The Bush Administration's Final Gift to the Nursing Home Industry

By Cindy Skrzycki, Bloomberg

February 24, 2009

The Bush administration shut off a source of information last fall about abuse and neglect in long- term care facilities that people suing nursing homes consider crucial to their cases.

The change that affects the $144 billion nursing-home industry occurred with no public notice or attention, perhaps because of the array of last-minute rules that President George W. Bush’s appointees rushed out before leaving Washington last month.

“This is pretty stunning,” said Mark Kosieradzki, a plaintiff attorney in Plymouth, Minnesota. “Nobody was told. It was just done.”

The rule designates state inspectors and Medicare and Medicaid contractors as federal employees, a group usually shielded from providing evidence for either side in private litigation.

The restrictions affect about 16,000 nursing facilities in the U.S. and 3 million residents. The practical effect is to force litigants to go to greater lengths, including seeking court orders, to get inspection reports or depositions for cases they are pursuing or defending.

“This change hurts nursing-home residents and their families by allowing bad practices to be kept in secret by nursing homes and inspectors,” said Eric M. Carlson, an attorney with the National Senior Citizens Law Center in Los Angeles. “Government inspectors have the right to go into nursing homes and investigate, and they learn things that residents and families otherwise could never find out.”

More than 90 percent of U.S. nursing homes in each of the previous three years were cited for violating federal standards, according to a report in September by the inspector general of the U.S. Health and Human Services Department.

Auditing Services

The new rule was issued in September by the department. It generally prohibits state health departments and contractors that do auditing and other services for the government from participating in private lawsuits involving facilities that are in the federal assistance program without approval by the head of HHS.

The rule was justified as being necessary to accommodate the hiring of new contractors to make Medicare payments to providers, perform audit and fraud reviews, and do survey, certification and enforcement work for the program.

Requests for these employees to participate in private cases “divert employees from their federal survey, certification and enforcement responsibilities,” the Bush administration said in a supporting document. “The cumulative effect of these requests can impede these activities.”

“This regulation update was in the works for a very long time,” said department spokesman Bill Hall, in an e-mail.

A Directive

Even before the HHS rule was issued, the Centers for Medicare & Medicaid Services, which administers the program, issued a directive on Jan. 12, 2007, telling states not to disclose “surveyor notes, worksheets, internal working papers, and other informal survey memoranda” they generated for the federal program.

States were told to direct requests for the documents to their federal regional officer. Legal requests for records, including subpoenas and state court orders, also should be sent to supervisors, according to the memo.

“There was concern there was a discrepancy among state agencies in what they were releasing and what they should be releasing. We laid it out in detail,” said Angela Brice-Smith, deputy director of the survey and certification group for the centers.

The agency said there are about 6,800 state inspectors who would be on the front line investigating complaints and surveying facilities for compliance with federal and state rules.

Lawyers want the evidence these people collect, which might include interviews with facility employees and witnesses in cases of neglect and abuse.

Playing Out

The effect of the directives has started to play out in the nation’s courtrooms. Requests for information, once fairly routine, now are stalled between state and federal officials.

“I’ve never run across anything like this before,” said Anne Marie Regan, an attorney with the Kentucky Equal Justice Center in Louisville, a non-profit poverty legal advocacy and research center.

Regan said the change has slowed a case she is pursuing on behalf of an 85-year-old man who was evicted from a nursing home in 2007. When she subpoenaed records and sought depositions from employees of the Kentucky agency that regulates nursing homes, the Health and Human Services office in Atlanta told the state to “please advise those employees that approval to comply with the subpoenas is denied and that it would be inappropriate for them to appear.”

No Authority

State officials were told they had no authority to release federal records, but a judge refused to allow the state to withhold the records or prevent the depositions.

“We will go back to state court and, presumably, the judge will tell them to comply with the discovery orders,” Regan said. “All we really want to do is enforce their rights and protect these people,” Regan said.

A nursing home lobbying group said the rule wasn’t among its legislative goals.

“We didn’t ask them to impose this regulation to keep the plaintiffs from getting this information,” said Priscilla Shoemaker, legal counsel for the American Health Care Association in Washington. Kindred Healthcare Inc., based in Louisville, and Fort Smith, Arkansas-based Golden Living are among the association’s 10,000 members.

‘The Same Boat’

Shoemaker said nursing homes “are in the same boat” because they also have difficulty getting information on how state inspectors determine penalties, citations, and orders to shut down homes.

Lawyers on both sides are considering how to approach the Obama administration to get rid of the rule.

“This is big deal, and we have mobilized a group of attorneys around the country,” said Kosieradzki. “The truth will liberate you.”