Consumer Advocacy Organizations Sue CMS Over 2017 Guidance on Civil Money Penalties Imposed Against Nursing Facilities

On July 7, 2017, the Centers for Medicare & Medicaid Services (CMS) issued sub-regulatory guidance limiting the types of civil money penalties (CMPs) that can be imposed for deficiencies that occurred at nursing facilities but were corrected before the survey – so called “past noncompliance.”[1] In the new guidance, CMS said that only per instance CMPs, not per day CMPs, could be imposed for past noncompliance. A lawsuit filed January 18, 2021 by National Consumer Voice for Quality Long-Term Care (Consumer Voice) and California Advocates for Nursing Home Reform (CANHR) challenges the policy change.[2] The two resident advocacy organizations are represented by attorneys with AARP and Constantine Cannon.

As enacted in 1987, the Nursing Home Reform Law authorizes CMPs for days prior to a survey that a facility was not in compliance with federal standard of care. 42 U.S.C. §§1395i-3(h)(1), 2d para., 1396r(h)(1), 2d para.  Under the statutory scheme and as found by the HHS Inspector General,[3] CMS typically accepts CMP recommendations made by states. Final regulations promulgated in March 1999[4] added another potential remedy – per instance CMPs, which are not linked to the length of time that a facility violates care standards. On July 7, 2017, without engaging in notice and comment rulemaking, CMS issued new sub-regulatory guidance that mandated per instance CMPs as the default CMP for past noncompliance deficiencies. 

The plaintiffs allege that this policy change “encourage[s] nursing facilities to knowingly allow deficiencies to linger, unaddressed for multiple days, weeks, or even months until the next state survey, because the penalty will be the same regardless of whether the deficiency persisted for one day, thirty days, ninety days, or nine months.”  Complaint ¶47.

Plaintiffs also allege that the policy change violates the Nursing Home Reform Law and its implementing enforcement regulations and the Administrative Procedure Act and is sub-regulatory guidance that is invalid under Azar v. Allina Health Servs., 139 S. Ct. 1804 (2019). They also allege that the July 2017 sub-regulatory guidance is arbitrary, capricious, an abuse of discretion, and otherwise not in accordance with law. They seek declaratory and injunctive relief.

Reflecting on the Biden Administration’s stated policy positions on long-term care during the recent Presidential campaign,[5] the Center for Medicare Advocacy predicts that per day CMPs will soon be available again for past noncompliance deficiencies.

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[1] CMS, “Revision of Civil Money Penalty (CMP) Policies and CMP Analytic Tool,” S&C: 17-37-NH (Jul. 7, 2017), https://www.cms.gov/Medicare/Provider-Enrollment-and-Certification/SurveyCertificationGenInfo/Downloads/Survey-and-Cert-Letter-17-37.pdf  
[2] National Consumer Voice for Quality Long-Term Care v. Alex M. Azar II, Case No. 21-162 (D.D.C. filed Jan. 18, 2021), nat-consumer-voice-v-us-dept-hhs-complaint (aarp.org)
[3] HHS Office of Inspector General, Nursing Home Enforcement: The Use of Civil Money Penalties, OEI-06-02-00720 (Apr. 2005), Nursing Home Enforcement: The Use of Civil Money Penalties (OEI-06-02-00720; 04/05) (hhs.gov)
[4] 64 Fed. Reg. 13,354, 13,360 (Mar. 18, 1999), 42 C.F.R. §488.430(a)
[5] “Long-Term Care Policy: Trump vs. Biden” (CMA Alert, Oct. 22, 2020), https://medicareadvocacy.org/long-term-care-policy-trump-vs-biden/