets out seven profiles as case studies of facilities that were decertified and
closed. It then describes findings from these profiles and from a range of interviews on
termination, use of intermediate sanctions, and relocation of residents. Finally, it makes
concluding observations that may offer guidance to front-line regulators and to policymakers
seeking workable solutions.
C.
Legal and Regulatory Framework
The nation’s 1.6 million nursing home residents in nearly 17,000 facilities are dependent
on the federal and state governments to ensure quality of care. The federal government sets
standards for homes that participate in the Medicare and Medicaid programs, and has authority to
impose sanctions against those that fail to comply.19 The federal Centers for Medicare and
Medicaid Services, formerly the Health Care Financing Administration (HCFA),20 contracts with
state agencies to survey participating facilities regularly21 and in response to complaints. States
vary as to which state agency is responsible for certification, but it is generally the state
department of health. In addition, each state has a nursing home licensure law setting out
standards and enforcement remedies. When the states conduct the Medicare/Medicaid surveys,
they also check for compliance with their own licensing standards.
1. Federal Enforcement.
Enforcement of Medicare-Medicaid standards is a shared federal-state endeavor.22 HCFA has
responsibility for enforcing standards in homes with Medicare (or both Medicare and Medicaid)
certification (about 86 percent of certified homes), while states have responsibility for Medicaidonly certified homes. When a Medicare-certified home has severe deficiencies or fails to correct
deficiencies in a timely way, states must refer the case to the HCFA regional office with
recommendations for sanctions, and HCFA has final authority to impose the sanctions. HCFA
generally accepts a state’s recommendations for sanctions but can modify them.
a. Intermediate Sanctions. Prior to 1987, enforcement was largely an “all or nothing”
process. Decertification or “termination” of federal participation in Medicare/Medicaid was the
only remedy, and was seldom invoked because of its harmful consequences. The landmark 1987
19
42 U.S.C. §1395i-3(a)- (h), Medicare; 42 U.S.C. §1396r(a)-(h), Medicaid.
In 2001, the Health Care Financing Administration changed its name to the Centers for Medicare and Medicaid
Services (CMS). The research and interviews for this study were conducted before the name change. Therefore, the
paper will refer to HCFA for historical accuracy and ease of reading, until the section on recommendations, when
CMS will be used.
21
The survey agency must conduct a standard survey not later than 15 months after the previous standard survey;
and the statewide average interval between standard surveys must be 12 months or less. 42 C.F.R. §§488.308(a) &
(b).
22
42 U.S.C. §1395i-3(h), Medicare; 42 U.S.C. §1396r(h), Medicaid; 42 C.F.R. §§488.300 – 488.456. For a
summary of nursing home enforcement law, see Edelman, Toby, “What Happened to Enforcement? A Study of
Enforcement Under the Nursing Home Reform Law,” National Senior Citizens Law Center, June 10, 1999.
20
4
Nursing Home Reform Law23 added a range of “intermediate sanctions” including civil monetary
penalties, temporary management, denial of payments for new admissions, monitoring, directed
in-service training, and plans of correction. Regulations implementing these sanctions were
promulgated in 1994 and became effective in July 1995.24
To determine triggers for these various intermediate sanctions, HCFA has established a
“scope and severity” grid.25 Deficiencies fall into one of 12 categories, labeled “A” through “L”
depending on the severity (harm or potential for harm) and the scope (isolated, pattern or
widespread). An “A” deficiency is the least serious -- one that is isolated, poses no actual harm
and has the potential for no more than minimal harm. An “L” deficiency is the most serious -one that is widespread and causes death or serious injury to residents or has the potential to do
so.
The sanctions for those deficiencies are divided into three groups and applied according
to this scope and severity grid. For example, if a home has a deficiency noted as a “D” on the
grid, required sanctions include “a directed plan of correction, directed in-service training, and/or
state monitoring.” Additional optional sanctions include “denial of payment for new admissions
or for all individuals, and/or a civil monetary penalty.” Deficiencies in the “J” through “L”
categories are deemed to place the residents in “immediate jeopardy,” and required sanctions are
temporary management or termination, but other sanctions may be added as well. HCFA
provides that the choice of sanctions also must take into account a facility’s prior history of
noncompliance and the likelihood that the selected remedies will result in compliance.
b. Termination. Termination from the federal Medicare/Medicaid program or
discontinuation of federal funding is the most severe remedy. Termination is clearly a last resort
and is used in two circumstances – if there is immediate jeopardy to the residents, or if the
facility does not achieve substantial compliance with all requirements within six months.
In the first circumstance, immediate jeopardy to the residents, federal law provides that
the state must recommend and HCFA must impose either temporary management or termination.
If the alternative of temporary management is not used, termination procedures must be
completed within 23 days from the last day of the survey that found the immediate jeopardy, if it
is not abated before then.26
Second, termination is used if the facility does not achieve substantial compliance
(having no more than level “D” deficiencies, those that pose no more than a potential for
minimal harm to residents) within six months of the date of the first survey that found it to be out
of compliance.27 This is called the “six-month rule.” The rule has been the leading trigger for
termination, and has been the topic of extensive legal and policy debate.28
23
Omnibus Reconciliation Act of 1987, Pub.L. No. 100-203, 101 Stat. 1330-182 (1987).
59 Fed. Reg. 56, 116 (November 10, 1994).
25
HCFA State Operations Manual (SOM), §7400. The SOM is available at www.hcfa.gov. See the Scope and
Severity grid at Appendix A.
26
42 U.S.C. §1395i (h)(4); 42 C.F.R. §488.410; HCFA State Operations Manual §§7301(A), 7556(B).
27
42 U.S.C. §1395I(h)(2)(C); 42 C.F.R. §488.412; HCFA State Operations Manual §§7301(B), 7311, 7556(C).
28
See Section VI(A)(4) of this report.
24
5
2. Application of Federal Sanctions.
To what extent are the intermediate sanctions in law and regulations actually used, and with what
results? A 1998 General Accounting Office report on California facilities found that 98 percent
of homes cited with deficiencies between July 1995 and April 1998 were given a reprieve before
any sanctions took effect. It also found that nationally, 99 percent of facilities with deficiencies
were granted a grace period,29 so that intermediate sanctions never came into play.
A 1999 GAO report found that while over one-quarter of homes in recent years had deficiencies
that caused harm to residents or put them at risk, sanctions were rarely implemented. Some
homes with a history of problems appeared to cycle through a pattern of identified deficiencies,
temporary correction of the problem (before any sanctions were in place), and re-emergence of
the same problems. Many homes were out of compliance again by the next survey or inspection,
and were again referred for sanctions.”30 In short, the threat of sanctions “helped bring the
homes into temporary compliance but provided little incentive to keep them from slipping back
out of compliance.”31 The report detailed limitations of the current sanctioning practices,
including failure to impose intermediate sanctions, a backlog of appeals in cases of civil
monetary penalties, and a weak system for responding to complaints. A recent survey of state
regulatory agencies also documented infrequent and problematic use of intermediate sanctions.32
Federal actions in 1999 sought to boost the frequency of the use of sanctions. In
December of that year, HCFA announced instructions to states to impose immediate sanctions,
such as fines, in more situations. HCFA also increased state flexibility to impose other sanctions
such as denials of payments for new admissions in a more timely way.33
3. State Enforcement.
Layered over the federal system of standards and enforcement is the state regulatory structure.
States enforce licensure criteria through a varying array of tools from license revocation to
intermediate sanctions similar to those in federal law. States differ dramatically in statutory
29
U.S. General Accounting Office, California Nursing Homes: Care Problems Persist Despite Federal and State
Oversight, GAO/HEHS-98-202 (July 1998).
30
GAO, Nursing Homes: Additional Steps Needed, p. 13. Of the 74 homes in the March 1999 study, states made a
total of 241 referrals to HCFA for sanctions. HCFA initiated 176 denials of payments for new admission, 115 civil
monetary penalties and 44 terminations – but often homes made corrections and HCFA rescinded the sanctions. pp.
12 – 13. Also see U.S. General Accounting Office, Nursing Home Care: Enhanced HCFA Oversight of State
Programs Would Better Ensure Quality, GAO/HEHS-00-6 (November 1999).
31
Id., GAO, Additional Steps Needed, p.12.
32
Harrington, Charlene, Mullan, Joe & Carrillo, Helen, State Nursing Home Enforcement Systems, Department of
Social and Behavioral Sciences, University of California, San Francisco, for the Kaiser Commission on Medicaid
and the Uninsured (June 2001).
33
HCFA Press Release, “Problem Nursing Homes to Face Immediate Sanctions,” and HCFA Fact Sheet, “Assuring
Quality Care for Nursing Home Residents,” Washington DC (December 14, 1999). See also GAO, Nursing Homes:
Sustained Efforts Are Essential; and U.S. Health Care Financing Administration, “Quarterly Report on the Progress
of the Nursing Home Initiative,” Calendar Year 2000 Fourth Quarter, Report to Senator Grassley, U.S. Senate
Special Committee on Aging, Washington DC (2001).
6
sanctions, use of state sanctions in practice, and interplay of the state and federal enforcement
systems.34
34
Edelman, What Happened to Enforcement. See also Harrington, Mullan, & Carrillo, which found that “many
states consider their own state intermediate sanctions to be more effective and easier to use than the HCFA
procedures,” p. 22.
7
II. Methodology
A.
Project Tasks
The project methodology involved five steps. First, the project completed a background
search of relevant literature, as well as state and federal law.
Second, the project selected seven nursing homes to profile. These were all homes with
involuntary termination from Medicare/Medicaid, resident relocation, and closure. Selection
factors included geographic location; size; ownership; state laws; varying approaches and
experiences in the termination or closure process including judicial actions; and availability of
information. While the selection sought diversity, the sample was not drawn scientifically. The
project did not compare these seven profiles with those of similar facilities that were terminated
or threatened with termination but were able to turn around and continue operating. Rather, this
project looked at closures for lessons learned.
All of the facilities studied were closed between 1996 and 2000. They were either in
urban or suburban locations. Of the seven homes, one was a non-profit facility and the rest were
for-profit; two were part of larger nursing homes chains and a third was sold to a chain before the
closure occurred. Five were certified for both Medicare and Medicaid, while two were
Medicaid-only facilities. Of the Medicaid-only facilities, one was terminated by the federal
government and one by the state. Some of the facilities were involved in court actions: one
sought an injunction from federal court to stay the termination; another fought in court against a
state petition for receivership; and a third was the defendant in a private lawsuit that alleged
abuse and neglect of a resident. One facility had a high proportion of residents with mental
illness and substance abuse. The number of residents relocated ranged from 34 to 160. The
relocation period varied from one day to several months.
For each of the seven facilities, the project obtained survey and enforcement documents
to the extent possible, constructed an enforcement history, and interviewed key state officials,
HCFA regional officials, long-term care ombudsmen and others where available. The interviews
used a structured guide but built in considerable flexibility.
Third, from March through September of 2000 the project conducted a range of more
general background interviews about nursing home terminations with HCFA officials in the
central and regional offices, experts in long-term care, long-term care management firms,
gerontologists, attorneys, advocates, and industry representatives. These contacts (both facilityspecific and general) are listed at Appendix E.
Fourth, the project filed a Freedom of Information Act (FOIA) request with each of the
10 HCFA regional offices to get data on the number of involuntary terminations and closures in
the 1997 to 2000 period. The FOIA request also sought information on the use of intermediate
sanctions, specifically asking for the number of civil monetary penalties, denials of payment for
new admissions, and temporary managements imposed in the 1999 calendar year.
8
Finally, the project examined state long-term care receivership statutes. Receiverships
can offer an alternative to termination and closure of facilities. Using an earlier American Bar
Association study as a base, the project conducted a survey of long-term care receivership
statutes currently in effect, and analyzed the laws of the six states in which the profiled facilities
were located.
B.
Note on Enforcement Data
An initial finding of this project is that it was difficult to get the data needed to study the
problem. Nursing home survey results are public information. The results are recorded on a
HCFA Form 2567, which is a statement of deficiencies with space for the facility’s plan of
correction. Also public are state and HCFA letters concerning remedies. But in some cases
these are difficult to obtain. Long-term care ombudsmen and advocates were the best source of
information. In two cases, however, the ombudsmen stated that the survey and enforcement
documents were not always readily available to them. A formal letter to the state licensure
agency generally resulted in at least some of the documents, but the history was not always
complete, and in some cases there was a lengthy delay. Thus, the project collected formal
documents to the extent possible, and supplemented these with ombudsman and advocate files
and news articles.
In addition, the project found that while HCFA keeps track of nursing home terminations,
it does not maintain data on closures. Closure is a state matter tracked solely by state licensure
and enforcement agencies. To respond to the project’s FOIA request concerning the number of
homes that were both terminated and closed, some regional offices had to survey their state
contacts. One HCFA regional official stated, “We don’t keep statistics on closures, since that is
more of a state issue. But we usually remember which facilities closed.”
Finally, data on use of federal intermediate sanctions were not readily available from the
HCFA central office. The regional offices keep these data. According to a regional office
staffperson, “All of the data requested [on terminations, closures, and intermediate sanctions]
should really be in one central place in HCFA. But some regional offices have homegrown data
systems, and so all of the data is not together. Regional offices do not necessarily keep current
the forms used to report enforcement actions.” Moreover, data maintained by the regional
offices on federal enforcement actions did not appear coordinated with data on state enforcement
actions. This lack of centralized HCFA data on enforcement also was a key finding of the March
1999 GAO report.35 In 2000, after the bulk of the research for this report was completed,
HCFA began to operationalize a “Long-Term Care Enforcement Tracking System;” and also
directed its regional offices to prepare tracking reports.36
35
The report noted that “HCFA lacks a system that integrates federal and state enforcement information to help
ensure that homes receive appropriate regulatory attention. Such a system would track key information about steps
taken by HCFA offices and the states, such as verification that deficiencies were corrected or sanctions imposed.
Although HCFA’s Online Survey, Certification, and Reporting (OSCAR) system was developed for this purpose,
we learned that the system’s information was incomplete and inaccurate because states and HCFA have not
consistently entered data into OSCAR. We found that the HCFA regions and states we visited maintain and use
their own systems, not OSCAR, to monitor enforcement actions.” GAO, Additional Steps Needed, p. 21.
36
According to the GAO, “HCFA’s Long-Term Care Enforcement Tracking System – the first comprehensive
national database on federal enforcement actions against nursing homes – became operational in all regions in
9
III. Facility Profile Summaries
This section includes summary profiles for the seven facilities studied. They were
compiled from enforcement documents where available, as well as interviews with state and
federal officials, ombudsmen, and others. The full set of profiles, including quotations from
respondents interviewed, is at Appendix B. Each of the profiles tells a tale of failure, poor care,
anguished decisions, and disruption that ends with a forced dispersal of residents and a vacant
home.
A.
Cobbs Creek Nursing Center
Description: 205-bed Philadelphia facility owned by a local not-for-profit corporation.
Recent Enforcement History: While an August 1997 survey found few deficiencies, a November
complaint alleging neglect of an 88-year old resident led to a state investigation and
recommendation for sanctions. A complaint survey (a survey triggered by a complaint that a
facility is not in compliance with federal requirements) in May 1998 found residents in
immediate jeopardy. Cobbs Creek was terminated from Medicare/Medicaid on May 24, 1998,
and closed in June.
Relocation: The 138 residents, primarily Medicaid beneficiaries, were relocated between June 24
and July 20, 1998. Most went to other facilities in Philadelphia and surrounding areas.
B.
Venoy Nursing Center
Description: 202-bed facility in Wayne, Michigan, owned by a private individual.
Recent Enforcement History: In January 1996, the state found numerous deficiencies and a
leaking roof. In October 1996, as well as in May and October 1997, the state again made
findings of deficiencies; and recommended termination in October. In February 1998, the state
referred Venoy to the new Collaborative Remediation Project under its Resident Protection
Initiative. In April 1998, the state sent in a temporary manager, yet the owner’s staff continued
to play a significant operational role. The roof was caving in. On April 27, 1998, Venoy was
terminated from the Medicare/ Medicaid program, and subsequently closed due to both the 180day rule and to immediate jeopardy.
Relocation: The 133 residents were relocated, primarily to other nursing facilities in the state,
over a two-to-three week period in the Spring of 1998.
January 2000 and includes data beginning with fiscal year 2000.” GAO, Nursing Homes: Sustained Efforts Are
Essential, p. 30. This GAO report also notes that “HCFA has directed its 10 regional offices to periodically prepare
18 ‘tracking’ reports’ . . . [including for example] pending nursing home terminations.,” p. 39.
10
C.
Belle Woods Continuing Care Center
Description: 220-bed, Medicaid-only facility in Belleville, Michigan.
Recent Enforcement History: Belleville was identified as a “poor performing facility” in 1997,
and exhibited a yo-yo compliance and enforcement pattern throughout 1998. The state made a
February finding of deficiencies and recommended sanctions, accepted the facility’s attestation
that the problems were fixed in April, confirmed additional complaints of inadequate care in
July, found immediate jeopardy due to hazardous bedrails in September, recommended
termination in October, and found substantial compliance in December. In January 1999, the
state again found immediate jeopardy, due to a critical shortage of staff and in February
appointed a temporary manager. Despite this, surveyors identified additional deficiencies, and
again found immediate jeopardy in October. The temporary manager did not have sufficient
resources to operate the facility. Staff resigned and residents were at risk. The owner was
bankrupt, and the bank held the mortgage for the facility. Belle Woods was terminated from
Medicaid on October 25, 1999, and closed.
Relocation: In November 1999, almost 70 residents were relocated to other nursing homes in the
state.
D.
Audubon Healthcare Center
Description: 276-bed facility in Bayside, Wisconsin, owned by a major national chain that had
declared bankruptcy.
Recent Enforcement History: Surveys in December 1998 and July 1999 found numerous
problems with resident care and safety. An October 1999 survey found quality of care
deficiencies causing harm to residents, and a December 1999 revisit found a substandard quality
of care. In January 2000, the state found the residents were in immediate jeopardy. While the
jeopardy was abated, deficiencies remained. In late February 2000, the state again found
immediate jeopardy. On March 2, 2000, Audubon was terminated from Medicare/Medicaid.
Following this, the license was revoked, and the home closed.
Relocation: Over 160 residents, many of whom were chronically mentally ill, were relocated
between March and June, 2000. Of these, 14 went to community facilities, one went home, and
the rest were transferred to nursing facilities throughout the state, including others owned by the
bankrupt chain.
E.
Snapper Creek Nursing Home
Description: 110-bed facility in Kendall, Florida, owned by a local businessman.
Recent Enforcement History: Snapper Creek had a history of egregious violations. From 1991
to 1993, the long-term care ombudsman documented dozens of problems; and in 1994, found the
facility had no soap for a week, causing infections to soar. In March 1995, a resident death
triggered a private lawsuit against the facility. In February and April 1996, the state found
numerous deficiencies and imposed sanctions. In April 1996, the long-term care ombudsman
asked the HCFA regional office to close Snapper Creek. In May, a national chain bought the
home. In June 1996, HCFA and state officials found immediate jeopardy due to lack of
protection against fire. The facility was terminated from Medicare/Medicaid, and subsequently
closed.
Relocation: The 67 residents were relocated to other facilities during the Summer of 1996.
11
F.
Laurel Glen Convalescent
Description: Medicaid-only facility in Redwood City, California, with 30+ residents.
Recent Enforcement History: In August 1998, the state found deficiencies and imposed
sanctions, but accepted the facility’s plan of correction in February 1999. A March revisit again
found deficiencies, and in June Laurel Glen was terminated from the federal Medicaid program.
It remained open, however, with state Medicaid funds. An October survey found immediate
jeopardy, which was abated, still leaving serious deficiencies. A January 2000 investigation
again found immediate jeopardy. In February, the state sought a receiver, but the judge denied
the request. Laurel Glen closed on April 14, 2000.
Relocation: All 34 residents were relocated on April 14 to other area nursing homes.
G.
Greenbelt Nursing and Rehabilitation Center
Description: 132-bed facility in Greenbelt, Maryland, owned by a national chain.
Recent Enforcement History: Events leading to closure occurred primarily during 1998, and
followed two separate regulatory tracks. January, April, and June surveys found the facility out
of compliance. After an August investigation, HCFA concluded that the facility had been out of
compliance for six months, and must be terminated. However, the U.S. Attorney’s Office was
investigating whether the facility had violated the False Claims Act. This Office filed a
complaint to enjoin HCFA and the state from termination, and the court approved a consent
order calling for a temporary manager and federal monitor. Both began work. However, in
December HCFA terminated Greenbelt from Medicaid, and the facility then brought suit to
enjoin the termination. In a lengthy opinion, the court rejected Greenbelt’s request, finding that
HCFA had authority to terminate, and declining to interfere. Greenbelt closed in January 1999.
Relocation: The 85 residents were relocated to other facilities in the state over the course of a
month.
12
IV.
Findings from Profiles and Interviews
The facility profiles (see Appendix B), along with more general background interviews,
yield findings in five areas: (1) frequency of and reasons for involuntary terminations and
closures; (2) use of intermediate sanctions; (3) use of one critical intermediate sanction in
particular – temporary management; (4) use of state long-term care receivership statutes; and (5)
resident relocation. Taken together, these findings offer insights into the convoluted problem of
nursing home closure due to enforcement actions, and may lead to possible approaches toward
addressing it.
A. Terminations and Closures
1. At-Risk Facilities.
The project interviews and facility profiles showed a shifting scene of financial and regulatory
actions in some of the nation’s most poorly operated facilities. Several respondents sought to
categorize facilities that were “in trouble.” A long-term care management consultant said, “they
could be for-profit or non-profit. Problem facilities cut across the board but they are all
characterized by poor management, often high turnover, especially of the administrator and
director of nursing, often staffing problems.” A state official observed “Facilities that are in
trouble too often do not have money, staff, a good director of nursing and administrator, and they
simply can’t be turned around.” Some also have problems with the physical plant. Two state
regulators cited the Cobbs Creek building as a factor in the closure decision. In Venoy Nursing
Home, the faulty roof was a constant theme.
Troubled facilities frequently exhibit a checkered pattern of compliance in which they are
cited for deficiencies, sanctions are threatened or imposed, the immediate problems are
corrected, the facilities receive a “clean bill of health,” and are soon cited and sanctioned again
for the same or different deficiencies. The March 1999 GAO report referred to this as a “yo-yo
pattern of compliance and non-compliance,” and noted that of the 74 facilities reviewed, 69 were
again referred by the states to HCFA after first being found out of compliance, and “some went
through this process an many as six or seven times.”37 In total, the GAO found that four out of
ten homes with severe deficiencies were “repeat violators.”38 A long-term care lawyer calls it
“the compliance game.” The facilities profiled here generally show the same pattern, with the
extreme being Belle Woods. In the two-year period prior to its closure, it appears to have been
sanctioned by the state or HCFA at least 14 times, and was found to be back in substantial
compliance at least four times.
But the enforcement turnabouts are only part of the picture. Troubled facilities often are
bought and sold -- sometimes several times. Frequent transfers in ownership make enforcement
and tracking more difficult. A HCFA regional office official noted that many troubled facilities
“have been sold, or changed their name. It’s a sliding cast of characters and there are various
regroupings. Sometimes a regrouping applies for certification as a new entity.” Another HCFA
37
38
GAO, Additional Steps Needed, pp. 13 – 14.
Id, p. 12.
13
official stated that “some terminations may have come back under a different name, so it’s hard
to tell for sure” which facilities have closed.
In some cases, the owners have not put in sufficient resources, and then look to selling as
a way out. A state regulator described the situation in Belle Woods: “The owner was out of
state, looking to sell, and did not want to put money into the facility. The owner was already
bankrupt, and the bank held the mortgage, so it was the bank that was concerned about what
happened because they would lose collateral.” A long-term care attorney in another state agreed:
“There are a lot of instances in which a facility in trouble is bought by a new owner. There are
always buyers waiting for homes. There have also been bankruptcies.” A state official noted
that, “very few facilities close. They are too valuable to close. They are sold to someone else.
Even when the certification terminates, they generally stay in business and work out a sale.”
Regardless of whether a facility’s ownership is transferred, regulatory and financial
strains can lead to both voluntary and involuntary terminations and closures. A facility may
“voluntarily” terminate or close under pressure. A long-term care ombudsman reported that
“sometimes homes will ‘voluntarily’ close when they have a bad inspection and perceive loss of
licensure and decertification as a threat, and decide it is better to close. So it looks like a
voluntary closure for business reasons.” A long-term care manager explained it from an industry
point of view: “Sometimes a small chain will fall into a pattern of not being in a good
relationship with the regulators, and its hard to pull out of it. There may be financial difficulties,
especially since reimbursement rates are low. Involuntary terminations are fairly rare, but
voluntary terminations under regulatory and financial pressure are much more common.”
While perceived as a last resort, termination does not always spell closure. In fact, the
majority of the terminated homes “come back” into certification. HCFA has a “reasonable
assurance” period for recertification, which can vary in length.39 In the GAO study of 74 homes,
seven were terminated, but six of these reapplied and were recertified. Of these, in “three of the
six reinstated homes in our group, the pattern of noncompliance returned.”40 A home may
remain open after termination of federal monies by using private funds or state Medicaid funds.
An advocate explained, “In some instances, there has been an agreement with the state that the
facility will not close upon termination, but will keep operating on state Medicaid funds until
recertification. Four or five facilities have done this.” A long-term care management consultant
concurred: “An owner may elect to leave the facility open after termination and absorb the costs
while they reapply. Some 80 to 90 percent of facilities terminated can turn around and do not
close. Sometimes the facility will be sold, and the buyer and seller will make an agreement as to
who will pay for the costs of keeping the place open until federal funding is started again.”
39
HCFA State Operations Manual §7321. The 1999 GAO report stated that “after a terminated home has been
readmitted in Medicare, HCFA policy prevents state agencies from considering the home’s prior record in
determining if the home should be designed as a poorly performing facility, effectively giving the home a ‘clean
slate.’” GAO, Additional Steps Needed, p. 18. The 2000 GAO report noted that HCFA has given “additional
guidance to . . . regional offices about the length of the so-called ‘reasonable assurance period’ during which
terminated homes must demonstrate that they have corrected the deficient practices that led to their terminations.”
The report also stated that HCFA now requires “pretermination performance to be considered” in determining any
future enforcement actions against terminated homes. GAO, Nursing Homes: Sustained Efforts Are Essential, p. 34.
40
GAO, Additional Steps Needed, p. 14.
14
2. Number of Cases.
To view the entire picture of nursing home terminations and closures comprehensively, several
sets of numbers are involved, although in some cases they are not readily available:
•
•
•
•
•
•
Total number of facilities. This is the total number of facilities operating in the United
States. As of September, 2000 this number was approximately 17,000.41
Total terminations. This is the total number of homes terminated either voluntarily or
involuntarily. OSCAR data shows that for the period January 1, 1997 through September 1,
2000, this number is 893.42
Threats of termination. This is the number of homes in which involuntary termination is
threatened but not necessarily imposed. According to HCFA, in 1998, only 30 of the more
than 8300 facilities given initial notice of termination were in fact terminated.43 According
to a study for the Kaiser Commission, in 1999 17 states issued a total of 46 termination
notices.44
Involuntary terminations. This is the number of involuntary terminations imposed. OSCAR
data show that for the period January 1, 1997 through September 1, 2000, this number was
111. By surveying each HCFA regional office, the project determined the total number since
1997 was 128.45 The discrepancies by region are shown in Table 1. According to HCFA, the
total number of involuntary terminations nationwide for 1998 was 30,46 and the number of
involuntary terminations from January 1998 through March 2000 was 66.47
Closures. This is the number of facilities closed. This number is unknown, and would
include facilities closed for reasons of enforcement (termination and licensure revocation),
bankruptcy and financial difficulties, sale or replacement, or natural disaster.
Involuntary termination and closure. This is the number of facilities involuntarily terminated
and then closed -- the subject of this study. The project’s survey of HCFA regional offices
revealed a total of 33 homes since January 1997.
HCFA regional office data secured through the project’s Freedom of Information Act request
is shown below. The number of terminations according to OSCAR data for the same period is
shown in parentheses.
41
GAO, Nursing Homes: Sustained Efforts Are Essential, p. 5.
Health Care Financing Administration, OSCAR Report 14S, “Termination Counts Broken Out by Reason for
Skilled Nursing Facilities, 01/01/97 to 09/01/2000.”
43
Hash, Mike, HCFA Deputy Administrator, Testimony before the Senate Select Committee on Aging (March 22,
1999). Note, however, that this high number of threats of termination may be misleading, since the HCFA notice
accompanying any survey with deficiencies may include a termination date of six months after the survey exit date,
if deficiencies are not corrected.
44
Harrington, Mullan, & Carrillo, p. 18.
45
The HCFA central office spreadsheet showed a total of 110 facilities nationwide involuntarily terminated since
1997, but not broken down by region. Note also that the 1999 GAO study found 44 terminations in 74 homes in
four HCFA regions over a three-year period. GAO, Additional Steps Needed, p. 13.
46
Hash testimony.
47
Internal HCFA memorandum made available by Region III office, entitled “Nursing Homes with Involuntary
Terminations Since 10/1/98” (March 22, 2000).
42
15
HCFA
Region
Table 1: Nursing Home Terminations
Facilities
Facilities
Involuntarily
Involuntarily
Terminated
Terminated Since
and Closed Since
1997
1997
Region I
Region II
Region III
Region IV
Region V
Region VI
Region VII
Region VIII
Region IX
Region X
Total
4 (1)
2 (1)
24 (16)
17 (16)
27 (21)
31 (31)
6 (7)
150 (1)
15 (16)
1 (1)
128 (111) 51
3
2
4
8
1148
not available
349
1
1
0
33
Thus, the universe of involuntary termination plus closure cases is very small. To
summarize, there are a substantial number of instances in which nursing homes have been
involuntarily terminated from Medicare/Medicaid – between 111 and 128 over the past three to
four years. In addition, an indeterminate number of nursing homes have closed for a variety of
reasons. However, the number of homes intersecting both of these categories appears to be only
33.52 Of these, the project profiled seven.
3. Triggers of Termination.
There are two legal triggers for involuntary termination -- (1) deficiencies constituting
“immediate jeopardy” that are not corrected within a maximum of 23 days; and (2) failure to
48
The Regional Office indicated 10, but noted this figure did not include any facilities in Indiana involuntarily
terminated and closed. Background interviews for this study disclosed at least one such facility. Thus, the chart
shows 11 facilities.
49
This approximate figure was based only on a staff interview.
50
This figure was based on a staff interview.
51
An OSCAR report for all of the HCFA Regions, furnished by HCFA Region VI, shows slightly different figures
from those collected through the FOIA inquiry, totaling 111 instead of 128.
52
The number may be slightly higher, due to lack of information from Region VI.
16
achieve substantial compliance within six months of the initial finding of noncompliance – the
“six-month rule.”53 The seven profiled homes in the study were terminated for the following
reasons:
•
•
•
•
•
•
•
Cobbs Creek – six-month rule and immediate jeopardy;
Venoy – six-month rule and immediate jeopardy;
Belle Woods -- immediate jeopardy (although the facility was out of compliance for most of
the six months prior to termination);
Audubon -- immediate jeopardy (although the facility was out of compliance for most of the
six months prior to termination);
Snapper Creek -- immediate jeopardy (although the facility was out of compliance for most
of the six months prior to termination);
Greenbelt – six-month rule; and
Laurel Glen -- immediate jeopardy.
While immediate jeopardy was the primary reason for termination in several of the
profiled homes, this appears to be atypical. Many project respondents commented that the sixmonth rule is the predominant reason for termination. Two management consultants and two
state regulators observed that HCFA terminates facilities primarily because of the six-month
rule. A HCFA regional official agreed: “The terminations are mainly because of the six-month
rule. The facilities are not totally out of control. They should have gotten it together. But they
just have not gotten back in compliance.” Staff from another HCFA regional office remarked
that “Most of the terminations are due to the 180-day rule. In cases of immediate jeopardy, 99
percent of the time the cause of the immediate jeopardy will be corrected within the 23-day time
limit.” An official from the HCFA central staff confirmed that “There are not many terminations
for immediate jeopardy. Generally, if there is immediate jeopardy, the facility is able to mitigate
it and goes onto the longer time track, and then eventually may be terminated after 180 days.” It
appears there is no readily available national data to confirm this. HCFA does not capture data
on number of involuntary terminations due to immediate jeopardy as compared with the number
due to the six-month rule.
4. The Six-Month Rule.
The six-month rule provides for termination if the facility does not achieve substantial
compliance within six months of the date of the first survey that found it to be out of compliance.
Although the six-month rule appears to be the primary trigger for involuntary termination, it has
been controversial in law and policy. Courts and policymakers have debated the legal
interpretation of the federal statute54 on two related but different questions: (a) can HCFA
impose involuntary termination through the six-month rule, absent a finding of immediate
jeopardy; and (b) does HCFA have any discretion in application of the six-month rule?
53
54
42 C.F.R. §488.410, §488.412; HCFA State Operations Manual, §7556; §7308.
42 U.S.C. §1395I-3(h)(2). See 42 C.F.R. §§488.412(d) & 488.450.
17
A number of courts55 have argued over the first question, with some cases finding that the
government lacked authority to terminate a facility absent a finding of immediate jeopardy,56
while other cases found sufficient authority.57 In the Greenbelt case (Northern Health Facilities,
Inc. v. United States)58 the facility argued that HCFA lacked authority to terminate on the sixmonth rule alone, and that residents would suffer greater risk from transfer trauma if forced to
move than any risk from remaining in the facility. Disagreeing with the legal analysis of three
previous cases, and lamenting the outcome as “inequitable,” the judge nonetheless found that
HCFA had authority to terminate a facility under the six-month rule, even though the facility did
not have deficiencies that immediately jeopardized residents’ health and safety.
Policymakers, regulators and advocates also have disagreed on whether HCFA regional
offices have any discretion on implementation of the six-month rule. Some maintain that
according to the statute HCFA has no authority to extend the time of termination beyond six
months (or 180 days). The statute provides “The Secretary may continue payments, over a
period of not longer than 6 months after the effective date of the findings. . . .”59 A HCFA
official from the central office and a second from a regional office both stated there is simply no
flexibility in the wording.
Others contend it is not so clear-cut. In Northern Health Facilities, Inc., the Greenbelt
facility argued (unsuccessfully) that a review of a number of statutory provisions taken together,
as well as the legislative history creating the intermediate sanctions, support the position that
HCFA has discretion to extend the time period. A long-term care attorney who had previously
played a leading role in the U.S. Attorney’s actions in Greenbelt concurred that “the 180-day
requirement can be interpreted to allow for discretion. You have to read that section of the law
in conjunction with the sections on intermediate sanctions.” This attorney charged that HCFA’s
strict interpretation of the law requires the agency to terminate on a rote basis without full
consideration of remedies such as temporary management.60
Another question relates to the severity of deficiencies for homes terminated under the
six-month rule. Data on this issue were not readily available from HCFA, and did not appear to
be compiled routinely. However, one regional office had surveyed the other regions to
determine the number and percent of facilities involuntarily terminated with only “D” level
deficiencies. The results, made available in an internal memorandum, showed that
55
For a thorough review of these cases and the legal arguments involved, see Lowe, J., “Northern Health Facilities,
Inc. v. United States: Enforcing the Nursing Home Reform Act,” unpublished paper, Arlington VA (May 2000).
56
Mountainview Nursing and Rehabilitation Center, Inc. v Department of Health and Human Services, 93 CV 1692
(M.D.Pa. Nov. 18, 1993); and Claridge House, Inc. v Department of Health and Human Services, 795 F. Supp. 1393
(S.D. Ohio 1991). Also see Libbie Rehabilitation Center, Inc. v Shalala, 26 F. Supp. 2d 128 (D.D.C. 1998) in which
the court did not reach the issue.
57
Lake County Rehabilitation Center, Inc. v Shalala, 854 F. Supp. 1329 (N.D. Ind. 1994); Northern Health
Facilities, Inc. v. United States, 39 F. Supp. 2d 563 (D. Md. 1998). Also see Vencor Nursing Centers, L.P. v.
Shalala, 63 F. Supp. 2d 1 (D.D.C. 1999) in which the court did not reach the merits of whether there must be
immediate jeopardy to terminate, but found insufficient justification for issuing a temporary restraining order to halt
the termination.
58
Northern Health Facilities, Inc. v. United States, 39 F. Supp. 2d 563 (D. Md. 1998).
59
42 U.S.C. §1395I-3(h)(2)(C).
60
Another long-term care attorney maintained that the statutory language simply provides a payment rule that does
not necessarily preclude another survey and the resumption of payments when compliance is achieved.
18
approximately nine percent of involuntary terminations were due to “D” level deficiencies
only.61
Interview respondents generally found the six-month rule problematic. Several charged
that application of the rule can cause traumatic resident relocations in situations where care
deficiencies may not be serious enough to warrant it. They argued that it promotes a “knee jerk”
reaction rather than a thoughtful assessment of alternatives. Some who interpret the law strictly
as allowing no discretion felt it should be changed:
•
“At six months the bell rings, and HCFA says they can’t do anything except [termination
leading to] closure.” (long-term care attorney)
•
“Often when there is a termination after six months, HCFA is at least as surprised as the
facility. HCFA thought they would recover." (HCFA regional office)
•
“We could change the way we look at the clock, altering the six-month rule.” (HCFA central
office staff)
•
“Nobody wants to close facilities. The regs are tough on minor deficiencies. It is difficult to
explain to people why the facility must close in 180 days.” (state regulator)
•
“After 170 days, if there are still ‘D’ violations, what then is in the public interest? To move
all hundred plus residents, just because of a deficiency concerning one resident? The 180rule is a fiasco.” (state regulator)
•
“In 1999, we terminated nine facilities -- a huge number for the state. And many were only
at the D level. The terminations were due to the six-month rule. In some cases, the state
refused to recommend termination of these facilities to HCFA, but HCFA terminated
anyway, due to the six-month rule. There should not be terminations for D-level
deficiencies.” (state regulator)
•
“The six-month rule has turned into a game of chicken between the states and the owners,
with the residents in between. It’s especially bad if the termination is for D level
deficiencies.” (long-term care ombudsman)
5. Divergent Perspectives.
Whether termination is triggered by immediate jeopardy or by the six-month rule, it may set the
facility on a path toward closure and relocation of residents. Respondents expressed very
different attitudes about this potential outcome -- and not necessarily along traditional industry
61
Internal HCFA memorandum, “Nursing Homes with Involuntary Terminations Since 10/1/98” (March 22, 2000).
Note that a D level violation is one that causes “no actual harm with potential for more than minimal harm that is not
immediate jeopardy.” It triggers the required remedies of a directed plan of correction, state monitoring and/or
directed in-service training; and the optional remedies of denial of payment for new admissions or for all
individuals, and/or civil monetary penalties. HCFA State Operations Manual, §7400(E).
19
versus advocate or industry versus regulator lines. Threat of closure can align providers and
consumers against regulatory action, although the motivations may be mixed.62
In most of the profiled cases, family members and long-term care ombudsmen decried
the closure of the home, citing potential harm to residents. However, in some instances
ombudsmen, advocates, and others recognized the need for closure, and because the harm to
residents of remaining might outweigh the harm of moving. In Snapper Creek, the ombudsman
wrote to HCFA asking that the facility be closed; and in Audubon, one of the ombudsmen
involved commented that “it should have been closed a long time ago.” A Texas ombudsman
maintained that “termination and closure could actually be weeding out the poor facilities.” A
HCFA regional official observed that “sometimes we might lean too far backwards to prevent
closure when in fact it might be appropriate. Closure of a pre-eminently bad facility might be
best for the residents. It might be time to say enough is enough.” A long-term care researcher
and advocate agreed: “HCFA and the states should be closing some facilities. We should be
getting rid of these bad facilities. Otherwise we will never obtain the objectives of the Nursing
Home Reform Law.”
Yet others disagree. A long-term care advocacy group submits that “while always an
option, termination [leading to possible closure]. . . should be used only when facilities’ physical
plant problems pose a danger to residents that cannot be mitigated or corrected. Staffing
shortages, inadequately trained and inadequately supervised staff, [and other operational
difficulties] that are identified in surveys are problems that can and should be corrected.”63 Two
long-term care ombudsmen expressed the view that “HCFA says it should not prop up
inadequate facilities, but they do that anyway” in some cases by allowing payment for poor care
to continue without appropriate sanctions. Closure, the ombudsmen argued, is very rarely the
answer. An attorney representing long-term care providers agrees, noting that closure is an out
for HCFA and the states, “because for budget reasons, its easier to close it down, too much
money and trouble involved in fixing it up.” Finally, a few respondents suggested some
terminations and closings may be rooted mainly in federal and state intent to demonstrate strict
enforcement, rather than tailoring the enforcement to the facility at hand -- that HCFA or the
state “wants to send a message” to other facilities, “has an agenda to close certain homes,” or
“are posturing” with one facility when others with similarly poor care are not terminated or
closed.
B. Intermediate Sanctions
There may be enforcement approaches that could avoid unnecessary closure, steering a
course between the “all or nothing” tack of termination and passively permitting poor care to
62
The National Senior Citizens Law Center asserts that “facilities are invoking the potential of irreparable harm to
residents resulting from transfer trauma as a basis for enjoining their terminations, although they do not represent
residents in the litigation.” “Recent Trends in Enforcement Litigation,” Nursing Home Law Letter, (February 22,
1999). A long-term care attorney interviewed argued that facilities do have a fiduciary responsibility to represent
the interests of the residents.
63
NSCLC, Nursing Home Law Letter.
20
continue. “Intermediate sanctions” is a term used to describe a range of remedies between these
two extremes. A 1981 study described the original rationale for intermediate sanctions:
“Unfortunately, early governmental efforts to regulate nursing homes largely failed – not
for improperly perceived goals, but because the government lacked adequate enforcement
mechanisms. Most states relied on the remedies of delicensure and closure to ensure
compliance with their determinations as to the minimal quality of care. These remedies
were drastic ones, however. Because they left in their wake transfer trauma among
residents, increased nursing home bed shortages, displacement of nursing home
employees and deprivation of a substantial property interest of the owner, the remedies
were invoked only infrequently, and only where nursing homes were found to be
violating vitally important government standards in a flagrant and outrageous manner.
Moreover, when invoked these remedies often met substantial judicial resistance.”64
1. Range of Remedies
The 1987 Nursing Home Reform Law mandated that each state and the Secretary of Health and
Human Services enact specified intermediate sanctions.65 The list of “available enforcement
remedies” in the HCFA State Operations Manual includes: termination, temporary management,
denial of payment for all Medicare and Medicaid residents by HCFA, denial of payment for all
new Medicare and Medicaid admissions, civil money penalties, state monitoring, transfer of
residents, transfer of residents with closure of facility, directed plan of correction, directed inservice training, and alternative or additional state remedies approved by HCFA.66 The Manual
also requires state Medicaid agencies to establish, at a minimum, the remedies of temporary
management, denial of payment for all new admissions, civil money penalties, transfer of
residents, transfer of residents with closure of facility, and state monitoring – “or an approved
alternative.”67 States have enacted a range of remedies mirroring or modifying the federal
sanctions.68
2. Frequency of Use
Little research exists on the use and effectiveness of intermediate sanctions. As noted earlier,
the U.S. General Accounting Office found in 1999 that federal intermediate sanctions in the four
states studied were rarely implemented.69 A 2000 Kaiser Commission survey of all state
licensing and certification agencies also documented that intermediate sanctions are
“infrequently imposed” by states and HCFA.70 Some states keep statistics on numbers of federal
64
Jost, Timothy, Model Recommendations: Intermediate Sanctions for Enforcement of Quality of Care in Nursing
Homes, American Bar Association Commission on Legal Problems of the Elderly (July 1981).
65
42 U.S.C. §1395i-3(h)(2)(B); 42 C.F.R. §488.406.
66
HCFA State Operations Manual §7400(C)(1).
67
HCFA State Operations Manual §7400(C)(2)..
68
A fifty-state statutory survey of intermediate sanctions was included in Jost, 1981. This table has not been
updated. Some states use additional mechanisms not found in federal law, such as provisional licenses. For
discussion of the use of state versus federal intermediate sanctions, see Edelman (1998) and Harrington, Mullan &
Carrillo (2001).
69
GAO, Additional Steps Needed.
70
Harrington, Mullan & Carrillo, p.22.
21
sanctions recommended or imposed, as well as the number of state sanctions. For example, the
Florida Agency for Health Care Administration reported that between 1995 and 1998, it imposed
59 bans on new admissions, and 17 state fines.71 The Michigan Department of Consumer and
Industry Services reported that for 1999, the state imposed 57 directed plans of correction, 33
directed in-service trainings, five administrative or clinical advisors, and four temporary
managers.72 But it appears there has been no cross-state consistency in the collection of
information on intermediate sanctions.
Under a Freedom of Information Act request, this project asked each of the ten regional
HCFA offices for the number of civil monetary penalties, denials of payment for new
admissions, and temporary managements actually imposed in 1999. The wide variations
reported by regions suggests some inconsistency in reporting, but also may be due to factors such
as the percent of older persons in the population, facility characteristics, occupancy rates, facility
bed supply, politics and other variables.73 It is interesting to note that the FOIA request to HCFA
regional offices for this study and the survey of state agencies for the Kaiser Commission both
were conducted in 2000 and both asked for statistics on the number of federal intermediate
sanctions imposed in1999, yet they yielded differing figures.74
Table 2: Use of Intermediate Sanctions
HCFA Region 1999 CMPs 1999 Denial
1999 Temporary
Payment New Management
Admission
Region I
52
23
2
Region II
4
0
0
Region III
52
74
2
Region IV
316
505
0
Region V
420
156
0
Region VI
169
177
0
RegionVII
Region VIII
Region IX
Region X
Total
59
Not available
110
11
1193
71
70
Not available
90
60
1155
0
Not available
0
0
4
AHCA Fines Chartwell Half-Million Dollars, Continues Aggressive Nursing Home Regulatory Actions,” Press
Release, Florida Agency for Health Care Administration, August 3, 1998, at
www.fdhc.state.fl.us/pio/press/ChartwellFines.htm.
72
Michigan Department of Consumer & Industry Services, “Resident Protection Initiative.”
73
See Harrington, Mullan & Carrillo suggesting these variables.
74
Id. The Kaiser Commission study by Harrington, Mullan & Carrillo reported that in 1999 HCFA issued a total of
1,208 CMPs (civil monetary penalties) (and states issued 82 CMPs for Medicaid-only facilities), states used the
HCFA denial of payment for new admissions for 620 facilities (plus 64 Medicaid-only facilities), and states used the
federal temporary management remedy for six facilities. States used additional intermediate sanctions under state
law.
22
In the seven profiled facilities, the predominant remedy used in the year before
termination and closure was denial of payment for new admissions or ban on admissions, with a
plan of correction. Civil monetary penalties were recommended or imposed in a number of
instances, but it is not possible to determine readily to what extent these were actually paid, or
whether they were appealed and modified. Temporary management was used in Venoy, Belle
Woods, and Greenbelt. At least four different denials of payment or bans on admission were
imposed in the Cobbs Creek case within months of its closure; and Belle Woods was involved in
at least five different plans of correction. Audubon faced three separate civil monetary penalties.
None of these sanctions, though, improved quality enough to avoid closure.75
The pattern of sanctions in the profiled facilities is similar to the pattern found by the
GAO in its 1999 report.76 In the 74 homes studied, the most common sanction initiated by
HCFA over a three-year period was denial of payments for new admissions (176 times),
followed by civil monetary penalties (115 times). The GAO found use of temporary
management rare.
3. Application and Choice of Sanctions
In 1998, the National Senior Citizens Law Center completed a study of enforcement strategies in
five states, focusing on the relationship of federal and state systems, including use of
intermediate sanctions. The study concluded that “additional research is needed to identify
whether and when . . . intermediate remedies work effectively with certain kinds of deficiencies
and certain providers under certain circumstances.”77 The 2001 report for the Kaiser
Commission called for “a close examination of what improvements can be made in the federal
intermediate sanctions procedures.”78 It appears there has been no systematic assessment of the
sanctions’ impact.
A number of project respondents commented that civil monetary penalties have not been
effective in improving care and preventing closure.79 A long-term care advocate noted that
“HCFA does use fines, but they are not effective and are rarely applied, [or they are] lifted
before imposed.” A long-term care ombudsman observed that, “There needs to be greater use of
intermediate sanctions to prevent closures. Fines are not applied. The percentage of fines
collected against fines levied is very small.” A provider attorney said the penalties “are not
useful. The actions already have taken place. They are merely a cost of doing business for the
big facilities.” A state regulator agreed that for a large chain, a monetary penalty is not effective,
but it could be for small facilities. He has relied more on bans on admissions and provisional
75
The project did not examine similar cases in which intermediate sanctions were successful in preventing
termination and closure.
76
GAO, Additional Steps, pp. 12 – 13.
77
Edelman. Chapter Seven, p. 11.
78
Harrington, Mullan & Carillo, p. 22.
79
The GAO report found that “Fines, or civil monetary penalties, are potentially a strong deterrent because they can
be applied even if a home comes back into compliance. However, the usefulness of civil monetary penalties is being
hampered by a backlog of administrative appeals coupled with a legal provision that prohibits collection of the
penalty until the appeal is resolved.” GAO, Additional Steps, p.3.
23
licenses. A second state regulator stated that “there is too much emphasis on fines. Often they
are not collected, and they do nothing to correct the problem.” The Kaiser Commission study
observed that “federal CMPs are not considered effective in achieving their compliance
objectives by the majority of states, primarily because of complex HCFA procedures and HCFA
dismissals or reductions in the CMPs.”80 Advocates have maintained that if civil monetary
penalties were consistently applied for each violation, they could make a difference. The HCFA
initiative on nursing home enforcement included efforts to assess and collect fines more
quickly.81
Two HCFA regional officials maintained that denial of payment for new admissions is
the most effective remedy. This echoes the finding of the Kaiser Commission study that “all
states [except one] rated the denial of payments as an effective intermediate sanction.”82 One
state regulator found provisional licenses and state monitors best in turning around failing
facilities. A long-term care attorney observed that “the best remedy is a directed plan of
correction,” but that it is rarely used and requires that regulators have extensive knowledge of
facility operation. A HCFA regional official emphasized that the use and choice of intermediate
sanctions is always a judgment call, and the challenge is getting the right match at the right time:
“The trick with the remedies is sorting them out, and deciding which is right for which situation,
to try to make a positive impact. There is no one answer, since each situation is different. There
is a menu of remedies available. Using the right one at the right time is the thing.”
In sum, the HCFA data, profiles, and interviews show that intermediate sanctions are
used irregularly, and that the sanctions do not always result in a correction of the violation.
Respondents repeatedly voiced concern about governmental passivity in the face of failing
homes:
•
“We don’t see any involvement of HCFA during the six-month period to try to improve the
situation. (provider attorney)
•
We need to work with the facilities as much as possible, but be more aggressive at the early
stages, when we first see the facilities starting to slip. Take actions up front.” (state
regulator)
•
“HCFA is not concerned at an early point, but the state might be concerned, and might
impose a remedy earlier. So the state can expand its role for early intervention.” (state
regulator)
•
“The federal government does not really do anything while the 180 days are going by.” (state
regulator)
80
Harrington, Mullan & Carrillo, p. 22.
HCFA Press Release, “Problem Nursing Homes to Face Immediate Sanctions,” Washington DC (December 14,
1999). In March 1999, HCFA published a regulation that gives states and HCFA expanded authority to impose per
instance civil money penalties of $1000 to $10,000 for deficiencies, without regard to whether actual harm has
already occurred and without giving facilities an opportunity to correct. 64 Fed. Reg. 13,354 (March 18, 1999).
82
Harrington, Mullan & Carrillo, p. 17.
81
24
•
“HCFA would rather leave the states to do it.” (long-term care management consultant)
•
“HCFA could take more control. Here [in one of the profiled homes] there was a failure to
deal with long-standing problems. It was very clear the fixes were just short-term fixes, not
really fixes at all, just a shifting of things.” (HCFA regional official)
•
“HCFA is very disconnected from the front, the grassroots. The regional staff lack direct
experience and are not often in facilities.” (long-term care ombudsman)
•
“HCFA does not use directed plans of correction because they don’t know enough about how
facilities actually operate.” (long-term care attorney)
•
“HCFA gets tired of the wringing of the hands at the six-month cutoff. They think it’s the
facility’s problem. HCFA does not want to rescue a failing facility.” (long-term care
advocate)
C.
Temporary Management
Temporary management appears to be among the least used remedies in addressing
serious care issues and preventing inappropriate closure.83 However, potentially it could be
among the most helpful. The project sought to determine what temporary management is, who
serves as temporary managers, and why the remedy is not used more frequently.
1. Definition and Authority
Temporary management is one of several Federal intermediate sanctions available for nursing
home enforcement. Federal law provides for appointment of a temporary manager “to oversee
the operation of the facility and to assure the health and safety of the facility’s residents” while
(1) a facility is being closed; or (2) changes are being made to bring the facility into
compliance.84 According to the HCFA State Operations Manual:
“a temporary manager may be imposed any time a facility is not in substantial
compliance. However, when a facility’s deficiencies constitute immediate jeopardy or
widespread actual harm and a decision is made to impose an alternative remedy to
termination, the imposition of temporary management is required. It is the temporary
manager’s responsibility to oversee correction of the deficiencies and assure the health
and safety of the facility’s residents while the corrections are being made. A temporary
manager may also be imposed to oversee orderly closure of a facility.”85
The HCFA Manual sets out a broad scope of authority for a temporary manager,
providing “authority to hire, terminate, or reassign staff; obligate facility funds; alter facility
procedures; and otherwise manage a facility to correct deficiencies identified in the facility’s
83
See VI(D)(1) below concerning a comparison of temporary management and receivership.
42 U.S.C. §1395i-3(h)(2)(B)(iii). See 42 C.F.R. §488.415.
85
HCFA State Operations Manual, §7550(B).
84
25
operation.”86 Also, “the facility’s management must agree to relinquish control to the temporary
manager” until it achieves substantial compliance or is terminated.87
Temporary management is a creation of both federal and state law. For Medicarecertified facilities, the state survey agency recommends, and the HCFA regional office imposes,
a temporary manager. For Medicaid-only facilities, the state Medicaid agency imposes a
temporary manager. The HCFA State Operations Manual specifies that if a state has “an
acceptable alternative” to the federal temporary management remedy that is “as effective in
deterring noncompliance and correcting deficiencies” the regional office or the Medicaid agency
may use this remedy instead of the federal sanction.88
Many states have enacted temporary management provisions. For example, in Tennessee,
the enforcement agency may “appoint temporary management to oversee the operation of a
nursing home and to assure the health and safety of the nursing home’s residents” during closure
or while deficiencies are being corrected.89 The state of Washington has a similar provision.90
In Oklahoma, the Commissioner of Health “may place a qualified person in a facility as a
temporary manager to assume operating control of the facility and to ensure that the health and
safety of the residents of the facility are protected” in designated circumstances.91 Michigan has
enacted a “Collaborative Remediation Project” as a part of its Resident Protection Initiative.”
Through this project, the state contracts with the Michigan Public Health Institute to provide
trained consultants to act as temporary managers and as administrative or clinical managers.92
In practice, “temporary management” appears to be a fluid term covering a wide range of
interventions:
•
•
•
•
Federal versus state. The federal temporary management remedy must be implemented by
the states. States may vary in the scope of authority, duration, and qualifications of the
managers.
Voluntary versus involuntary. A facility may choose to hire a consultant to help improve
compliance, and may call the consultant a “temporary manager.” HCFA or a state agency
may impose a temporary manager as part of a settlement agreement; or may petition a court
to impose the sanction. A HCFA official explained, “If the facility agrees, then it is
voluntary and there is no need to go to court. The goal is for the facility to agree.”
Judicial versus administrative. Temporary management often is viewed as an administrative
remedy, imposed by order of an administrative agency. However, imposition may be by
order of a judge, or may be as part of a consent decree following an agency petition or a
facility appeal.
Enforcement versus consultation. Temporary management may be a strict tool of state
enforcement, or may be offered as a more collaborative strategy to aid facilities in improving
86
Id., §7550( C ).
Id., §7550(E).
88
Id., §7550 (I).
89
TN Stat. §68-11-831.
90
RCWA §18.51.060(7).
91
OK St. §1-1914.2.
92
Michigan Department of Consumer & Industry Services, “Resident Protection Initiative” (2000).
87
26
•
the quality of care. The temporary manager may assume complete control of all personnel,
policies, and expenditures -- or may have less than full authority and function more as an
advisor to the administrator, operator or owner.
Correction versus closure. A temporary manager may be placed in a facility with the intent
of correcting deficiencies and regaining substantial compliance, or of overseeing an orderly
relocation of residents and closure of the home.
“Temporary management” may blur with voluntary corporate consultative resources on the
one hand, and with court-based state “receivership” procedures93 on the other. One state official
characterized temporary management as temporary replacement of the administrator, with
receivership more akin to temporary replacement of the owner, giving much broader powers. A
long-term care advocate distinguished temporary management from receivership, noting that: (1)
temporary management generally is an administrative remedy while receivership is a judicial
remedy; and (2) a temporary manager is “a substitute facility manager or administrator who has
the authority to bring the facility into compliance or to ensure the safe relocation of residents”
while under a receiver “at the discretion of the court, the licensee can be divested of possession
and control of the facility in favor of the receiver.”94 A long-term care ombudsman remarked
that, “Whether you call it temporary management or receivership, those are lawyers’ niceties.
What matters is getting someone to step in that can turn the facility around.”
2. The Temporary Management Role
HCFA requires each state to compile a list of individuals who are eligible to serve as temporary
managers and “whose work experience and education qualifies the individual to correct the
deficiencies in the facility to be managed.”95 According to project interviews, these lists
primarily include current or former facility administrators, or occasionally nurses. While the
state agencies and HCFA rely mainly on the state lists of temporary management candidates, a
few regional or national companies have sought to provide ready expertise.
A number of respondents emphasized that one individual alone cannot turn a troubled
facility around. Instead, a team of consultants in management, nursing and personal care
services, nutrition, information systems and other areas must be deployed to work together to
bootstrap a failing home and put practices in place to ensure continued compliance. The job is
formidable. Not only does it require considerable skills in administration and human resources,
but the manager also must be ready to come in at a moment’s notice, face a crisis situation with
indignant staff and families, confront regulatory pressure for quick improvements, and stay on a
temporary basis for up to several months.
93
See receivership section of this report at VI(D).
McGinnis, Pat, “Temporary Manager As Proposed by AB 1160 v. Receivership Remedies Currently in Law,”
California Advocates for Nursing Home Reform (2000). California AB1160 authorizes the state to appoint a
temporary manager when residents are in danger due to a facility’s noncompliance. This provides more flexibility
than court appointment of a receiver.
95
HCFA State Operations Manual §7550(D). The manual excludes those who have been “found guilty of
misconduct by any licensing board or professional society,” who have a financial interest in the facility, or who are
or have recently served as staff.
94
27
3. Frequency of Use
The HCFA regional office data and the respondent interviews revealed very little use of
the temporary management sanction. Of the 10 HCFA regional offices, six indicated in
response to the project’s FOIA request that they had not used temporary management at all in
1999, and two had used it twice each. Thus, according to these data, the federal temporary
management sanction was used only four times throughout the nation in that year. States have
used a temporary management remedy in some instances, but the frequency is unknown.
Michigan has used the remedy more than other states because of its Collaborative Remediation
Project. Through the Remediation Project, according to the Michigan Public Health Institute, the
state has imposed 10 temporary managers, 16 “clinical advisors,” and 3 “administrative
advisors” between 1997 and 1999.
Many project interviews highlighted the infrequency of temporary management as either
a state or federal option for improving care and preventing closure. A long-term care
ombudsman commented that “the state can order a temporary manger, but it is not used enough.”
A provider attorney remarked that “HCFA has authority to do a lot more than they do. HCFA
doesn’t do temporary managers. In one case,96 the court had to direct that a temporary manager
be put in place.” A state regulator observed that she did “not remember a temporary manager
being used, either for immediate jeopardy or other situations, in the last three years.” Another
stated that the federal regulations “put too much emphasis on fines and not enough on temporary
management . . . The federal government is reluctant to use temporary managers.” One HCFA
regional official stated that “we have thought of it a few times, but it’s not much use;” a second
noted that he is “not aware of any use of temporary management since 1995;” and a third said “it
is rare because of the nature of the beast – who would want to do this?” A long-term care
management consultant said most cases of temporary management are voluntary, and a fraction
are involuntary, but estimated the total (federal and state) “is only about 25 to 30 cases in the last
two years.”
As described below, the seven facilities profiled97 show a somewhat higher use of
temporary management, since some facilities were selected with this in mind. There were three
instances of use of temporary management -- two due to the Michigan Collaborative
Remediation Project (in Venoy Nursing Center and Belle Woods Continuing Care Center), and
one resulting from a False Claims Act settlement (in Greenbelt Nursing and Rehabilitation
Center). In one instance (Laurel Glen), the state unsuccessfully sought to impose a receivertemporary manager. In the remaining three facilities, the state did not seek to use temporary
management:
•
In Cobbs Creek Nursing Center, a 205-bed Philadelphia facility, no temporary manager was
used. Regulators instead relied on bans on admissions and civil monetary penalties, which
were both imposed several times in the year preceding closure. The state recognized that
“the facility had numerous opportunities to correct the deficiencies and did not. The
96
Libbie Rehabilitation Center, Inc. v Shalala, 26 F. Supp. 2d 128 (D.D.C. 1998).
For the full profiles, see Appendix B. Quotes are from the sources listed in Appendix E.
97
28
department kept telling them they were out of compliance, and then had to use the band-aid
approach. But Cobbs Creek failed to heed the warnings. . . . There was a demonstrated
history of non-compliance.” State regulators reported that the department “thought about
temporary management but in the end decided for closure, partly because the building was
chopped up, not good for dementia, not conducive to the operation of a nursing home.”
HCFA regional office staff said Cobbs Creek was “over the line” for temporary management,
and that the owner had no interest in bringing the facility back.
•
In Venoy Nursing Center, the state, through the Collaborative Remediation Project of the
Michigan Public Health Institute, sent in a “quality advisor” two months before termination,
but when the facility did not pay, the advisor discontinued work. The state then sent in a
temporary manager -- an individual who was a nurse and former nursing home administrator.
Yet the owner’s staff continued to play a significant operational role, and the temporary
manager lacked sufficient access to facility funds and important records. In the last month
before closure the temporary manager had to deal with difficult staffing problems,
inadequate resources, and a roof that was caving in. The temporary manager sought to keep
the home open, but when the state decided to revoke the license and close the home, she
quickly became a manager for closure.
Family members claimed that the advisors who were originally sent in were too late,
were there infrequently, had insufficient authority, and failed to communicate effectively
with residents and family members about complaints: “This Collaborative Remediation plan
may have worked well at an earlier stage for Venoy. It would seem there are some major
reforms needed for it to be truly effective . . . If managers are put into place, why do they
have no power to address all issues? Would it not make sense to involve families with those
managers to develop some enforcement plans? The ultimate goal should be to solve
problems, not to close facilities.” The state conceded that Venoy was an early effort at turnaround, and that lessons were learned. The long-term ombudsman observed that “one thing
that was learned from Venoy is that one individual alone can’t do it. After that the
Collaborative Remediation Project sent in teams.”98
•
In Belle Woods Continuing Care Center, the state appointed a temporary manager and a
clinical advisor through Michigan’s Collaborative Remediation Project eight months before
termination. But the manager had insufficient resources and authority to effect real change.
The owner was bankrupt, and the bank held the mortgage. The manager left the facility at
one point for lack of payment.
A long-term care advocate charged the temporary manager at Belle Woods was
completely ineffective: “How can it be that a state appointed temporary manger could allow
the conditions at the home to deteriorate to such a dangerous level and then abandon the
home’s residents? Why did the state fail to ensure that the temporary manager had sufficient
resources to hire and maintain qualified staff and to ensure that legal obligations were paid?
Why was the facility operator allowed to divert facility funds from care related obligations
98
The Collaborative Remediation Project did have at least two individuals in Venoy, and more in the later stages.
29
while the facility was under the control of a temporary manager? Why did HCFA not
intervene?”
The state claimed that the temporary manager tried to bring the facility into compliance
but “there were severe and intractable issues that toppled the manager’s efforts. The
manager lacked funds to make needed structural changes, and the census was too low to
maintain.” A state regulator explained that there was no money to run the home, no interest
by the owner, and the only way out was to seek a buyer.
•
In Audubon Healthcare Center, no temporary manager was imposed. However, long-term
care consultants were called in during the last few months before termination. The
consulting company commented that, “this is an example of too little too late. We sent in a
couple of nurses for a few weeks. The nurses found this was not nearly enough. We
recommended to the state an eight-person team to help this sinking ship, not just a little here
and a little there. If a temporary manager with proper authority had been put in there three
months earlier, it may never have closed.” An ombudsman expressed uncertainty: “Whether
a temporary manager would have helped is a hard call.”
•
In Snapper Creek Nursing Home, state regulators used bans on admission, plans of
correction, civil monetary penalties, and state monitoring, but no temporary management,
despite severe violations.
•
In Laurel Glen, the state went to court to seek a receiver-temporary manager, but the judge
refused to grant it. The state sent in monitors,99 but this action was not enough, and the
facility closed.
•
In Greenbelt Nursing and Rehabilitation Center, a temporary manager was imposed as part of
a False Claims Act settlement. The manager began operating three months before closure.
She hired a new medical director and a new certified nurse practitioner. The nurse
practitioner began to assess each of the remaining residents. But HCFA sought to terminate
the facility, and Greenbelt brought suit to enjoin the termination. Greenbelt claimed the
termination thwarted the efforts of the manager to improve care. HCFA asserted that the risk
to the residents required closure. The temporary manager became embroiled in an
enforcement dispute over which she had no control.
4. Barriers
Project interviews sought to determine the reasons for the minimal use of temporary
management, and identified several related barriers: lack of funds, divergent views on
operational authority, lack of clear triggers, lack of experience, lack of qualified candidates, lack
of judicial understanding, and regulatory confusion.
a. Lack of funds. Federal guidelines provide that “the facility’s management must agree
99
A state monitor “oversees the correction of cited deficiencies in the facility as a safeguard against further harm to
residents when harm or a situation with a potential for harm has occurred.” HCFA State Operations Manual, §7504.
30
to . . . pay his/her salary before the temporary manager can be installed in the facility.”100 But
the facility may be failing financially and have no funds available. Moreover, to make lasting
changes, the manager needs resources to hire staff, make structural improvements, and pay for
supplies and staff training. “To make temporary management work,” according to a state longterm care ombudsman, “you have to have control over the accounts and have something in the
accounts.” A state regulator agreed: “A temporary manager should have access to a pool of
funds to use for care. . . . and for operating the facility” -- and this pool must be readily available
to meet immediate needs. The HCFA State Operations Manual specifies that the temporary
manager “must be given access to facility bank accounts that include Medicare and Medicaid
receipts.”101
Moreover, Federal law provides that civil monetary penalties collected from a Medicaid
facility (or the Medicaid portion of a dually participating facility) must be “applied to the
protection of the health or property of residents of nursing facilities [found to be] deficient,
including payment for . . . maintenance of operation of a facility pending correction of
deficiencies or closure. . . .”102
b. Divergent views on operational authority. HCFA guidelines provide that the nursing
home must agree to “relinquish control to the temporary manager,” and that “the facility cannot
retain final authority to approve changes of personnel or expenditures of facility funds.”103 State
temporary management sanctions, however, may not require a complete transfer of control, and
such state sanctions may be substituted for or serve to shape the federal sanction. For instance,
Michigan’s Collaborative Remediation Project is based on the idea that the manager-advisor and
the facility operator should work together. Complete relinquishment of financial and operational
authority may be viewed by regulators as too drastic an intervention into the private business of
the owner. A long-term care ombudsman disagreed, noting that “Having a temporary manager
without real authority or sharing authority with the corporate owners will not work because they
have a different agenda. If the facility is allowed to maintain the current administration in place,
the temporary manager is not replacing them but supporting them, so real changes are not made.”
A long-term care advocate added that if the temporary manager and the administrator have
different goals and management approaches, staff may be confused, which can create a chaotic
condition.
Others observed that regardless of the extent of authority, temporary management may
not be a viable way to improve care, because change ultimately must come from inside the
facility. The key to success, according to some state regulators, is that the facility must want to
change, since change cannot be forced from the outside. A HCFA regional official questioned
whether a temporary manager “can really create a new pattern. Lasting improvement must come
from within the facility. A temporary manager can only help to show the way.” If there is no
real commitment by the owner to improving the quality of care, a state official said, the
temporary manager may end up recommending sale of the facility to a new owner, which in
some instances could be the best result.
100
HCFA State Operations Manual §7550(E).
Id.
102
42 U.S.C. §1396r(h)(2)(A)(ii). See HCFA State Operations Manual §7534.
103
HCFA State Operations Manual §7550(E).
101
31
c. No clear triggers. While temporary management is the required federal remedy short of
termination if residents are in “immediate jeopardy,” temporary management can be used “at any
time a facility is not in substantial compliance.”104 Both federal and state regulators expressed
uncertainty about when to use the remedy.
Regulators said there is very little time to find and place a temporary manager if a facility
is in immediate jeopardy and must come into compliance in 23 days. Identifying qualified
candidates and placing them in the facility takes time. Indeed, according to an attorney involved
in the Greenbelt case, it took 30 days just to find a temporary manager. Even if there is no
immediate jeopardy, regulators said they waver, thinking the facility will correct the problem
with lesser sanctions, and believing that a temporary manager “is overkill.” They thus fail to use
the remedy at an early point, time goes by, and it becomes too late.
Several regulators at both the state and federal level said they might have used temporary
management with certain facilities, but “it is a judgment call” and it is not possible to know in
advance: “Temporary management can be helpful, but it may not be a golden arrow. It is all
hindsight. How do you know that in six months time, a facility will still have deficiencies?”105
Too often it is “too little too late,” as one state regulator put it. A HCFA regional official
expressed this dilemma: “Often we assume facilities can correct deficiencies with lesser
intermediate sanctions, less intervention, and then when they do not, it is too late. Temporary
management would need to be used early to be of any use, and often at that point it seems overly
aggressive.” A state official remarked, “There are real questions about the circumstances under
which temporary management should be used, since it is such an intrusive remedy. You need a
clear understanding of what triggers a temporary management, what its scope is, and what the
expectations are.”
d. Lack of experience. Currently, regulators lack such an understanding. Temporary
management is a vague and ill-defined remedy. It works differently in different states and
different federal regions. It is implemented differently by variously qualified individuals, teams,
and companies. Neither regulators nor facility owners seem to know exactly what to expect from
the remedy. An industry representative said providers “don’t know what to expect with
temporary management. It is uneven. What rights and roles will the owner still retain, and how
can the owner be responsible to shareholders.”
An individual who had served as a monitor in one of the profiled facilities expressed this
sense of ambiguity and risk: Some regulators “cannot afford to take the chance that the
temporary management might not work. There are many stages in a temporary management, and
in turning a facility around, and it does not happen right away. There has to be a governmental
culture to take account of this. There is a level of discomfort with a temporary manager in
HCFA because it takes time, could be messy, is not certain. HCFA has little experience with it,
little knowledge of it. There has to be room for mistakes, toleration for this drawn out and
104
Id., §7550(B).
A long-term care advocate observed that a facility’s compliance history perhaps should be a factor in making this
judgment call. A facility with a good record may be more likely to correct the deficiencies within six months,
whereas a facility with a cyclical pattern of compliance may require a temporary manager to make the corrections.
105
32
uncertain process.” A state ombudsman agreed: “It is a judgment call, and you can’t write this
into the statute or rules. The idea is to give enough options, with resources, to intervene in a
timely way.”
e. Lack of qualified candidates. All of the respondents commented that there are simply
not enough qualified candidates available quickly enough to serve as temporary managers.
Several claimed the state lists often are outdated. One HCFA regional official noted, “There is
no national database with a track record of temporary managers. It’s hard to find someone you
know will be reliable so quickly.” Another commented that “it’s tough to find a good pool who
are knowledgeable and willing to come in and work.” A regulator reflected this view at the state
level: “Right now I am stuck to find one for a particular facility. It’s hard to expand the state
pool because to become [temporary managers or state consultants] they really need assurance
that they will be used, can’t be just kept on hold, and its hard to know in advance how many will
be needed, hard for them to stay in a hotel for months, hard to pull them off of other work.”
This regulator said that if more temporary managers were available, he would probably use them
more readily.
A HCFA official in the central office stated, “there are not many companies. A single
temporary manager is not enough. You need a team. Many companies or individuals don’t do
that.” A long-term care consultant echoed this concern, claiming that federal and state
regulations “are still written as if a temporary manager were an individual, and regulators often
still perceive it this way, yet this won’t work.”
f. Lack of judicial understanding. Most cases of temporary management probably will not
go to court, since the remedy generally is administratively imposed. But if the facility opposes
the temporary management, the state may seek judicial approval. Some regulators have found
local judges reluctant to grant a temporary management because they perceive it as a “taking” of
private property rights, and they fail to see the imperative for improving care of the residents
short of relocation. For instance, in Laurel Glen, the state agency went to court to get a
temporary manager, but the judge failed to grant one. A long-term care advocate noted that to
get court approval for a temporary management “sometimes the test is so high, you might as well
close.” A state regulator noted that her state sought legislation to clarify that temporary
management is an administrative remedy that does not require judicial approval.
g. Regulatory confusion. Interview respondents identified several areas in which
regulatory decision-making on temporary management may need to be clarified or strengthened.
•
106
An “old” interpretation of federal law and regulations was that a temporary management
could only be imposed in a situation of immediate jeopardy. The current version of the
HCFA State Operations Manual clarifies that the remedy may be used in other circumstances
– “any time a facility is not in substantial compliance.”106 But former practices or
perceptions still may prevail.
HCFA State Operations Manual, §7550(B).
33
•
Another issue is whether imposition of a temporary manager under federal law could allow
for a delay of termination under the six-month rule. In the Greenbelt case, Northern Health
Facilities, Inc., Greenbelt argued that the temporary management remedy would be
meaningless if HCFA is required to terminate after six months, because a temporary manger
may need more time to bring a facility into compliance. Greenbelt claimed that the
temporary manager put in place by the U.S. Attorney’s office was making substantial
progress, but was hindered by cessation of federal funds. The judge agreed that “a
reasonable interpretation” of the relevant legal provisions “would be that the [HHS]
Secretary can continue funding past six months to a facility if the temporary management
alternative is employed.” But in Greenbelt, he found, it was not HCFA that invoked the
temporary management remedy, so the reasoning would not apply. A HCFA official
interviewed found “no basis” for this judicial interpretation.
•
State and federal regulators appeared uncertain about the relationship between the federal and
state remedies of temporary management. A HCFA regional official commented, “A state
can ask for substitution of a state remedy for a federal remedy. If the state and federal
remedy are the same, there is no adoption of one over the other. The federal and state
officials just need to cooperate and agree on what will happen.”
•
The mechanics may be an obstacle in federal-state cooperation. HCFA can impose the
remedy, but it is implemented through the state. According to a regional official: “HCFA
would not have the authority to enter into a contract. HCFA must go through a state
Medicaid agency, so if the facility defaults, the Medicaid agency pays. The agency can build
this into its state plan and into the contract with the facility.”
•
A HCFA regional official observed that regional offices are sometimes too far removed from
“the front line” and cannot know what is occurring in a facility. He maintained that better
communication is needed with state surveyors and with state and local long-term care
ombudsmen to use temporary management most effectively. A provider attorney concurred,
observing that HCFA staff frequently lack facility operational experience, and this may
impede their use of the temporary management remedy. A long-term care ombudsman
echoed this comment, stating, “HCFA is very disconnected from the grassroots. The regional
office staff lack experience with temporary management, and are not often in facilities. They
have never watched a closure or tried to fix a place up.”
•
A HCFA regulator warned that temporary management “can backfire.” First, a facility may
blame the temporary manager for deficiencies, and use this as an excuse to avoid strict
enforcement actions. Second, a state may be too quick to accept a facility’s assurance of
compliance if a temporary manager has been in place.
D.
Long-Term Care Receivership
Akin to the temporary management remedy is state long-term care receivership. The
project identified state long-term care receivership statutes; conducted a review of the provisions
in selected jurisdictions; examined statutory barriers to use; and sought preliminary information
34
on frequency of use. While application thus far has been extremely limited, long-term care
receivership merits further study as a workable intermediate sanction.
1. Long-Term Care Receivership Defined
Receivership107 “has long existed as a traditional equitable remedy to preserve assets subject to
litigation and to terminate or reorganize troubled businesses.”108 The idea of using receivership
for addressing quality of care problems in nursing homes stemmed from a seminal 1971 law
review article,109 and four years later New York enacted a nursing home receivership statute. By
1981, 15 other states had enacted receivership statutes.110 The current project’s statutory survey
identified an additional 11 states with statutes, bringing the total to at least 27 in 2000.111
Long-term care receivership and temporary management are similar concepts. Both may
have a state statutory base, and the distinctions may at times blur. But there are significant
differences. First, receivership is not a federal remedy, whereas temporary management is.
Second, receivership requires a court order and features continuing judicial oversight, whereas
temporary management may or may not. Third, receivership may allow for greater authority in
managing a facility and taking financial control than temporary management. A state regulator
observed that receivership “is a better option than temporary management because there is the
authority of the court. It gives a better basis for both parties to understand boundaries and
responsibilities and third party oversight, and [is] a way to resolve conflicts, whereas temporary
management through an administrative appointment does not do this.” Others find receivership
more cumbersome, in that going to court is a significant obstacle to overcome.
2. State Receivership Laws: Statutory Elements
This project examined long-term care receivership statutes existing in 2000 in the six states
where the profiled facilities were located (California, Florida, Maryland, Michigan,
Pennsylvania, Wisconsin). The project looked at seven related elements of the statutes: who may
apply; venue of court hearing; conditions for appointment; duration; eligibility requirements for
receivers; powers and duties; and financing.112 The project questioned interview respondents as
to statutory barriers that might inhibit use.
107
A receiver is “an indifferent person between the parties to a cause, appointed by the court to receive and preserve
the property or fund in litigation, and receive its rents, issues, and profits, and apply or dispose of them at the
direction of the court when it does not seem reasonable that either party should hold them.” Black’s Law
Dictionary, West Publishing Co., St. Paul, Minnesota.
108
Jost, T., Model Recommendations: Intermediate Sanctions for Enforcement of Quality of Care in Nursing
Homes, American Bar Association Commission on Legal Problems of the Elderly, Washington DC (July 1981).
109
Grad, F., “Upgrading Health Facilities: Medical Receiverships as an Alternative to License Revocation,” 42
Colo. L. Rev. 419 (1971).
110
Jost, 1981.
111
See list at Appendix D.
112
See Appendix C.
35
a. Who may apply. The long-term care receivership statutes in these six states allow the
director of the enforcement agency to initiate the action before the court. Some states also allow
other state agencies with responsibilities for the elderly or persons with disabilities to petition. In
addition, some states allow residents or their surrogates to petition -- for example, Michigan
provides that “a patient in the facility or a patient’s representative may file an emergency petition
with the circuit court. . ..”113 Some states also provide for voluntary receiverships.
b. Venue. Receivership statutes in these six states generally provide for a petition to be
filed in the court in the county where the facility is located. Some laws may permit a choice of
venue,114 naming, for instance, “a court of competent jurisdiction” for appointment of a receiver,
and at least one state (Texas) designates the state capital.115 A few long-term care advocates
expressed concern that local judges may be open to influence by local facility owners. One said,
“the judge will want to protect the property rights of those in his jurisdiction. A more neutral
seat is the courthouse at the state capital. I advise moving it there if possible.” A state regulator
noted, though, that this concern would be unfounded if the facility is owned by a multi-state
chain -- and moreover, that removing the action from the locus of the facility may weaken the
capacity for judicial oversight.
c. Conditions for receivership. The statutory triggers for receivership may determine
much about how it is really used. An early study by the American Bar Association (ABA) found
that long-term care receiverships are used when a facility is: (1) violating state licensing statutes,
thereby endangering residents; (2) operating without a license; or (3) intending to close without
adequate arrangements for the relocation of residents.116
Of the six states studied, four allow for receiverships when a facility is unlicensed, or the
license is suspended, revoked, or expired. Four name need for relocation in the face of imminent
closure, and five list “immediate jeopardy.” Other reasons are “substantial or habitual
noncompliance” (California), noncompliance or a demonstrated unwillingness or inability to
achieve compliance (Pennsylvania), financial instability (Florida), and abandonment of residents
or the home (Maryland). The California statute includes a statement of intent that the enactment
is meant to avoid “the abrupt and involuntary transfer of patients from one nursing home to
another,” and that it is “not intended to punish a licensee or to replace attempts to secure
cooperative action to protect the patients’ health and security. The receivership is intended to
protect the patients in the absence of other reasonably available alternatives.”117
A number of interview respondents cautioned that receivership can be perceived as a
taking of private property, and therefore “should only be used as a last resort.” But some said
that if licensure action, impending closure, or immediate jeopardy are prerequisites, receivership
may not be useful in instances where facilities continually exhibit poor care or routinely cycle in
and out of compliance. They said the bar may be too high, and may limit use of receivership
113
Mi. Stat. §333.21751(1).
Venue is “the county (or geographical division) in which an action or prosecution is brought for trial. . .” Black’s
Law Dictionary.
115
TX Health & Safety Code, §242.094(e).
116
Jost, p. 19.
117
CA Health & Safety Code, §1325.
114
36
until a point when a turn-around may no longer be possible.118 A state regulatory official
complained that receivership is “not useful” in quality of care situations “since it does not kick in
until after licensure revocation.” A long-term care advocate voiced a need for reforms that “get
receivership used as an intermediate sanction rather than as a closure remedy only.”
d. Duration. In the six states examined, the maximum duration of receivership ranged
from two months with an extension of one month (Florida) to 12 months with a possible
extension of 12 additional months (Maryland). Two of the states indicated no duration
(Michigan, Pennsylvania). As with temporary management, it often takes a receiver a
considerable time to improve the care and bring the facility back into compliance. The ABA
study found that “given the desperate condition in which a receiver typically finds a facility . . . it
may take one to two years to sufficiently rehabilitate the facility to render it attractive to buyers
or adequate to return to the former owner. While courts will be justifiably reluctant to supervise
an extended receivership, the authorizing statute ought to allow the receiver enough time” to do
the job. 119
e. Receiver eligibility. Some states impose educational or experience qualifications for
receivership candidates, sometimes including a requirement that the receiver be a licensed
nursing home administrator. Other states specify who may not be a receiver. For example,
Maryland prohibits a state or local government employee or the owner or administrator of the
facility or anyone “with a financial interest in the nursing home” from serving. Florida,
California, and other states require that the enforcement agency maintain a list of qualified
persons.120 But as with temporary management, finding qualified receivers may be an obstacle.
The U.S. General Accounting Office has noted that “finding qualified and interested individuals
to act as trustees [receivers] may be problematic. . . .”121 State lists may be outdated. The pool
of qualified individuals or companies is very small, explained one state regulator, because of “the
nature of the beast” – the inherent difficulty of the job.
f. Receiver powers and duties. The scope of a receiver’s powers and duties is defined
by a combination of state statute and court order. For example, the California law provides that
the receiver “may exercise those powers and shall perform those duties ordered by the court, in
addition to other duties provided by statute,” and that the licensee may “at the discretion of the
court, be divested of possession and control of the facility in favor of the receiver.”122 The
receiver “shall operate the facility in a manner which assures safety and adequate health care for
the residents.” Within the bounds of the statute, the court thus may tailor the receivership to the
needs at hand.
118
The ABA study found that “judges are reluctant to impose a receivership unless the emergency nature of
problems in the facility is painfully obvious.” Jost, p. 20.
119
Jost, pp. 20 – 21.
120
FL Stat. §400.126(2); CA Health & Safety Code §1327.3.
121
GAO, Statement of Laura Dummit (September 2000), p. 12.
122
CA Health & Safety Code, §1329.
37
Receivership statutes (including those in California, Florida, Maryland and Wisconsin)
generally set out an extensive list of powers and duties, “including the normal incidents of
ownership and management of a facility.”123 Notable provisions include:
•
Limitations on capital expenditures. California, Wisconsin, and Maryland provide a limit of
$3,000 on capital expenditures without court approval. Florida allows up to $10,000 for
correcting structural deficiencies that may endanger residents. Michigan prohibits a major
structural alteration “unless the alternation is necessary to bring the nursing home into
compliance with licensing requirements.”
•
Use of incoming revenue. State statutes address the receiver’s authority to spend income that
is received by the facility. California, for instance, directs the receiver to “take title to all
revenue coming to the facility” and specifies an order of priority for its use, starting with
payment of wages to staff.124
•
Set asides. Some statutes (including those in California, Florida, Maryland and Wisconsin)
allow the receiver to petition the court to set aside contracts entered into by the licensee.
•
Limitation on liability. Statutes generally limit the liability of the receiver.
•
Care or transfer of residents. State statutes address the receiver’s duties toward residents.
For example, the Maryland law specifies that the receiver must give notice of the
receivership to residents and their representatives, preserve resident property and records,
and explain alternative placements if residents are to be transferred. Wisconsin lists duties
on resident transfer or discharge.
Some states make very general provisions for court appointment of long-term care
receivers, which may even be termed “temporary managers.” For example, Pennsylvania law
simply authorizes the appointment of “temporary managers . . . to assume operation of the
facility . . . to assure the health and safety of the facility’s patients.” 125 Such general provisions
may be subject to wide variation in judicial interpretation. The ABA study noted that “judges
are inexperienced with managing quality of care receiverships. Unless the statute spells out in
great detail the powers of the receiver and the conditions under which the receivership must
operate, judges may inappropriately treat quality of care receiverships like traditional financial
receiverships focusing more on the problems of the facility’s creditors than on those of its
residents.”126
g. Financing receivership. Facilities in receivership generally are facing financial crisis,
especially with the termination of Medicare/Medicaid. Yet funds are needed immediately to pay
the receiver, cover the cost of the receiver’s bond, run the home, return the home to compliance,
make capital improvements, or transfer the residents if the home is closing. The U.S. General
Accounting Office has observed that it is not “clear who would finance the costs of continued
123
Jost, p. 19. See Appendix B.
CA Health & Safety Code, §1329(5).
125
PA Stat. §448.814(b).
126
Jost, p. 20.
124
38
operations or the costs” of a “trusteeship” or receivership.127 State receivership laws provide that
the licensee must pay the receiver’s compensation. Candidates may be hesitant to serve if
payment cannot be guaranteed. One long-term care consultant commented that she had only
been involved with one receivership many years ago, and that “it was not financially profitable.
The facility never paid its bills, and dissolved, and the court never was able to pay.”
Some states have authorized the use of state monies or established special state funds to
cover receivership costs. For example, in California, “if the revenue is insufficient to pay the
salary in addition to other expenses of the operating facility, the receiver’s salary shall be paid
from the General Fund.”128 In Maryland, if there are “insufficient funds to operate the
receivership, the Secretary may petition the Board of Public Works for sufficient funds to
operate the receivership.”129 In Wisconsin, if funds “are insufficient to meet the expenses of
performing the powers and duties [of a receiver],” the state may draw from a special
supplemental fund.130
However, the funds must be reimbursed, and if they are not recovered by the end of the
receivership, they may be imposed as a lien against the facility. At least one long-term care
advocate maintained that the likelihood of failing to recover the funds makes the state reluctant
to use receivership: “The state has a receivership fund from state general funds, but it is
structured as a revolving loan fund. The facility must pay it back, but usually can’t, so the state
is reluctant to use it. In one facility, $1.5 million was spent and the state never got it back. So
instead, they let things go, and then shut the home down.”
3. Frequency of Use
According to the 2001 Kaiser Commission study, 17 states “reported having used their own state
receivership or management program at some point in the past, but only four states reported
using it for nine facilities in 1999.”131 The current project did not locate any other data on use of
these state receivership laws nationwide. While each state may track the number of long-term
care receiverships, these statistics apparently have not been compiled. Moreover, the state data
may not differentiate quality of care receiverships from those in situations of financial crisis or
bankruptcy – or the number of receiverships may be lumped in with the number of licensure
revocations and closures. For example, in 1998, the Florida Agency for Health Care
Administration reported that since 1995, it had initiated “13 receiverships, closures or
revocations against nursing homes.”132 Many of the project’s interview respondents commented
that use of receivership is rare:
•
“There have been no receiverships. The state has a nursing home receivership law, but it has
not been used in a couple of decades.” (long-term care advocate)
127
GAO, Statement of Laura Dummit (September 5, 2000), p. 12.
CA Health & Safety Code, §1332.
129
MD Health Gen. §19-338.
130
WI Stat. §50.05(10).
131
Harrington, Mullan & Carrillo, pp. 17-18. It is unclear whether receivership or temporary management was used.
132
Florida Agency for Health Care Administration, “AHCA Fines Chartwell Half-Million Dollars,” press release
(August 3, 1998).
128
39
•
“The receivership law is not too useful. There is no provision for liability insurance. The
health department is now moving to revise this, but it was not used for years.” (long-term
care ombudsman)
•
“I am not aware of any use of receivership.” (HCFA regional official)
•
“There have been six facilities under receivership in the state, all due to bankruptcy.” (longterm care advocate)
•
“The state has used receiverships only twice in 11 years.” (state regulator)
•
“We use receivership as a last resort. We do not want to use it too often, since there is a
taking [property] issue there, and it’s not a tool we use lightly. We used it a couple of years
ago with [a chain], and in the last six months with two homes.” (state regulator)
•
“Lack of financing is the key barrier to use. As a practical matter, receivers are used only for
closings, usually for financial distress, preferably for bankruptcy, where the fees can be paid
as an administrative claim” (provider attorney).
E. Resident Relocation
Decisions on sanctions and closures must take into account relocation. What happens to
the residents when a facility is closed and they must move? How does relocation affect their
health and welfare? What can regulators and nursing homes do to ease the move? Under what
circumstances is the risk of moving residents offset by the risk of remaining in a dangerously run
facility? Using gerontological research and court cases as a background, this project sought
information on relocation plans and tracking of residents in the profiled facilities.
1. Gerontological Research
Researchers and practitioners have long been concerned about relocation of older persons from
one setting to another. Terms used to describe the effects of relocation include transfer trauma,
relocation stress, translocation syndrome, transfer shock, transfer anxiety, and relocation shock.
A formal nursing diagnosis of “relocation stress syndrome” has been defined as “physiologic
and/or psychosocial disturbances as a result of transfer from one environment to another.”133
Relocation or transfer trauma is described as “a wave of disorientation and despair” resulting
from the sudden move of frail older residents away from the stability of familiar people and
routine. Characteristics include anxiety, depression, weight change, sad affect, dependency,
gastrointestinal disturbances, apprehension, increased confusion, withdrawal, sleep disturbance,
agitation, and change in eating habits.134 Sudden forced change is said to be harder for older
133
Manion, P., & Rantz, M., “Relocation Stress Syndrome: A Comprehensive Plan for Long-Term Care
Admissions, Geriatric Nursing, Vol. 16, p. 108 (May/June 1995).
134
Id. Also, some practitioners have noted a refusal of residents to take medications from unfamiliar caregivers,
resulting in additional health problems.
40
persons than for others: “The elderly rank changes in living conditions and residence as
requiring significantly higher magnitudes of adjustment than the normative groups.”135
A review of the literature examining the effect of institutional relocation on mortality
rates reveals conflicting results, with some investigators reporting increased mortality while
others report a decrease.136 The decrease reported by some studies may reflect the fact that
residents were prepared for the relocation -- a result of the widespread acknowledgment of the
negative consequences when residents are not prepared to move.137 Indeed, a 1981 study
recognized that "a consensus has emerged among researchers that the outcome of relocation is
dependent on the conditions under which it occurs and the characteristics of the population being
relocated. Conditions found to mediate mortality outcome are degree of environmental change,
degree of preparation for relocation and importantly, whether relocation was voluntary or
involuntary."138
Even a notable proponent of the view that there are no negative effects of relocation
identifies numerous measures (such as notice, preparation of residents in various ways, and
assurance that residents’ belongings are not lost) necessary to alleviate the stress associated with
relocation.139 This suggests that some negative consequences could result without these
measures.
With the current presumption among researchers that some type of relocation preparation
program is implemented before moving residents, the focus of more recent studies is not on
mortality rates but on morbidity rates (the effect on relocated residents’ health generally), as well
as the vulnerability to transfer trauma of particular subgroups of residents such as those with
dementia.140 Short of mortality, a number of studies over many years have found adverse health
effects. One study of 210 nursing home residents moved to a new facility found that the
incidence of falls doubled after relocation, and the incidence of injuries per resident also
increased. Residents with dementia who were ambulatory or mobile were more likely to fall.141
135
Thomasma, M., et al, “Moving Day: Relocation and Anxiety in Institutional Elderly,” Journal of Gerontological
Nursing,” Vol. 16(7), p. 18 (1990).
136
Jerrold Mirotznik, Inter-Institutional Relocation and Its Effects on Health,” 24 The Gerontologist 286 (1984)
(citing J.H. Borup, Relocation Mortality Research: Assessment, Reply, the Need to Refocus on the Issues 3
Gerontologist 235 (1983); M.J. Horowitz and R. Schulz, The Relocation Controversy: Criticism and Commentary
on Five Recent Studies, 3 Gerontologist 229 (1983)).
137
See, e.g., Irine Ehrmann Vanderbilt, Survival status of elderly nursing home residents following involuntary
relocation (1993) (unpublished M.S. dissertation, University of Arizona) ( on file with the University of Arizona
Library).
138
Inter-Institutional Relocation and Its Effects on Health, supra at 286 (citing N. Bourestom & L. Pastalan, The
Effects of Relocation on the Elderly: A Reply to Borup, J.H., Gallego, D.T. & Heffernan, P.G., 1 Gerontologist 4
(1981)).
139
J.H. Borup, “Relocation: Attitudes, Information Network and Problems Encountered, 5 Gerontologist 501
(1981).
140
Jerrold Mirotznik & Lenore Los Kamp, Cognitive Status and Relocation Stress: A Test of the Vulnerability
Hypothesis, 40 Gerontologist 5 (2000).
141
Friedman, S. et al, “Increased Fall Rates in Nursing Home Residents After Relocation to a New Facility, “
Journal of American Geriatrics Society, Vol. 43(11), pp. 1237-1242 (1995).
41
An examination of 49 relocated nursing home residents found a decrease in ability to perform
activities of daily living, but an increase in “receptive communication.”142
Other studies have concluded that relocation has little significant effect or that some
effects were somewhat positive. For instance, an analysis of prescription drug use, dependency,
and bedfast conditions of 196 residents from two facilities relocated to another nursing home
showed no significant adverse effects compared to a control group.143 A study of 326 residents
relocated from 30 nursing homes found positive effects in stamina and daily functioning.144 A
recent study of 58 residents relocated from one nursing facility to others in the state showed
modest deterioration in cognition, and slight increases in depression and behavioral symptoms,
but positive changes in sleep patterns and activity levels.145
As with mortality rates, research on morbidity also identifies factors that affect the
resident’s health and welfare in the moving process. Factors might include, for instance, degree
of change involved in the relocation, health condition of the residents, age, degree of dementia,
income level and source of payment, relocation planning, individualized assessment of residents,
extent of choice involved, quality of care in the new facility, and the extent to which other
residents and familiar staff also are moved to the new facility. All of these factors make it
difficult for researchers to draw conclusions about the effects of relocation. Moreover, some
studies have documented that effects on residents frequently are temporary, and that over time
residents may return to their original condition.146
2. Judicial Recognition of Transfer Trauma
While gerontologists study the effects of relocation after the fact, judges are faced with the
immediacy of transfer. In O’Bannon v. Town Court Nursing Center,147 the Supreme Court in
1980 considered the assertion of nursing home residents that they had a constitutional right to
participate in hearings concerning Medicare/Medicaid termination, based on a property right to
remain in the home of their choice and the possible effects of relocation. While the Court did not
find such a right, Justice Blackmun’s concurrence highlighted the concept of transfer trauma.
142
Rogers, J.C. et al, “Functional Health Status of Relocated Nursing Home Residents,” Journal of American Board
of Family Practice, Vol. 33, pp. 157-162 (1990). “Receptive communication” involves understanding others, and
was differentiated from “expressive communication,” which involves making oneself understood.
143
Grant, P. et al, “The Impact of Interinstitutional Relocation on Nursing Home Residents Requiring a High Level
of Care,” The Gerontologist, Vol. 32(6), pp. 834-842 (1992).
144
Borup, J., et al, “Relocation: Its Effect on Health Functioning and Mortality,” The Gerontologist, Vol.20, pp.
468-479 (1980).
145
Klein, W., Grant Street Rehabilitation Center Relocation Study, Connecticut Long-Term Care Ombudsman
Program (June 2000). Also see Teaster, P.P., Roberto, K.A. & Miller, M.C. “A Center for Gerontology/Virginia
State Ombudsman Study on Perceive Nursing Home closure Due to Loss of Medicaid Certification,” to the Virginia
Department of Medical Assistance Services” (1998).
146
See Friedman et. al., “Increased Fall Rates.”
147
447 U.S. 773 (1980).
42
The transfer trauma concept was a factor in a string of cases in which federal courts
granted injunctions against termination or closure.148 For example, in Lexington Mgmt. Co. v.
Missouri Dept. of Social Services in 1986, a federal district court granted an injunction after
finding “uncontroverted evidence” that nursing home residents are vulnerable to transfer
trauma.149 A decade later in 1996, in granting a temporary injunction in International Long
Term Care v. Shalala, a district court observed “the irony here is that the Medicare statute is
designed to protect the interests of residents of nursing facilities, and yet it is these very residents
who will suffer the most if they are unnecessarily transferred.”150 In Libbie Rehabilitation
Center, Inc. v. Shalala in 1998, the court again granted an injunction against a pending
termination, holding that “the likelihood of irreparable injury in dislocating the residents of
Libbie is clear and strongly influences this court’s conclusion . . .”151
While the court in the 1998 Greenbelt case, Northern Health Facilities, Inc. v. United
States, refused to grant an injunction, the opinion notes this “is an inequitable result,” and that
closure is “not in the best interests of Greenbelt residents.”152 Federal courts reexamined issues
of transfer trauma in 1998 in Mediplex of Massachusetts, Inc. v. Shalala, which found that “the
public interest lies with keeping [the residents] in the nursing home pending a final determination
. . .”;153 and in 1999 in Heartland Manor at Carriage Town v. Shalala, which found that
“irreparable injury may occur to plaintiff’s residents.”154 The courts in both cases granted
preliminary injunctions. However, another case in same year as Heartland reached a different
result. In Vencor Nursing Centers, L.P. v. Shalala, the court balanced the possible harm from
transfer trauma against a risk of harm in staying in a noncompliant facility. It found that
“relocation may ultimately tend to improve the residents’ care and well-being”155 and denied a
temporary restraining order.
3. Regulatory Response
In the face of gerontological and judicial findings, as well as an increased rate of closure due in
part to bankruptcy, state and federal governments responded with measures to minimize transfer
trauma.
148
These cases are outlined in Lowe, J., “Northern Health Facilities, Inc. v. United States: Enforcing the Nursing
Home Reform Act,” unpublished paper, Arlington VA (May 2000).
149
The court noted that the risk of transfer trauma “is particularly great in the instant case because the residents
would have to be transferred out of their urban environment to facilities in rural areas. This . . . could be extremely
disorienting and distressing. In addition, the transition would move the residents far away from their families and
friends, thereby cutting down their number of visitors and generally damaging their external support systems.” 656
F. Supp. 36 (W.D. Mo. 1986) at 41.
150
947 F. Supp. 15 (D.D.C. 1996) at 19.
151
26 F. Supp. 2d 128 (D.D.C. 1998) at 132.
152
39 F. Supp. 2d 563 (D. Md. 1998) at 577.
153
26 F. Supp. 2d 128 (D.D. C. 1998) at 132. The National Senior Citizens Law Center has noted that in this and
similar cases “facilities are invoking the potential irreparable harm to residents resulting from transfer trauma as a
basis for enjoining their terminations, although they do not represent residents in the litigation” and thus providers
are “using residents to assert their interests in enjoining termination.” National Senior Citizens Law Center, “Recent
Trends in Enforcement Litigation,” Nursing Home Law Letter (February 22, 1999).
154
Civ. A. No. 899-71253 (E.D. Mich. 1999), at 18.
155
63 F. Supp. 2d 1 (D.D.C. 1999) at 13.
43
a. Federal Initiatives. Federal law requires states to “provide for the safe and orderly
transfer of the residents” if HCFA or a state terminates a facility’s Medicare/Medicaid
participation.156 Moreover, federal law also provides that for Medicaid facilities (or the
Medicaid portion of dually participating facilities) civil monetary penalties collected from noncompliant homes must be applied to “the protection of the health or property” of the residents,
including “payment for the cost of relocating residents to other facilities.”157
In July 1999, the HCFA Center for Medicaid and State Operations sent a letter to state
survey agency directors setting out points to include in a state plan for facility closures.158 These
points included: assessment of resident care needs, plans for communicating with staff and
unions, continuation of appropriate staffing levels and pay, provision of supplies, availability of
facilities in case of transfer, quality of care by alternative facilities, process for relocation of
residents, management of facility during closure, oversight by other organizations, funding to
keep facility open until residents are transferred, and plans for communication with residents and
families.
At least one HCFA regional office has developed a relocation plan detailing the role of
the regional office and the state. The Region III memo on “Nursing Home Resident
Relocation”159 provides that state governments have “the primary role” in relocation, but that
federal officials must ensure residents are not placed in troubled facilities. The “Principle State
Representative” on the HCFA Regional staff should contact the state to get a copy of the state
relocation plan. When a relocation will occur, HCFA Region III staff are to check whether any
enforcement action is imposed or pending for any facility to which residents are to be
transferred; and if so, “they will notify the state that the intended transfer should not take place.”
Meanwhile, the Administration on Aging funded development of a manual on The Role
of Long-Term Care Ombudsmen in Nursing Home Closures and Natural Disaster Evacuations,
by the National Long-Term Care Ombudsman Resource Center.160 The manual outlines the role
of state and local long-term care ombudsmen in addressing transfer trauma problems when
nursing homes close. It suggests that state ombudsmen develop a contingency plan in case of
closure. The plan should involve all appropriate agencies and advocacy groups, designate a lead
agency, determine a notification timetable for closings, examine the state receivership remedy,
ensure funds are available during closures, and develop pamphlets for residents and families
identifying key resources. Similarly, local ombudsman should prepare a local plan.
The ombudsman manual outlines elements of a relocation plan. The plan should
determine how personal belongings will be transported, ensure the proper transfer of medical
records and resident funds, provide for transfer of medications, direct a comprehensive discharge
plan for each resident, and develop a tracking sheet to help locate residents once they are moved.
The plan should emphasize that residents’ rights continue through the relocation process and
should encourage the involvement of resident and family councils.
156
42 U.S.C. §§1395I-3(h)(4), 1396r(h)(5).
42 U.S.C. §1936r(h)(2)(A)(ii); HCFA State Operations Manual §7534.
158
Letter from Sally K. Richardson, Director HCFA Center for Medicaid and State Operations (July 15, 1999).
159
HCFA Region III memo dated September 28, 1999.
160
Murtiashaw, Sherer (2000).
157
44
A number of state long-term care ombudsman programs have been involved in
developing relocation strategies at the state and local level. For example, in Connecticut, the
state ombudsman played a leading role in development of a “Nursing Facility Closure Response
Coalition,” as an outgrowth of a local work group convened to coordinate relocation of residents
of a facility in Bridgeport.161
b. State Initiatives. In response to federal law, and perhaps to the recent rash of
bankruptcies as well, several states have developed plans for the orderly closure of nursing
facilities.162 The plans define roles of various state agencies and outline means of coordination.
Some set out steps to be followed, including timeframes for notice to the residents and families.
This project sought information on transfer and closure plans in states in which the profiled
facilities were located. The results are presented below.
In addition, states have a responsibility to place nursing home residents with disabilities
in “the most integrated setting” appropriate to their needs. The U.S. Supreme Court decision in
Olmstead v. L.C.,163 held that unjustified institutionalization of people with disabilities is
prohibited discrimination under the Americans with Disabilities Act. The Court suggested that
states may be able to demonstrate compliance with this mandate by having comprehensive and
effective plans for placing qualified individuals with disabilities in less restrictive settings. Thus,
in a nursing home closure, states must ensure examination of community-based alternatives as an
important part of the relocation planning process.
4. Relocation in Profiled Facilities
The project sought information on relocation in each of the profiled facilities.164 The
descriptions show there is inherent difficulty in a relocation effort, no matter how good the plan.
The lack of solid data underscores the need for better resident tracking.
a. Cobbs Creek Nursing Center. In Pennsylvania, state regulations require 30 days’
notice to residents, except when an earlier transfer “is necessary for health and safety.” The
Department of Health “is permitted to monitor the transfer of residents.”165
In the 1998 Cobbs Creek closure, a management firm hired by the facility was
responsible for the relocation, but state staff and the ombudsman program also put in long hours
helping residents. The ombudsman explained that the program “was on site, as personnel from
the Department met first with residents and then with staff to announce the closing. We [the
ombudsman] also spoke briefly to the residents to let the residents know we would be available
161
Klein, W., Grant Street Rehabilitation Center Relocation Study, Connecticut Long-Term Care Ombudsman
Program (June 2000).
162
Murtiashaw, (2000) outlines a number of state relocation plans. The report also focuses on relocations due to
natural disasters – and the suggestions could be useful as well in other emergency situations.
163
119 S. Ct. 2176 (1999).
164
Specific information and quotes are from the sources listed with the full profiles at Appendix B.
165
PA Department of Health, Long-Term Care Facilities Licensure Regulations, Division of Nursing Care Facilities
(July 1999), §201.23.
45
daily during the closure. As expected, both staff and residents were extremely upset about the
closing.”
The ombudsman recalls: “As far as the actual closing and relocation, they were not at all
prepared. There was a pamphlet on the role of the long-term care ombudsman, very general, but
that was all. There was no relocation procedure. It was very hot. The state ombudsman asked all
local ombudsmen to follow up with any Cobbs Creek residents and ask if all the medical records
and possessions were transferred, and how the resident is doing, although most of the complaints
were simply that the resident didn’t want to move. Some did go to troubled facilities.”
The state ombudsman office attempted to track Cobbs Creek residents. Most were
relocated in Philadelphia and surrounding areas. Of the 138 residents relocated, the office
received information about 100 within a month or two of the closure. Of these, 16 residents
died. There is no information on what their condition had been. A number of residents were in
the hospital at the time of the relocation, and were transferred directly to a new facility. No
further tracking was conducted.
b. Venoy Nursing Center. Michigan has an interagency agreement among the
Department of Community Health, Office of Services to the Aging, Department of Consumer
and Industry Services, and Family Independence Agency setting out the roles and responsibilities
of each when residents must be relocated due to facility closure.166 It creates a “state team” to
give ongoing policy directions, mobilize resources, and oversee the relocation, and a “local
team” to give direct operational assistance at the facility. It provides for designation of a
“closure agent” to be present at the facility and ensure safety of the residents and orderly closure,
and includes a detailed sample “protocol” for relocation.
In the 1998 closure of Venoy Nursing Center, the temporary manager from the Michigan
Public Health Institute coordinated the relocation of the 133 remaining Venoy residents, with a
team including state agency staff and the ombudsman. Relocation took two to three weeks.
According to the ombudsman, some residents were transferred to substandard facilities facing
their own compliance problems. The ombudsman said her program sought to research how the
Venoy residents fared in the new facilities and did some field-testing of a tracking instrument,
but no data are available.
One family member wrote in a letter to the state, “I received a call on the 13th of May
telling me my Mom had to be out by the 15th. . . We made not just one traumatic move but two,
because my Mom’s new facility could not take her until May 21. . . . And while the quality of
care Mom is receiving is so much better, there is no compensation for lack of friends and good
conversation because the residents at her new place are, on a whole, not as alert as those at
Venoy had been. . . .”167
c. Belle Woods Continuing Care Center. Little follow-up information was available on
the close to 70 Belle Woods residents relocated in November 1999. Belle Woods is the second
166
Michigan “Interagency Agreement for Nursing Facility Closures.”
Testimony of family member Kathleen Monit, at hearing on implementation of the Collaborative Remediation
Plan, before Michigan Department of Community Health (July 1998).
167
46
profiled Michigan facility. A long-term care advocate charged that “with very little notice,
residents of Belle Woods were transferred to other nursing homes, some having histories of
substandard care similar to Belle Woods. Those who survived the collapse of this nursing home
must cope with the trauma of relocation . . . in their new homes.”
d. Audubon Healthcare Center. In Wisconsin, the Department of Health and Family
Services has statutory authority to “provide, direct or arrange for relocation planning, placement
and implementation services in order to minimize the trauma associated with the relocation of
residents. . ..”168 Facilities must get prior approval of a resident relocation plan from the
Department, and once the plan is approved, the Department monitors the process and may assist.
The Department has established a “relocation plan review team” involving six different
agencies.169 A manual sets out the role of each.
The state and the facility faced a tough challenge in relocating more than160 remaining
residents of Audubon in the Spring of 2000. Audubon had a mixture of residents with special
needs, including a significant number with serious mental illness, and some with alcohol or drug
abuse problems. Audubon “led all nursing homes in the state in patients with schizophrenic
disorders, affective psychoses, and paranoia.”170 A long-term care ombudsman commented
“many nursing homes don’t have the staff to care for [this population].”
The Department of Health and Family Services, the Board on Aging and Long-Term
Care, the state and local ombudsman programs, and the local area agency on aging were all
involved in the relocation, along with the facility itself. All participated in meetings with
residents, families, and guardians. The ombudsman had begun talking with the facility about the
special needs of the residents months before closure, and was present at the facility on a regular
basis. According to state regulators, each resident was evaluated to determine a transfer plan. A
survey team was sent to each potential facility to observe, and to ensure that none had
substandard care. The Department hired a consultant to monitor the relocation process.
The facility, however, played a major role in decision-making about the relocation. The
home was owned by a major national chain that was in bankruptcy and also owned several other
nearby nursing homes. Ombudsman staff charged that, “the facility was dictating the relocation,
despite the state’s relocation manual.” Local community staff commented, “before the Agency
on Aging or others had a chance to speak with families, the facility often relocated the residents
to other [chain-owned] facilities. Yet some of the family members did not want to consider
community placement [at home or in a small-group living arrangement], and were relieved when
the resident was placed quickly in another [chain-owned] facility.” Regulators conceded that “in
the beginning, the process went a little too fast, and then the team intervened and slowed it down.
Both the facility and the families felt a sense of urgency. It takes a lot of working together to
educate them that they can go slower.” Moreover, community placements were difficult because
there were waiting lists due to lack of funding. According to an advocate, “placing some of the
168
WI Stat. §50.03(14)(a).
Wisconsin Department of Health and Family Services, Resident Relocation Planning and Procedure Manual
(January 2000).
170
Umhoefer, D., “Nursing Home Residents Pose Relocation Challenge,” The Journal Sentinel (March 3, 2000).
169
47
residents in less restrictive community settings is possible but will strain the county’s overtaxed
programs for community placement.”171
State regulators reported that of the 160 Audubon residents, 15 went to group homes or
community-based facilities, one went to an apartment with supervision, and one went home with
family. The rest were placed in nursing homes throughout the state, but many remained in the
Milwaukee area. A total of 72 went to a nearby facility owned by the same chain. Regulators
explained that the families often wanted this. Since the administrator and director of nursing
went there, “it was a popular choice with residents. Residents wanted to be with other residents
and staff they knew.” An additional 10 residents went to other facilities owned by the chain. The
state’s consultant was continuing to track the Audubon residents. She noted that of the residents
placed in the community, there were two failures, and these went back to nursing homes. There
were two deaths, both hospice patients that died soon after the move. The consultant observed
that a number of residents were “doing better than at Audubon,” noting in particular that they
appeared to be better groomed.
e. Snapper Creek Nursing Home. Under Florida statute, the Department of Children and
Family Services is directed to aid in resident relocation and assure the least possible disruption of
residents’ lives.172 Department staff indicated there are no guidelines for implementation.
Very little follow-up information was available on the 67 Snapper Creek residents
relocated in 1996. The relocation was conducted by the facility and by the area office of the
Department of Children and Family Services. The facility had been sold recently to a major
chain, which was running it on an interim basis. A long-term care ombudsman commented that
the agency was reluctant to share information about the relocation of residents or give the
ombudsman a role, and that “there was a lot of distrust between the state agencies involved and
the ombudsman.”
f. Laurel Glen Nursing Home. California law provides that when residents must be
transferred because of licensure revocation or termination, “the facility shall take reasonable
steps to transfer affected patients safely and minimize possible transfer trauma” by: assessing
the health condition of residents, getting physician recommendations for ameliorating adverse
consequences from transfer, providing counseling prior to transfer if necessary, evaluating the
relocation needs of each resident, giving 30 days’ notice, and arranging for future medical care
and services. The state may provide or arrange for these relocation services if “these services
are needed promptly to prevent adverse health consequences to patients, and the facility refuses,
or does not have adequate staffing, to provide the services,” but the facility must reimburse the
state.173
All 34 Laurel Glen residents were relocated within one day. Even though state law
provides for 30 days’ notice for relocation, one interpretation was that this applied only to
closure due to voluntary rather than involuntary terminations. A bill has since been enacted to
clarify that both types of relocation are included. The long-term care ombudsman explained that
171
Umhoefer (March 3, 2000).
FL Stat., Chapter 400
173
CA Health & Safety Code, §1336.2.
172
48
“the owner was uncooperative, and the residents were at tremendous risk.” According to a
memorandum of understanding between the Department of Health Services and the ombudsman
office, the ombudsman oversaw the placements and helped the families, while the department
took care of transfer of medications, personal belongings, and records.
The long-term care ombudsman recounted the relocation: “The day of the closure, that
morning, the owner told the families and residents that the facility would not close. At 10:00
a.m. the state officials came with an order for closure. The families were confused. Not all
families could be contacted that day. The relocation went on from morning until quarter of
10:00 p.m. The residents did not want to move, and some were dehydrated in the moving
process, some had decubiti. Some ended up better off after the move. Some had to be placed in
temporary situations and moved again. The placements all in one day would not have been
possible except that in the previous weeks, we thought the facility might close, and had been
collecting information about available beds from other area facilities. The owner did everything
he could to obstruct. He did not let us use any facility phones, fax, or copier, and we had to use
cell phones and pay phones.”
The ombudsman tracked residents in the months following the closure of Laurel Glen.
She said they had been dehydrated at Laurel Glen, and the poor care they had received
contributed to their frail appearance. Some went to board and care homes, but most were moved
to other nursing homes in San Mateo and nearby Santa Clara, where some had relatives. Five
residents died within five months of the closure, but there is no indication of what their health
condition had been. The ombudsman noted that many of the others were better off after the move
and were able to be more active.
g. Greenbelt Nursing and Rehabilitation Center. When Greenbelt closed in January
1999, 85 residents remained. A state regulator reported that the state “paid for about 650 hours
of time for nurses to work with the families and residents on relocation. It took about a month.”
Some of the residents were placed in a facility in Largo, Maryland, which subsequently faced a
threat of termination.
The HCFA Administrator was reported as saying, “there was no transfer trauma” for
Greenbelt residents.174 The state commissioned a foundation to study the question of transfer
trauma as a result of the Greenbelt experience.175 The former federal temporary manager
informally kept track of the residents, and found seven deaths in the first three months after
closure, and 14 after six months.176 A state regulator maintained these deaths were related to the
previous health conditions of the residents and not necessarily to the move.
5. Views on “Transfer Trauma”
Overall, “transfer trauma” is a touchstone for widely differing perspectives on nursing home
termination and closure. Advocates and providers both have cited the phenomenon to block
174
Jacoby, M., “Quality Push is Costing Residents, Critics Say,” St. Petersburg Times (February 7, 2000).
This study was not completed or released during the current project.
176
Id.
175
49
pending closures. Regulators seeking closure sometimes have discounted it. Respondent
interviews show the range of views, and suggest there is no bright line on transfer trauma -- that
resident relocation requires a careful weighing of factors in each case:
•
“I hate to see residents disrupted. . . . HCFA thinks transfer trauma is just an industry-created
thing. But we do lose people in transfer trauma or soon thereafter.” (long-term care
provider/manager)
•
“HCFA does not recognize that there is a public health issue involved in transfer.” (long-term
care attorney)
•
“Transfer trauma is very real, but if you have enough time to work things out, you can
minimize it. But sometimes you don’t have this time. You can see the decline the in MDS
[“minimum data set,” a tool for resident assessment] data if the move is too quick. Ideally
the residents would be better off after the move, but this is not always the case.” (HCFA
regional official)
•
“Transfer trauma doesn’t always occur. Sometimes the activity actually improves the health
of some of the residents.” (long-term care attorney)
•
“Sometimes closure of a pre-eminently bad facility might be best for residents [despite the
possible trauma of transfer].” (HCFA official)
•
“There are procedures to reduce transfer trauma. Facilities don’t have to close so quickly,
and there should be time to take a thorough and systematic approach (long-term care
consultant)
•
Factors such as “low financial status, . . . high levels of acuity in their physical conditions, as
well as a high proportion of mental health issues . . .[can] work together to elevate the risk
that residents might experience in the face of precipitous transfers.”177 (long-term care
ombudsman)
•
“Transfer trauma is overdone. It all depends on how it is handled. There are positive and
negative situations, internal transfers, cross-transfers, so it is mixed. It’s often exaggerated.”
(long-term care researcher)
•
“Transfer can be good and can be bad. It depends -- on the timing, the resources available,
the reasons for the move, the speed with which it is undertaken.” (former monitor)
177
Klein, p. 1 (2000).
50
V. Study Recommendations
This study sought to examine federal-state decision-making in instances in which
federally-certified nursing facilities were terminated and the subsequent closure led to resident
relocation. Through case profiles and background interviews, it highlighted the problematic use
of intermediate sanctions, particularly temporary management and receivership. It explored
regulatory responses to forced relocation, and efforts to minimize the impact on residents. The
study recommendations address approaches to strengthen standards and implementation by
regulators, and to safeguard the interests of residents.
(Note: Since this study was written, the Health Care Financing Administration (HCFA) has
changed its name to the Centers for Medicare and Medicaid Services (CMS). While the study
has referred to “HCFA,” the resulting recommendations are forward-looking, and thus refer to
“CMS.”)
1. Strengthen data on enforcement and public access to this data. Data for this study
were scattered, incomplete, and difficult to obtain. To obtain the most accurate picture,
examinations of nursing home closures, terminations and use of intermediate sanctions should be
based on timely, uniform data that is readily available from the CMS central office. Although
the Online Survey, Certification, and Reporting (OSCAR) system was developed to track nursing
home data, the GAO and the current study found that regional offices and states have not
consistently used it. CMS should address problems in using the OSCAR system and require that
regional offices and states regularly enter data; and should fully and consistently implement a
Long-Term Care Enforcement Tracking System. Additionally, state and CMS letters to facilities
concerning remedies are sometimes difficult to obtain. These regularly should be copied to the
long-term care ombudsman program and made available to the public.
2. Study effectiveness of intermediate sanctions. The civil monetary penalties, bans
on admissions, directed plans of correction, and other intermediate sanctions imposed on the
facilities profiled in this project were of little avail. The project did not study similar facilities in
which sanctions may have helped to turn things around. What sanctions are most effective under
what circumstances? At what points do the various sanctions work best? What combination of
sanctions could best reverse the trend of a troubled facility and prevent closure? An empirical
study of intermediate sanctions would help to guide state and federal regulators making frontline decisions about enforcement, and policymakers considering how to strengthen the system.
3. Initiate a temporary management demonstration project. This study showed that
the intermediate sanction of temporary management is rarely used. State regulators often do not
recommend it to CMS regional offices, and the regional offices do not initiate its use. Yet it
could be helpful in targeting difficult care and management problems and preventing
inappropriate closure. For the remedy to work, temporary managers must be readily available,
well-qualified, brought in at a timely point, and have the administrative and financial authority to
make real changes in the facility. CMS should initiate discussions with regional offices and state
regulatory agencies about barriers to greater use of temporary management, promising practices,
51
and good examples. CMS should test the use of temporary management with full operational
authority in selected facilities on track for six-month closure and evaluate the results.
4. Develop a protocol for use of temporary management. A temporary management
demonstration project could provide a foundation for CMS to develop a protocol for regional
offices and states on temporary management, to provide guidance and consistency on when and
how it should best be used -- allowing for more of a test up front, rather than an assessment in
hindsight that temporary management might or might not have been useful.
5. Develop a national database of temporary managers. Project interviews showed
that one reason for low usage of temporary management (and long-term care receivership) is
lack of qualified candidates. CMS and states should promote the development of temporary
management teams of clinical and administrative expertise. CMS could provide leadership in
developing a national database of companies that meet minimum qualifications -- including
willingness to be available on short notice and provide periods of intense but temporary service.
CMS also could encourage states to develop, update, or maintain lists of temporary managers
who can mobilize quickly and are familiar with local resources.
6. Couple limited flexibility in the six-month rule with temporary management.
CMS has interpreted federal law to allow no discretion in termination of federal funds if a
facility is not in substantial compliance after six months. An amendment that provides or
clarifies that CMS has authority to make a limited extension of the time period in selected cases
only where temporary managers, as well as other intermediate sanctions, are in place might allow
for a more thoughtful weighing of risks and benefits to residents. It also could permit a facility
to develop new patterns of compliance and avoid unnecessary resident relocation.
7. Strengthen state long-term care receivership laws. CMS should sponsor
development of a model receivership statute. Then, based on this model, states should develop
or revise their long-term care receivership laws to allow receivership to be used as an
intermediate sanction rather than as an instrument of closure. Triggers for receivership should be
broadened beyond situations of closure, state licensure action, or immediate jeopardy to include
instances where a facility is continually or repeatedly out of compliance, homes are financially
unstable and at risk of bankruptcy, or residents need protection. Statutes should give the receiver
authority over incoming revenue, designated capital expenditures and staffing; limit the liability
of receivers; allow receivers to set aside transactions of the licensee; and recognize that the
primary responsibility of receivers is the care and welfare of residents.
8. Encourage judicial education on temporary management and receivership. For
temporary management and long-term care receivership to work, judges need to understand these
tools as intermediate sanctions to improve the quality of care. State regulators and state court
administrative offices should collaborate on judicial education units on long-term care, including
the triggers for temporary management and receivership, the powers and duties involved, and the
difference between a financial receivership focused on creditors and a long-term care
receivership focused on residents.
52
9. Provide funds for the operation of temporary management and receivership, and
for resident relocation when necessary. Facilities in need of temporary management or
receivership may lack resources needed immediately to cover the costs of salary, bond, staffing,
supplies, and limited capital improvements. If the home is closing, monies may be necessary for
resident assessments and relocation. States should establish funds to contribute toward these
costs, using civil monetary penalties and other sources. While the fund could include a revolving
loan component, it should not rely entirely on this, because the likelihood of failing to recover
the funds may be a barrier to use. CMS should provide additional guidance and technical
assistance for states on the use of collected civil monetary penalties for relocation costs.
10. Provide guidance and promote best practices on resident relocation. CMS
should initiate a dialogue with regional offices and states about relocation practices, and should
promote those that best minimize the trauma of transfer. CMS should provide guidance and
promote consistency on establishment of a relocation team, adequate notice to residents and
families, resident assessments and interviews on needs and preferences, involvement of the longterm care ombudsman program to ensure attention to residents’ rights, involvement of family
councils, ways of maximizing resident choice, procedures to ensure orderly transfer of records
and medications, full information about the new facilities, and follow-up visits. CMS should
examine the Region III procedure to prevent placement of residents in facilities that are not in
substantial compliance for potential use of that procedure as a model.
11. Develop and require use of a uniform protocol for tracking residents after
relocation. This project showed there is very little information on what happens to residents
when a facility closes. What little information exists often is not uniform or correlated with
factors such as previous health condition. CMS and the states should designate a point of
coordination for collecting this information and a uniform report format (including changes in
MDS data) for the receiving facilities to complete within a designated time period (such as six
months) following the move.
12. Convene roundtable on nursing home termination and closure. All of the
findings in this report bear further scrutiny by policymakers, federal and state regulators,
advocates, industry representatives, and gerontologists. A roundtable bringing all stakeholders
together should set out the findings, provide a format for structured discussion, and make broadbased recommendations for action.
53
VI. APPENDICES
Appendix A. Scope and Severity Grid For Nursing Home Enforcement
Medicare State Operations Manual Section 7400
STANDARDS AND CERTIFICATION
Immediate jeopardy to
J – Plan of
K – Plan of
resident health or
Correction
Correction
safety
#" Required: Cat. 3
#" Required: Cat. 3
#" Optional: Cat. 1
#" Optional: Cat. 1
#" Optional: Cat. 2
#" Optional: Cat. 2
Actual harm that is
G – Plan of
H – Plan of
not immediate
Correction
Correction
jeopardy
#" Required* Cat. 2
#" Required* Cat. 2
#" Optional: Cat. 1
#" Optional: Cat. 1
No actual harm with
potential for more
than minimal harm
that is not immediate
jeopardy
No actual harm with
potential for minimal
harm
D – Plan of
Correction
#" Required* Cat. 1
#" Optional: Cat. 2
A – No Plan of
Correction
#" No Remedies
#" Commitment to
Correct
#" Not on HCFA2567
Isolated
E – Plan of
Correction
#" Required* Cat. 1
#" Optional: Cat. 2
L – Plan of
Correction
#" Required: Cat. 3
#" Optional: Cat. 1
#" Optional: Cat. 2
I – Plan of
Correction
#" Required* Cat. 2
#" Optional: Cat. 1
#" Optional:
Temporary Mgmt.
F – Plan of
Correction
#" Required* Cat. 2
#" Optional: Cat. 2
B – Plan of
Correction
C – Plan of
Correction
Pattern
Widespread
Substandard quality of care is any deficiency in 42 CFR 483.13, Resident Behavior And Facility
Practices, 42 CFR 483.15 Quality of Life, or 42 CFR 483.25, Quality of Care, that constitutes
immediate jeopardy to resident health or safety; or, a pattern of or widespread actual harm that is
not immediate jeopardy; or, a widespread potential for more than minimal harm that is not
immediate jeopardy, with no actual harm.
* This is required only when a decision is made to impose alternative remedies instead of or in
addition to termination.
54
Appendix A. Scope and Severity Grid For Nursing Home Enforcement (Cont’d)
SUBSTANTIAL COMPLIANCE
REMEDY CATEGORIES
Category 1 (Cat.1)
Category 2 (Cat.2)
Category 3 (Cat.3)
#" Directed Plan of
#" Denial of Payment for
#" Temp Management
Correction State Monitor;
New Admissions
Termination
and/or Directed In-Service #" Denial of Payment for All
#" Optional CMPs: $3,050Training
Individuals imposed by
$10,000/day
HCFA; and/or CMPs: $50
- $3,000/day
55
Appendix B. Facility Profiles
A.
Cobbs Creek Nursing Center 178
Non-profit facility with history of turnover and terminations. Cobbs Creek Nursing
Center was a non-profit facility in the far southwestern corner of Philadelphia owned by a local
corporation that also ran other homes in the area. It was operated by a long-term care
management firm. It had 205 licensed beds, all certified for Medicaid and 72 for Medicare.
Many of the residents were low income, minority, or without families.
According to a federal official in a regional HCFA office, the facility had “a long and
ugly history, and was terminated several different times under several different owners.” This
included a ban on admissions in 1990 and termination from the Medicare/Medicaid program in
1993. An August 1997 survey found few deficiencies. But problems related to closure began
soon after this.
Complaint investigations. In November 1997, the ombudsman program received a
complaint alleging neglect of an 88-year-old resident. The ombudsman investigated and found
that a nurse aide had attempted to transfer the resident without proper assistance and had
fractured the resident’s leg. The following January, upon investigation of this and other
complaints, the state substantiated inadequate care. A full survey resulted in a ban on new
admissions and a civil monetary penalty. The ban on admissions was lifted in March 1998,
although the state continued to monitor the facility.
In response to a new series of complaints, a survey in May 1998 found Cobbs Creek
residents to be in immediate jeopardy. Deficiencies were cited for resident rights violations,
resident care, nursing services, resident safety, social services, care planning, and activities. The
state also imposed a civil monetary penalty and another denial of payment for admissions and
recommended that HCFA terminate the facility.
Termination and closure. Cobbs Creek was terminated from the Medicare/Medicaid
program on May 24, 1998. A state official observed that “the building was a problem and the
management was a problem. After 23 days [the required period for termination after immediate
jeopardy], they simply had not put in the resources to bring it back up to par.” The facility
continued to operate briefly after the termination date, but a state survey found the home did not
meet minimum state standards, and in June 1998 the state revoked the home’s license and
ordered immediate closing. A state official explained, “the closure was a difficult decision to
come to. It exhausted a lot of time. The facility had numerous opportunities to correct the
deficiencies and did not.” An ombudsman remarked that “everyone was stunned at the closing,”
178
This enforcement history was compiled from the following sources: HCFA Form 2567 “Statement of
Deficiencies” for 5/1/97, 8/28/97, 1/14/98, 5/1/98; State table of deficiencies and status from 8/5/87 through 5/1/98;
State listing of “Licensure Deficiencies from Survey of May 1, 1998” and “Licensure Deficiencies from Survey of
June 18, 1998”; Davis, M., Center for Advocacy for Rights and Interests of the Elderly (long-term care ombudsman
program) “Southeastern Region Ombudsman Report, Cobbs Creek Nursing Home Closure, Enrichment Training,”
(June 2-3, 1999); and several contacts with individuals listed at Appendix E.
56
the first in Pennsylvania in more than a decade. Simultaneously, the owner terminated its
contract with the manager, and a new consulting group was brought in for the closure.
Dispersal of residents in Philadelphia area. A total of 138 residents, mostly Medicaid
beneficiaries, were relocated between June 24 and July 20, 1998. Officials from the Department
of Health met with the residents and staff to announce the closing. Both residents and staff “were
extremely upset about the closing,” according to a long-term care ombudsman. Most were
relocated in nursing homes in Philadelphia and surrounding areas, although some went to
personal care homes, and one went home. Of the 138 residents relocated, the state ombudsman
reported that 16 had died within 2 months after the closure, but there is no information on what
their conditions had been. A number of residents were in the hospital at the time of the
relocation and were transferred directly to a new facility.
B.
Venoy Nursing Center 179
Serious and longstanding problems; physical plant deterioration. Venoy Nursing Center
was a 202-bed facility in Wayne, Michigan, owned by a private individual. There was an active
and involved family council. Venoy was the first of six Michigan facilities that were
involuntarily terminated and then closed. According to testimony of the state protection and
advocacy agency, “The facility had serious and long-standing problems and, by the end, it was
critically understaffed and had a physical plant that was seriously compromised from years of
neglect.” Its troubled history dated back to at least 1993, when a state survey identified
numerous deficiencies and noted that the facility lacked sufficient staff. Similar findings were
made in 1994. In January 1996, the state found multiple deficiencies and a leaking roof.
Cyclical compliance. In April 1996, the state issued a correction order to fix the roof.
The facility attested that it was in compliance in May. In October, the state found deficiencies in
the quality of care causing harm to residents. According to the protection and advocacy agency,
deficiencies were cited on 10 different occasions in the 18 months before the facility was closed.
In May and October 1997, state surveyors found that Venoy failed to meet staffing requirements,
and found numerous other violations. The state notified the facility of its recommendation for
termination if the facility was not in substantial compliance by April 1998.
The state agency cited deficiencies again on a revisit survey in December 1997, and in
January 1998 HCFA imposed a denial of payment for new admissions. In January, the
ombudsman program wrote to the state that, “Dozens of complaints have been filed against the
facility in recent years, with common themes of resident neglect, poor staffing, unexplained
resident injuries, building disrepair, insufficient supplies, and poor food.” The ombudsman
179
This enforcement history was compiled from the following sources: HCFA Form 2567 “Statement of
Deficiencies” for 10/17/97, 12/10/97, 3/30/98; “Notice of Termination” to Venoy Nursing Center Administrator,
from HCFA Region V, April 8, 1998; Letter from State Department of Consumer & Industry Affairs to family
member Lannette Nabb, (July 10, 1998); Edelman, Toby, “Michigan Case Study,” in “What Happened to
Enforcement? A Study of Enforcement Under the Nursing Home Reform Law,” National Senior Citizens Law
Center (1998); Letter from Citizens for Better Care (long-term care ombudsman program) to Michigan Department
of Consumer & Industry Services (January 5, 1998); Testimony of Elizabeth Bauer, Michigan Protection and
Advocacy Services, Inc. before the Department of Community Health Administrative Rules, “Establishing An
Enforcement System for Long Term Care Facilities,” (June 1998); and contacts listed at Appendix E.
57
program recommended frequent monitoring, meetings with family and resident councils, a ban
on admissions, civil monetary penalties, and a temporary manager.
“Collaborative remediation.” In February 1998 the state referred Venoy to its new
Collaborative Remediation Project, operated by the Michigan Public Health Institute as part of
the state’s Long-Term Care Quality Improvement Program and Resident Protection Initiative.
The project sent two “clinical advisors.” However, the facility failed to pay, and work was
discontinued after six weeks. In March, Venoy was still not in substantial compliance. In April,
the state sent in a skilled temporary manager who was a nurse and former nursing home
administrator, under the Collaborative Remediation Project. The owner’s staff continued to play
a significant role in operating the facility, however, and the temporary manager lacked access to
facility funds and important records. The roof was caving in, and the residents were in jeopardy.
Termination and closure. On April 27, 1998, Venoy was terminated from the
Medicare/Medicaid program, and after 30 days, federal funding ceased. After the termination,
the state worked to negotiate a change in ownership in an effort to keep the facility open, but
then revoked the license. The temporary manager was given responsibility for closing the
facility. The manager checked all remaining residents and immediately sent 11 to the hospital.
According to a state official, “In Venoy, remediation was not possible. Venoy was closed
due to both the 180-day rule and to immediate jeopardy. It had multiple serious problems,
including the roof, lack of staff, odors. The state was working to negotiate a change in
ownership, which might have kept it open, but was not successful. . . . There was a criminal
action against some of the key people and they were indicted. Nobody would have wanted to
keep it open at that point. There were severe problems in the physical plant, and a real lack of
care.”
The protection and advocacy program observed, “The family council was relentless for
four years in seeking help and bringing problems to the attention of state and federal regulators,
never imagining that their efforts would ultimately result in the closure of the very home they
tried so hard to improve.” The agency charged that closure resulted from weak enforcement, and
that “over and over again, the state gave the facility a date certain by which time it had to correct
the deficiencies, and over and over the facility failed to pass inspections.”
Resident relocation. A total of 133 residents were relocated over a two-to-three week
period. Some were transferred to facilities that were facing their own compliance problems.
Several family members recounted personal traumas and alleged that the move was injurious to
residents.
C.
Belle Woods Continuing Care Center 180
180
This enforcement history was compiled from the following sources: Letters from Michigan Department of
Consumer & Industry Services to Belle Woods, many with attached HCFA Forms 2567, for 2/03/97, 11/06/97,
2/02/98 3/05/98, 4/16/98, 7/16/98, 9/18/98 (Notice of Imposition of Remedies), 10/22/98, 11/25/98, 12/14/98,
12/23/98, 1/21/99 (Notice of Imposition of Remedies), 2/12/99 (Correction Notice Order), 3/23/99, 7/20/99,
10/08/99, 10/28/99 (Emergency License Revocation and Correction Notice Order); Michigan Department of
Consumer & Industry Services, Compliant Investigation Form, 1020/99; Letter from Michael Connors, Citizens for
Better Care (long-term care ombudsman program) to HCFA (September 27, 1995); Letter from Belle Woods nurse
58
Yo-yo pattern in Medicaid facility. Belle Woods Continuing Care Center was a 220-bed,
Medicaid-only facility in Belleville, Michigan, a suburb of Detroit. The history of Belle Woods
shows a classic “yo-yo” pattern of being in and out of compliance over a period of many years,
under several different operators. Belle Woods was identified as a “poor performing facility”
meaning the citing of substandard quality of care in two annual surveys (August 1995 and
September 1996). The facility had severe staffing shortages. In November 1997, the state
recommended a civil monetary penalty and denial of payment for new admissions and imposed a
state monitor. A revisit a month later found substantial compliance.
Complaint allegations. Revisits and complaint surveys in early 1998 showed the facility
not in compliance. The state recommended sanctions if Belle Woods failed to achieve
compliance by April. In that month, the state accepted the facility’s attestation that it had fixed
the problems. At the same time, according to a consumer advocate, the state received complaints
alleging that residents were developing pressure sores and were being hospitalized due to lack of
treatment of this condition, and that the facility lacked sufficient staff. Many of these allegations
were substantiated in July.
In September 1998, surveyors issued a “K” level citation indicating a pattern of
deficiencies causing immediate jeopardy to residents’ health and safety. Residents were at risk
of death due to hazardous bedside rails. The facility replaced the beds the same day, abating the
immediate jeopardy. In October 1998, a nurse who had just resigned from Belle Woods wrote
the state a 10-page letter detailing severe risk to residents and alleging that the home staged
corrective actions. On October 22, 1998, HCFA imposed a civil monetary penalty and a denial
of payment for new admissions. Surveyors still found problems in November.
From substantial compliance to immediate jeopardy. In December 1998, the state
notified Belle Woods that it was in substantial compliance (thus breaking up the period of noncompliance). However, advocates subsequently claimed that the surveyors had not investigated
the complaints made by the nurse, as well as other complaints, when the determination was
made. The complaints were later substantiated. In January 1999, the state conducted a full
survey of Belle Woods and found immediate jeopardy due to problems with the resident call
system. Surveyors found a critical shortage of staff. The state imposed a directed plan of
correction and recommended federal sanctions.
Temporary manager. In February 1999, the state banned new admissions at Belle Woods
and appointed a temporary manager and a clinical advisor through the Collaborative
Remediation Project at the Michigan Public Health Institute. Despite the temporary manager, in
March and June the state found deficiencies and recommended federal remedies. Yet in July, the
state again found substantial compliance. In August, the temporary manager discontinued work
for a month because of non-payment of wages.
to Michigan Department of Consumer & Industry Services (October 1998); Letter from Michael Connors, Michigan
Campaign for Quality Care to U.S. General Accounting Office (March 12, 1999); and Letter from Michael Connors
to HCFA (November 30, 1999); and contacts listed at Appendix E.
59
In early October 1999, a state survey again found immediate jeopardy. The state imposed
monitoring and recommended federal remedies, including termination effective October 25. The
temporary manager did not have sufficient resources to hire and maintain staff, and bills were not
being paid. The facility had not paid Social Security or health insurance for the workers for
months. Staff resigned. Allegations of fraud were made against the owner. The director of
nursing and other nurse managers were not familiar with the emergency policies, which were
outdated. Residents were left at risk.
Financial crisis. Belle Woods faced daunting financial problems. A state official
explained, “There was a fire safety problem and there was simply no money to run the facility.
There was a clinical advisor, a temporary manager and a ban on admissions, we used the whole
bag of tricks, also a directed plan of correction. The temporary manager tried to work with the
staff, but the owner was not putting the resources in. The owner was already bankrupt, and the
bank held the mortgage. It was the bank that cared about not closing the facility, not the owner.
The bank was trying to find a new owner. So there was no money.”
Termination, closure, and relocation. On October 19, 1999, a surveyor witnessed the
death of a resident while facility staff sought to locate and administer oxygen. Belle Woods was
terminated from the federal Medicaid program October 25. Three days later, the state issued an
emergency license revocation. In early November, close to 70 residents were relocated to other
nursing homes, “some having histories of poor care,” according to a long-term care advocate.
D.
Audubon Healthcare Center 181
Bankrupt chain. Audubon Healthcare Center was a 276-bed bed facility in Bayside,
Wisconsin, a suburb of Milwaukee. Most of the residents were on Medicaid. Many were
mentally ill. The facility was owned by a major national chain that had declared bankruptcy.
The closure of Audubon was only the second due to termination in the state, and the first was in
the 1970’s. The termination and closure occurred quickly, while the owner was reorganizing
under bankruptcy.
Substandard quality of care. State surveys in December 1998 and July 1999 found
numerous problems with the quality of resident care and safety. The state fined the facility for
several deficiencies and accepted the facility’s allegations of compliance for others. An October
1999 survey again found deficiencies, including isolated instances of actual harm to residents (in
the areas of quality of care, pressure sores and urinary incontinence), and a December 1999
revisit found substandard quality of care. In a January 2000 letter, the state informed Audubon
that it had found serious deficiencies constituting immediate jeopardy (failure to prevent
accidents), but the state later determined the jeopardy had abated, although serious deficiencies
still remained. The state recommended denial of payment for new admissions and begin a state
revocation action.
181
This enforcement history was compiled from the following sources: Wisconsin Department of Health and
Family Services, Provider Inspection Summary, 12/01/98 – 08/01/00; Letters from Wisconsin Department of Health
and Family Services to Audubon Healthcare Center, 3/02/00; Letters from HCFA to Audubon Healthcare Center,
2/17/00 and 3/02/00; HCFA Form 2567, Statement of Deficiencies, 2/23/00; News reports from The Journal
Sentinel of Milwaukee from March 2, March 3, & April 10, 20000; and contacts listed at Appendix E.
60
Immediate jeopardy. In late February 2000, the state completed a complaint investigation
and again found immediate jeopardy. Failure to adequately monitor residents’ conditions led to
hospitalizations and, in one case, an amputation. Noting that this immediate jeopardy was the
third cited since July 1999, the state recommended and HCFA imposed a denial of payment for
new admissions and civil monetary penalties.
State surveys found 24 serious violations of state care standards over 14 months, and
numerous violations of federal standards, including a lack of supervision that allegedly led to
death of a resident who choked on food, neglectful care, and problems with bedsores. A news
article reported that the police department had responded to 116 calls involving Audubon
residents in 1999.
In March 2000, the HCFA regional office wrote to Audubon that the facility had “failed
to demonstrate [an analysis of] deficiencies to identify a root cause or systems breakdown, and
failed to provide specific corrective actions to correct the deficiencies.” The letter stated, “it is
evident that the staff . . . were not properly trained and supervised to ensure that resident needs
were identified, assessed and communicated to the caregivers. The death of the resident due to
choking demonstrates that the staff although present were not prepared to handle the emergency
situation.”
Long-term care consultant nurses who were called in found “the home was a disaster.
We found 90 percent of the staff was temporary agency staff. There were no assessments, no
care plans. We recommended to the state an eight-person team to help this sinking ship, not just
a little here and a little there.” An ombudsman commented that the state was “going in, doing
revisits, sending in monitors, but they were not able to turn it around.” A news article
characterized Audubon as “a large Bayside nursing home where health inspectors and police
have repeatedly documented chaotic and life-threatening conditions.”
Termination, closure. On March 2, 2000 HCFA terminated Audubon’s participation in
Medicare/Medicaid, effective March 19, and continued the denial of payment for new
admissions and the civil monetary penalties, along with state monitoring. The state license was
voluntarily surrendered by the facility, effective April 19, 2000. “The history of this facility,
where care was declining, made the decision very clear to us,” said a state regulator. “The
trauma of transfer is an issue, but there was a higher risk for residents of staying” at the facility.
Resident Relocation. Over the course of several weeks between March and June of 2000,
more than 160 residents were relocated. Of these, 14 went to community-based facilities, one
went home, and the remainder were transferred to nursing facilities throughout the state,
including other nearby facilities owned by the bankrupt chain. Many of the residents in
Audubon were chronically mentally ill. Some had been there for 20 years and a number had
corporate guardians.
E. Snapper Creek Nursing Home 182
182
This enforcement history was compiled from the following sources: District XI Florida Long-Term Care
Ombudsman Council 11/91 Inspection Report, 12/91 letter to Snapper Creek, memos to Florida Agency for Health
61
History of egregious violations. Snapper Creek Nursing Home was a 110-bed facility in
Kendall, a suburb of Miami. It was owned by a local businessman, and then sold to a chain.
Snapper Creek Nursing Home had a long history of egregious violations. “Year after year, the
state has ordered the 110-bed home to correct numerous inadequacies. . .” according to a news
article. From 1991 to 1993, the local ombudsman program documented dozens of problems in
care, food, the physical plant, residents’ activities, and residents’ rights. There were inadequate
supplies of clean linen and diapers.
Infection control. In 1994, the ombudsman documented that the facility had no soap for a
week and resident infections soared. A state memo in 1995 confirmed this, noting that “It was
substantiated that a period of time elapsed with no liquid soap in the bathroom dispensers. To
assess the effect on resident care a review of the infection control records was conducted. These
records revealed a dramatic and significant increase in the number of facility acquired infections
during the month of August 1994 . . .”
In March 1995, a 97-year-old Snapper Creek resident died “after receiving inadequate
care for a life-threatening bed sore,” according to state officials (as described in a 1996 news
article and documented in the ombudsman report). In February 1996, the state found
deficiencies in staffing, infection control, care planning and assessment, use of restraints, and
care supervision. The state imposed a ban on admissions and recommended additional federal
sanctions if substantial compliance was not achieved.
Ombudsman request for closure. In April 1996, the long-term care ombudsman program
asked the HCFA regional office to close the home. The ombudsman memo stated “The council
wants this nursing home’s license suspended immediately and its residents relocated to other
nursing home beds in the community.” The ombudsman provided a lengthy chronology of
violations. In April 1996, state inspectors found the facility was not in compliance,
recommended a civil monetary penalty, and imposed a denial of payment for new admissions,
and a directed in-service training. The state recommended termination in August if the facility
did not come into compliance.
Change in ownership. In May, a national chain bought the home. In June, the state
reached an agreement with the facility, and imposed a civil monetary penalty and frequent
monitoring. Some improvements were made, and a four-month ban on admissions was lifted, but
it was reinstated in July. Also in June, a lawsuit was filed in the Circuit Court alleging abuse and
neglect of the 97-year-old resident who had died of complications from a pressure sore.
Immediate jeopardy; termination; relocation. In July 1996, a HCFA official accompanied
state surveyors on an inspection of Snapper Creek. The state found remaining deficiencies and
Care Administration (3/92, 6/92,1/95, 12/95, 4/96), 6/92 letter to Medicaid Fraud Control Unit, 5/95 staff memo,
9/95 letter to State Attorney for Eleventh Judicial Circuit of Florida, 11/95 Inspection Report, & 4/96 letter to
HCFA; Florida Agency for Health Care Administration letters to the ombudsman program, 1/93, 3/95; HCFA Form
on Statement of Deficiencies for 6/95; Florida Agency for Health Care Administration letter to Snapper Creek
Nursing Home, 6/96; Rogers, Peggy, “Plagued by Violations,” The Miami Herald, B-1, May 17, 1996; Rogers,
“Kendall Nursing Home is Shut Down,” The Miami Herald, B-1, August 20, 1996; and contacts listed at Appendix
E.
62
immediate jeopardy due to lack of protection against fire. The home “was placed on a 24-hour
fire watch.” Snapper Creek was terminated from the Medicare/Medicaid program, and
subsequently was closed. Sixty-seven frail residents were relocated.
F.
Laurel Glen Convalescent183
Small Medicaid-only home. Laurel Glen was a small facility in Redwood City,
California. It had just over 30 residents, of whom all but six were on Medi-Cal. It was not
certified for Medicare.
Repeated deficiencies; loss of federal funding. In August 1998, an annual survey found
deficiencies at the “H” and “G” levels, causing actual harm to residents. In December, the state
imposed a civil monetary penalty and a denial of payment for new admissions. Two months
later, the state accepted a plan of correction from Laurel Glen and recommended lifting all
previously imposed remedies. In March, a follow-up visit again found deficiencies. In June,
federal Medicaid funds were discontinued, but the facility remained open with state Medicaid
funds.
In October 1999, a survey determined that conditions had deteriorated and harm to
patients’ health and safety was imminent. The survey found immediate jeopardy, which was
immediately abated, but serious deficiencies remained. In January 2000, a nurse surveyor and
dietary consultant visited Laurel Glen and stated that residents were still in immediate jeopardy.
Receivership hearing, termination. In February 2000, the state went to court to get a
receiver for Laurel Glen. The judge denied the state’s request. The state immediately served the
facility with a temporary suspension order for Medicaid certification. The facility continued to
provide poor care, and the state sent in monitors. Laurel Glen was closed on April 14, 2000.
The long-term care ombudsman “did not want the facility closed, yet recognized it was getting to
be an impossible situation.”
One-day relocation. All remaining 34 residents were relocated on April 14 between
10:00 a.m. and 10:00 p.m. According to the ombudsman, the entire relocation had to be done
within one day because the owner was uncooperative and the residents were at tremendous risk.
“The families were confused. Not all families could be contacted that day . . . . The residents
did not want to move, and some were dehydrated in the moving process. Some had to be placed
in temporary situations and moved again.” The ombudsman reported that five residents died
within five months after the move, but there is no information on what their conditions had been.
However, others were receiving better care and their conditions improved. Some were relocated
closer to family.
G.
Greenbelt Nursing and Rehabilitation Center 184
183
This enforcement history was compiled from the following sources: Department of Health Services, Licensing
and Certification, “Laurel Glen Synopsis of Events,” 8/13/99 – 5/26/00; and contacts listed at Appendix E.
184
This enforcement history was compiled from the following sources: Northern Health Facilities, Inc. v. United
States of America, 39 F. Supp. 2d 563 (D. Md. 1998); Goldstein, Avram, “Shutdown Forces Residents Out of Md.
63
Chain-owned facility. Greenbelt Nursing and Rehabilitation Center was a 132-bed
facility in Greenbelt, Maryland, built in 1966 and owned by a large national chain. It was
certified for Medicare and Medicaid, but most of the residents were Medicaid beneficiaries. A
state official described Greenbelt’s performance over the years as “marginal” but not marked by
egregious conduct, and with “a cyclical performance problem.” According to the head of the
family council, “Things weren’t perfect at Greenbelt, but at least they listened and tried.”185
The history of Greenbelt that led to closure occurred primarily during 1998. A news
article characterized this period as “a time of regulatory and legal confusion while two federal
agencies fought over how best to respond to Greenbelt’s failings.”186
Continuing noncompliance. In January 1998, the state found Greenbelt was not in
substantial compliance and required a plan of correction. State inspectors reported that the
facility’s nurses “committed serious medication errors, failed to note changes in residents’
medical conditions, and did not follow up with calls to doctors and with orders for lab tests.”187
In March 1998, the facility submitted a plan of correction and made an allegation of compliance.
An April 1998 survey to verify the allegation found that the facility was still not in compliance,
and another plan of correction was required. When the facility had been out of compliance for
three months, HCFA denied payments for new admissions and imposed civil monetary penalties.
In June 1998, the state documented continuing noncompliance, increased the fines, and
advised that it would recommend termination if Greenbelt was not in compliance by July. In
July, the state again documented noncompliance. Greenbelt submitted additional evidence
claiming that it was in compliance.
Two regulatory tracks. In August 1998, the U.S. Attorney’s Office for the District of
Maryland and the Office of Inspector General for the U.S. Department of Health and Human
Services began to investigate whether Greenbelt had violated the False Claims Act. In August
1998, representatives from the U.S. Attorney’s Office, the state, and HCFA visited Greenbelt and
found it was not in substantial compliance. Based on this visit, HCFA concluded that the
allegations of compliance were false, and that HCFA must therefore terminate the facility’s
participation in the Medicare/Medicaid program, based on the six-month rule (January 26 to July
26). HCFA sent Greenbelt a letter on September 11 notifying it of termination.
On September 14, the U.S. Attorney’s Office filed a complaint in District Court to enjoin
HCFA and the state from terminating Medicare/Medicaid payments. On September 15, the court
approved a “consent order” that was signed by the U.S. Attorney’s Office and counsel for
Greenbelt, but not by the state or HCFA. The consent order called for a temporary manager and a
Nursing Home,” The Washington Post, January 10, 1999; Moss, Michael, “Fighting a Nursing Home’s Closing,”
The Wall Street Journal, A-13, January 4, 1999; Jacoby, M., “Quality Push is Costing Residents, Critics Say,” St.
Petersburg Times (February 7, 2000); and contacts listed at Appendix E.
185
Jacoby.
186
Goldstein, B-5.
187
Goldstein, B-5.
64
federal monitor, both to be selected by the U.S. Attorney’s Office. “We wanted to fix Greenbelt,
not shut it down,” according to a representative of the U.S. Attorney’s office.
However, according to the consent order, all state and federal oversight and enforcement
was to remain in effect. Thus, the HCFA termination proceeded. On September 26, Medicare
payments ceased.
Temporary management in face of termination. On October 5, a temporary manager was
hired, with a projected nine-month task, in accordance with the consent agreement signed by the
U.S. Attorney and Greenbelt. The temporary manager hired a new medical director and new
certified nurse practitioner, who began a comprehensive clinical assessment of each of the 85
remaining residents.
On October 9, the state notified Greenbelt that it would terminate Medicaid payments. In
November, the state found that Greenbelt was still not in substantial compliance. On November
20, the federal monitor began work. She observed that the termination undermined the efforts of
the temporary manger and others to correct deficiencies, hire and train staff, and retain existing
staff.
In late November and early December, a HCFA team visited Greenbelt and noted
additional deficiencies, including “dirty rooms, a 23-percent medication error rate, inappropriate
care of bedsores. . . .”188 However, according to the monitor, the temporary manager had made
considerable improvements in staffing, activities, reduction of restraints, and other areas. The
temporary manager charged that state and HCFA surveyors “wanted to prove a point,” but the
HCFA Administrator countered that the surveyors were not acting vindictively and that care was
getting worse.189
On December 2, state Medicaid funding ceased. Since 90 percent of the residents
received Medicaid, the facility would have to close.
Federal suit. On December 7, Greenbelt filed a lawsuit in District Court to enjoin HCFA
from terminating its participation in Medicare/Medicaid. Greenbelt argued that closure would
cause transfer trauma to residents. The facility claimed that the temporary manager and the
federal monitor were in place to remedy deficiencies and to improve the quality of care. At the
hearing, the temporary manager alleged that “if the result of the survey process is termination, I
will not be able to fulfill the Federal Court’s mandate.” The monitor said the facility had not had
enough time to address the problems, but was working hard and acting in good faith. The state
licensure agency said the state had an efficient plan to move the residents without transfer
trauma, and that there would be greater risk for the residents to remain in Greenbelt than to
move. Nearly two dozen residents or families signed affidavits in support of Greenbelt and the
work of the temporary manager. “There are problems here that we can work with,” explained
one family member.
188
189
Goldstein, B-5.
Jacoby.
65
While noting that “Greenbelt and its residents are caught in a conflict between competing
governmental objectives which they cannot control,” the court rejected Greenbelt’s request to
block the closure. The judge found that the HHS Secretary had authority to terminate and
declined to interfere with this authority. He noted, however, that the public interest would be
served if Greenbelt were allowed to correct the deficiencies and the residents were allowed to
stay.
Resident Relocation. In January 1999, Greenbelt closed and the remaining 85 residents
were transferred to other facilities over the course of a month. Families expressed surprise,
dismay, and resentment. A state official stated that there were “seven or eight deaths” in the first
several months after closure, but that these appeared to be “related to prior conditions and not to
the relocation.” Some residents were sent to a facility in Largo, Maryland that later faced a
threat of termination.
66
Temp
Mgr
✔
✔
✔
After administrative proceeding
#" Noncompliance
#"
5
3
✔
✔
#" Under emergency conditions, Wisconsin courts may grant petition immediately, ex parte and without further hearing.
receivership.
#" Automatic stays (60 days) are implemented in California and Wisconsin against any actions that may interfere with the
67
Court may shorten/lengthen for just cause.
Within 5 days of petition if immediate appointment is made ex parte.
✔
✔
Other comments:
3
2
✔
✔
✔
✔
NEED FOR CARE OR RELOCATION
WI
PA1
MI
✔
103
#" Home or residents abandoned
CONDITIONS SPEC. IN PETITION
✔
✔
5
#" Financial instability
CONDITIONS THREATEN H/S/W
✔
✔
✔
✔
✸Optional
✔
✔
✔
NO OWNERSHIP INTEREST
✔
✔
MD
UNLICENSED
✔
SUSPENDED
✔
REVOKED
✔
CLOSING W/O ADEQUATE RELOC.
FL
CONDITIONS OF IMMINENT DANGER
5-102
HEARING HELD AFTER PETITION (in days)
Substantial violation
Habitual noncompliance
ADEQUATE CONDITIONS EXIST
#"
#"
EDUCATION /EXPERIENCE
✔
LICENSED ADMINISTRATOR
✔
OTHER
GRANTED IF
RECEIVER ELIGIBILITY
✔
NOT STATE / LOCAL GOV’T EMPLOYEE
1
LICENSE
CONDITIONS
PETITION
Must be from licensing agency (except Michigan, which allows resident) to court in county where facility is located)
✸
✔
FROM QUALIFIED LIST
CA
S
T
A
T
E
Appendix C. Long-Term Care Receivership Statutes in Profiled States
✔
✔
✔
AGENCY DESIGNEE
NO PRIOR MISCONDUCT
employ one
#" If not lic. admin., must
or entity
#" Other responsible person
OTHER
POWERS
4
1
✔
✔
✔
✔
✔
✔
✔
✔
✔
68
4
Maximum of 4 months for facilities caring for persons with developmental
disabilities.
5
One time extension
WI
PA1
MI
COURTS CERTIFIES
✔
✔
✔
✔
orderly
transfer of
residents
#" Or the
property
#" Preserve
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✔
✸
Other comments:
#" State funds are available to pay receiver in California, Maryland, and Wisconsin.
#" Florida provides a trust fund for relocation of residents at risk of imminent danger.
#" California limits receiver liability to gross neglience.
✸ Implied.
✔
✔
12
TIME PERIOD ENDS
✔
INITIAL PERIOD
MD
✔
ENSURE ADEQUATE CARE
12
✔
TRANSFER OWNERSHIP OR CLOSE
✔
MANAGE PROPERTY/ASSETS
✔
MANAGE REVENUE/EXPENDITURES
✔
MANAGE EMPLOYEES
✔
DUTIES
INITIATE CONTRACTS
✔
OTHER
RECEIVER RESPONSIBILITIES
EXTENSION INCREMENT
15
SPECIFIED BY PARTIES
2
HOME CLOSES
FL
LICENSE RESTORED
✔
COMPLIANT
6
TERMINATION
RESIDENTS RELOCATED
64
DURATION
(in mo.’s)
LENGTH OF RECEIVERSHIP
BRING INTO COMPLIANCE
CA
S
T
A
T
E
Appendix C. Long-Term Care Receivership Statutes in Profiled States (Cont’d)
RELOCATION OF RESIDENTS
Action to enforce liability.
Other duties as set out by the court
#" Restrict admissions
#" Action to enforce liability
licensee and administrator
#" Same rights to possession as
#"
#"
licensee and administrator
#" Preserve patient funds.
#" Same rights to possession as
OTHER
✔
Court
discretion
✔
Licensee may
waive
BOND
Appendix D. Long-Term Care Receivership Statutes
Arizona
Ariz. Rev. Stat. Ann. § 36-429 (West 1999)
Arkansas
Ark. Code Ann. §§ 20-10-901 to 20-10-916 (West 1999)
California
Ann. Cal. Health & Safety Code §§ 1325 to 1337 (West 2000)
Colorado
Col. Rev. Stat. Ann. §§ 25-3-108 (West 2000)
Connecticut
Conn. Gen. Stat. Ann. §§ 19a-343d, 19a-541 to 19a-549 (West
2000)
District of Columbia
D.C. Code Ann. §§ 32-1411 to 32-1420 (1999)
Florida
Fla. Stat. Ann. §§ 400.063, 400.121, and 400.126 (West 2000)
Indiana
Ind. Code §§ 16-28-8-1 to 16-28-8-7 (West 1999)
Illinois
210 Ill. Comp. Stat. §§ 45/3-501 to 45/3-517 (West 1999)
Iowa
Iowa Code Ann. § 135C-30 (West 1999).
Kansas
Kan. Stat. Ann. §§ 39-954, 39-963 (West 1999)
Maine
22 Me. Rev. Stat. Ann. §§ 7931 to 7938 (West 1999)
Maryland
Md. Code Ann., Health-Gen. §§ 19-333 to 19-340 (1999).
Massachusetts
Mass. Gen. Laws Ann., Ch 111 §§ 72M to 72T (West 2000)
Michigan
Mich. Comp. Laws Ann. §§ 333.21751 and 333.21799b (West 1999)
Minnesota
Minn. Stat. Ann. §§ 144A.14 to 144A.15 (West 1999)
Mississippi
Miss. Code Ann. § 43-13-227 (2000)
Missouri
Mo. Ann. Stat. §§ 198.099 to 198.139 (West 2000)
New Jersey
N.J. Stat. Ann. §§ 26:2H-42 to 26:2H-46 (West 1999)
New Mexico
N.M. Stat. Ann. §§ 24-1E-1 to 24-1E-6 (Michie 1999)
New York
N.Y. Pub. Health Law § 2810 (West 2000)
Oklahoma
Okla. Stat. Ann. tit. 63 §§ 1-1931 to 1-1937 (West 1999).
Pennsylvania
Pa. Stat. Ann. tit. 35 § 448.814 (West 1999).
Texas
Tex. Health & Safety Ann. §§ 242.091 to 242.120 (West 1999).
Virginia
Va. Code Ann. § 32.1-17.1 (West 2000)
Washington
Wash. Rev. Code Ann. §§ 18.51.400 to 18.51.520 (West 1999)
Wisconsin
Wis. Stat. Ann. § 50.05 (West 1999)
69
Appendix E. List of Study Contacts
Health Care Financing Administration
Jerry Artz, Region III
Helene Fredeking, central office
Timothy Hock, Chief, Elderly and Disabled Branch, Region III
Cindy Graunke, central office
Tom Lenz, Region VII
Ed Mortimor, central office
Brenda Nimmons, HCFA Region IV
Dewey Price, Region IV
Dale Van Wieren, Region III
State Regulators, Officials
Pat Benesch, licensing agency, Wisconsin
Carol Benner, Director, Office of health Care Quality, Maryland Licensing and Certification
William Bordner, Director, Division of Nursing Care Facilities, Pennsylvania Department of
Health
Mike Dankert, Bureau of Health Services, Michigan Department of Consumer and
Industry Services
David Dunbar, Georgia Office of Regulatory Services, Department of Human Resources
Brian Forbis, Deputy Director, Missouri Division of Aging, head of nursing home licensure
division
Carl Gibson, Program Director, Michigan Collaborative Remediation Project
John Hinton, California licensing, San Mateo office
Ruth Jacobs-Jackson, Chief, Facility Enforcement Section, Department of Health Services,
Licensing and Certification, California
Brenda Klutz, California licensing
Chris Shoemaker, Florida Children & Families Agency
Phoebe Shoup, Pennsylvania Division of Long-Term Care Nursing Facilities, Southeast
Region
Dinh Tran, Wisconsin Bureau of Quality Assurance
Walter Wheeler, Director, Bureau of Health Services, Michigan Department of Consumer
and Industry Services
Long-Term Care Ombudsmen and Advocates
Edie Brecken, Citizens for Better Care, Detroit
Michael Connors, Michigan Protection and Advocacy Agency
70
Kathy Cubit, CARIE, Philadelphia
Ed Dale, Connecticut Legal Services
Mark Davis, CARIE, Philadelphia
Toby Edelman, Medicare Rights Center, Washington DC
Ron Flickinger, long-term care ombudsman, Indianapolis
Dan Greenawalt, Pennsylvania long-term care ombudsman
Chris Hess, Milwaukee area agency on aging
Sharon Maxwell, Long-Term Care Ombudsman for San Mateo County California
Pat McGinnis, California Advocates for Nursing Home Reform
Benson Nadell, long-term care ombudsman, San Francisco
Deborah Sokolow, long-term care ombudsman, Miami
Claudia Stine, Wisconsin state long-term care ombudsman program
Vicki Sali, long-term care ombudsman, Bayside Wisconsin area
Hollis Turnum, former Michigan long-term care ombudsman
Long-Term Care Consultants, Lawyers, Providers
Norma Adams, Rehabilitation Care Consultants, Wisconsin
Joseph Bianculli, attorney, Virginia
David Bragg, attorney, Texas
Eileen Coggins, Genesis Health Ventures
Dr. Harriet Fields, Proactive Monitoring, Washington DC
Beth Klitch, Survey Solutions, Columbus Ohio
Katie McDermott, lawyer, formerly with U.S. Attorney’s Office, Maryland
Claudia Schlosberg, appointed as federal monitor, Washington DC
John Whitman, Senior Director, ZA Consulting, Jenkintown Pennsylvania
Researchers
Charlene Harrington, Department of Social and Behavioral Sciences, University of California,
San Francisco
Alison Hirschel, attorney, researcher, Michigan
Joseph Lowe, researcher and author, Virginia
Sherer Murtiashaw, attorney, nursing home administrator, ombudsman, author, Texas
Pamela Teaster, Center for Gerontology, Virginia Tech
71