3 Nursing Home Legal Issues to Watch in 2022 and Beyond

As a flurry of regulations and mandates descend upon the nursing home sector, such changes could create legal obstacles, and suggest yet another difficult and onerous year for providers.

Staffing mandates, the aftermath of the end of the public health emergency (PHE), Covid liability and the PREP Act, all create “existential threats” for skilled nursing operators, at a time when so many are still attempting to recover from the last two and a half years.

“This will be a really, really challenging year following any number of other challenging years … Bad policy in one of these particular areas could have very consequential impacts, and that’s the kind of thing that those of us who spend every day thinking about this stuff,” Mark Reagan, a managing shareholder at Hooper Lundy & Bookman PC, told Skilled Nursing News.

Reagan has also represented the California Association of Health Facilities and the American Health Care Association (AHCA).

The challenges associated with staffing and lingering Covid-related lawsuits alone have the ability to create huge hurdles for operators, according to Craig Conley, a shareholder at the Baker Donelson Bearman Caldwell & Berkowitz law firm.

What it comes down to, according to Reagan, is striking a balance between advocating for the sector with stakeholders in ways that advance some of the underlying policy interests while making sure there is realism associated with what can be accomplished.

“The sector has amazing resilience that I’ve seen over the course of my three decade professional life representing the sector, but there are many existential threats … And so serious challenges continue. There is no other way to think of it than that,” he told SNN.

Staffing minimums and mandates at the state, federal level

Providers agree that staffing continues to be the largest challenge facing the industry at this point in time, and that is not expected to change as the federal government works to create its own federal staffing standard.

The Centers for Medicare & Medicaid Services (CMS) is expected to publish a proposed minimum sometime in Spring 2023, if not sooner.

In the meantime, federal officials are in the midst of conducting a staffing study that includes nursing home site visits as well as cost analyses, among other qualitative and quantitative considerations.

Several questions surround the looming mandate, including whether it will be achievable, if it will be tied to the presence of staffing, whether it will be phased in or if it will be subject to some sort of pilot program, Reagan said.

“I think that there are a lot of different potential options for how that might come, but the extent to which it is established at a level that is not sustainable and imposed on a timeframe that is not sustainable, I think that it raises a number of issues about the underlying lawfulness of such a mandate,” he said.

Implementing a staffing minimum of 4.1 hours per resident day would require 94% of nursing homes to increase staffing levels just to be in compliance, according to data from accounting and consulting firm CliftonLarsonAllen in partnership with AHCA.

Some states that have implemented minimum staffing requirements have already had to make policy revisions given the current state of the labor market — and facilities not being able to comply.

The state of New York’s staffing requirements were originally supposed to go into effect in January of this year, but it was postponed until April by Gov. Kathy Hochul.

The law requires the state’s more than 600 nursing homes to provide 3.5 hours of care per resident per day.

About two-thirds can’t meet the minimum, Stephen Hanse, president and CEO of the New York State Health Facilities Association, said earlier this year.

Potential legal questions also surround whether CMS has the authority to impose a minimum staffing mandate without congressional action, and if it does, whether doing so could create future access problems for Medicaid beneficiaries, Reagan said.

“I know that the goal of the sector is to try to reach a reasonable compromise along these lines, but I think that if that’s not achieved I think that each one of the actions or they are the types of issues that I’ve described … Would involve conceivably potential litigation at some point,” he added.

A fiscal cliff at the end of the public health emergency

While the PHE still remains in effect, providers and legal experts alike are wondering what the impact will be for facilities if temporary programs like increased Medicaid funding come to an end.

The challenge now for advocacy groups is to convince state leaders to keep those increases permanent.

AHCA President and CEO Mark Parkinson told SNN earlier this year that doing so would be the association’s “big priority” for 2023.

Some states have already taken steps toward those efforts.

In California, for example, the 10% increase of the 2019 rates will stay in place throughout 2023 regardless of whether the PHE ends before that.

Illinois’s $700 million in facility staffing incentives, implemented this year, involve a data-driven staffing ratio program and wage incentive initiative – specifically the CNA tenure and promotion payments program to increase and maintain wages for certified nursing assistants.

“States that create permanent solutions to recognize those internal increases to labor costs will be better off when it comes to being in a position to ensure access. Those that just have a hard stop and a cliff, that’s going to be a real problem and a real challenge,” Reagan said.

It remains to be seen whether the federal government will step in should the Medicaid increases not be made permanent, though CMS has encouraged states to allocate funds toward improving staffing — in line with its goals toward strengthening quality of care, accountability and transparency in the sector.

“Through initiatives like these, we expect that Medicaid beneficiaries residing in nursing facilities will receive better care through the collaboration of CMS and states to realize the goals outlined in the White House Biden-Harris Administration’s Nursing Home Reform Action Plan,” Daniel Tsai, deputy administrator and director for the Center for Medicaid and CHIP Services, said in an August memo.

Tsai called Medicaid a “key lever” for accomplishing the goals set forth by the Biden administration.

Covid liability cases and the PREP Act

While the Covid-19 pandemic did not necessarily create the “tsunami” of lawsuits that many legal experts expected, issues surrounding liability, including the Public Readiness and Emergency Preparedness (PREP) Act, should remain on the minds of providers.

Many of the cases involving the PREP Act are currently in the stages of determining where the cases should be heard, whether that be federal or state court. But that will soon turn into a fight over whether the statute provides protection for nursing home providers, according to Reagan.

The act, established by Congress in 2005, provides immunity from liability, with the exception of willful misconduct, from certain legal claims. The protection can be used in state and federal courts, and will continue to be used post-PHE.

Usually, when state and federal law conflict, federal law preempts state law, per the Supremacy Clause of the U.S. Constitution. But that hasn’t really been the case for these nursing home cases.

The U.S. Supreme Court has been asked to decide whether it will hear a nursing home Covid-19 wrongful death case involving the PREP Act — potentially interpreting the federal statute for the first time.

California-based nursing home operator Glenhaven Healthcare asked the Supreme Court to consider taking up the case in late August after the 9th U.S. Circuit Court of Appeals earlier this year upheld a lower court’s decision to keep the case in state court.

Another issue surrounds the role of insurance, or lack thereof, when dealing with these cases. A lot of insurers wrote themselves out of being responsible for covering such issues in the midst of the pandemic, creating a “significant fork in the road” should providers have to litigate and potentially settle or pay monetary damages, Reagan said.

While the flood of lawsuits in the early stages of the pandemic did not materialize as expected, Conley said he’s seen an uptick in cases related to care during the pandemic — what he refers to as “snapshot lawsuits.”

“I think the recent uptick in Covid-related lawsuits probably will continue, as memories fade as some of the immunity statutes roll off and some of the other protections kind of roll through their deadlines and are no longer in place,” he said. “I think staffing and Covid-related lawsuits, especially the so-called snapshot lawsuits, will be a continuing hurdle for the industry to deal with and the providers to have to handle.”