nursing homeWith the COVID-19 pandemic sweeping the U.S., nursing homes have been ground zero for infections and deaths. According to new data released by the Centers for Medicare & Medicaid Services (“CMS”), there were 29,457 U.S. nursing home deaths from COVID-19 through the first week of June 2020.

With COVID-19, the criminal enforcement landscape for nursing homes has drastically changed in just a few months. Here are our predictions for the coming months of enforcement and suggestions for best practices for nursing homes to remain compliant.

Background on DOJ’s National Nursing Home Initiative

In an eerie harbinger of the pandemic to come, on March 3, 2020, the Department of Justice and the Department of Health and Human Services announced the creation of the National Nursing Home Initiative (NNHI). DOJ stated that the mission of the NNHI would be to pursue criminal and civil enforcement actions against nursing homes that provide “grossly substandard care,” and that it was already investigating approximately 30 nursing facilities. Just a few days later, on March 11, the World Health Organization declared the coronavirus outbreak an official pandemic.

We expect DOJ to use the NNHI as a springboard to increase its scrutiny of nursing homes with the most severe COVID-19 problems.

Sources of Potential Criminal Referrals

DOJ and HHS will have a wealth of referral sources for criminal nursing home cases, including:

Whistleblowers. Whistleblowers (including disgruntled current or former nursing home employees, residents and their relatives) will provide a ready-made source for federal referrals. During the pandemic, many medical professionals have been fired, disciplined, sued or have threatened to sue due to their facilities’ alleged lack of personal protective equipment (PPE) creating a ready-made cadre of potential whistleblowers.

Wrongful death lawsuits. Numerous civil lawsuits filed by the estates of deceased nursing home workers and patients will provide a source of referrals. Although not a traditional source for criminal health care fraud cases, expect federal law enforcement to monitor these wrongful death lawsuits and follow up where appropriate. While many states, such as New York, have enacted laws that immunize nursing homes from COVID-19 lawsuits, state law immunity is not a bar to federal criminal enforcement.

On-site inspections and audits. The on-site inspections and audits being performed by federal and state authorities will provide a stream of referrals to DOJ and HHS-OIG. The number of non-compliant facilities is large—according to the Washington Post, 40% of the nursing homes nationwide with publicly reported cases of COVID-19 had been cited multiple times in the recent past for violating federal infection-control standards.

Expect DOJ to focus on the “worst of the worst” and those homes where there is evidence of intentional or willfully blind non-compliance.

COVID-19 reporting data. Expect DOJ and HHS-OIG to proactively comb through regulatory data from agencies, including CMS and the Centers for Disease Control and Prevention. On April 19, CMS started requiring long-term care facilities that accept Medicare and Medicaid funds to report COVID-19 cases.

Given that nursing home industry groups have acknowledged that not all coronavirus deaths have been counted, law enforcement may examine whether nursing homes have intentionally underreported mortality rates.

Scrutiny of acceptance of CARES Act relief funds. CARES Act funding presents a “second wave” of risk for nursing homes because of the significant compliance requirements. HHS announced May 22 that skilled nursing facilities will receive $4.9 billon to pay for expenses related to the pandemic. Providers who accept federal funds must submit financial records and sign certifications governing the use of the funds.

The HHS has warned that it will engage in “significant anti-fraud monitoring of the funds distributed” underscoring that accepting federal funds is never a “no-strings attached” proposition. Nursing homes that mispresent their financial data or use funds for unauthorized purposes could find themselves on HHS-OIG’s radar screen.

Best Practices for Nursing Homes

Nursing homes should prepare for heightened legal and regulatory scrutiny related to the pandemic. This is especially true for homes with COVID-19 infections or deaths, and those that accept CARES Act funds. Regulatory requirements are rapidly changing, and the federal government is releasing federal funds on a rush basis with arguably ambiguous guidance.

However, nursing homes should keep in mind that the federal criminal enforcement look-back will not be kind for facilities that are perceived as willfully noncompliant. DOJ will view nursing homes with 20/20 hindsight, so maintaining “defensive” contemporaneous documentation is key.

This need to maintain proper documentation applies to operational functions as well as financial records related to how federal funds are spent. Facilities that can prove, with an adequate documentary trail, that they have remained in compliance will position themselves favorably in the face of an HHS audit or a DOJ criminal investigation.