State Attorneys General Successfully Take on Nursing Home Issues

State Attorneys General are successfully litigating issues of key importance to nursing home residents, including insufficient nurse staffing levels and inappropriate transfers or discharges of residents. This Alert discusses two cases: the Pennsylvania Attorney General’s challenge to inadequate staffing levels by a national chain and the Maryland Attorney General’s challenge to a state chain’s transfer and discharge practices. Both cases confirm the broad authority of the Attorney General to file lawsuits on behalf of residents.

Overpromising and Understaffing in Pennsylvania

In July 2015, the Pennsylvania Attorney General filed a lawsuit against Golden Living nursing facilities in Pennsylvania, alleging that their marketing materials were deceptive and misleading, in violation of the Unfair Trade Practices and Consumer Protection Law (UTPCPL), because they promised a level of care that the facilities could not provide due to understaffing. 

The Commonwealth Court of Pennsylvania dismissed most of the complaint, holding that the facilities’ marketing materials were “puffery” or otherwise general statements of intent or optimism that residents and families could not rely on.[1]  The state Supreme Court, in a unanimous decision, reversed the lower Court’s analysis of puffery under the UTPCPL:

We hesitate to conclude that consumers seeking a nursing home would necessarily find statements promising to provide food, water, and clean linens to be hyperbolic in any respect, or to be vague statements of optimism or intent.  To the contrary, for residents of nursing homes, many of whom are physically compromised and require assistance with day-to-day living activities, regular access to these items is essential, and there is no reason to think that a consumer would not take these statements seriously.[2]

The Supreme Court held that the UTPCPL could be violated by facilities’ fraudulent or deceptive conduct that could confuse consumers, as well as by marketing materials.[3]  It also expressly confirmed the Attorney General’s “authority and standing to investigate and prosecute companies that take advantage of senior citizens and consumers by confusing or misleading them with fraudulent or deceptive conduct.”[4]

Evictions in Maryland

In December 2016, the Maryland Attorney General sued Neiswanger Management Services, LLC, a Maryland nursing home chain, and its facilities and owner, alleging that they violated the Maryland Health Code, Patient’s Bill of Rights, and state False Claims Act by evicting residents, unsafely and unlawfully, to homeless shelters and unlicensed boarding homes, generally in order to have rooms available for Medicare beneficiaries.  The State alleged that between January 1, 2015 and May 31, 2016, NMS issued involuntary discharge notices to at least 1061 residents, alleging failure to pay.  During the same 17-month period, Maryland’s 225 other licensed nursing facilities issued approximately 510 involuntary discharge notices. 

A Montgomery County Circuit Court judge dismissed the Maryland Health Code and Bill of Rights allegations, holding that the Attorney General lacked authority to pursue such broad injunctive relief.[5]  A unanimous Court of Appeals reversed, holding that the Injunction Clause authorizes the Attorney General to seek injunctive relief “on behalf of multiple unnamed residents who have been, or await, imminent unlawful involuntary discharges.”[6]

On October 26, 2018, the Attorney General announced final settlement of the case.  Both the chain, which had discontinued operations in February 2018, and its owner, Matthew Neiswanger, have been permanently barred “from engaging directly or indirectly in the management or operations of nursing facilities in Maryland, and from participating as providers in the Maryland Medicaid program.”  In addition, they must pay the state $2.2 million and dismiss their lawsuit against the State, which they filed in March 2017.[7]

Conclusion

As the Administration cuts back on federal enforcement of standards of care,[8] state Attorneys General may play a more prominent role in protecting nursing home residents from poor care and harmful facility practices.

November 29, 2018 – T. Edelman