Upending enforcement

Appeals court ruling puts lawsuits against nursing homes in jeopardy

Pittsburgh Post-Gazette

The state attorney general’s unprecedented 2015 lawsuit alleging shoddy conditions in 25 Golden Living Centers nursing homes set off a chain reaction concerning oversight of an industry that cares for 80,000 Pennsylvanians.

The suit, which included four Golden Living chain homes in southwestern Pennsylvania, was followed by creation of a state Department of Health task force focused on nursing home quality; a state auditor general’s investigation of regulatory enforcement; a sharp increase in fines against nursing homes among beefed-up actions; and similar litigation against O’Hara based Grane Healthcare Co., which operates 11 homes in Pennsylvania.

Now, however, the strategy of using the courts to seek monetary penalties and deter poor care is in serious jeopardy. Commonwealth Court in late March threw out the attorney general’s case against Golden Living. The decision faulted the suit’s contention that Golden Living had deceived consumers through marketing that promised quality care — the advertising was instead deemed commercial “puffery,” which is legal.

The attorney general filed an appeal to state Supreme Court last week of that ruling, one which was doubly important because of its likely impact on the case filed against Grane in November, as well as any future such efforts.

“We filed very similar preliminary objections” to the ones the court sided with from Golden Living, noted Grane’s attorney, Walter Cohen of Harrisburg. “The case against us was very similar to the case against them in terms of allegations.”

The Supreme Court will likely take many months to review and rule on the Commonwealth Court decision, which has the potential to upend a new way of enforcing quality in Pennsylvania’s some 700 nursing homes. That quality oversight role has traditionally belonged to the Department of Health, through its annual inspections, responses to complaints, and its system of fines and licensing actions for non-compliance with regulations. It has sometimes been criticized for inadequately performing those duties.

Then-Attorney General Kathleen Kane tried a new tactic with filing of the Golden Living lawsuit, which listed years’ worth of care deficiencies that Health Department inspectors had identified, though rarely with repercussions for the nursing homes. Deficiencies are almost always found on inspections — the question becomes whether they’re serious enough to merit penalties, and the Health Department went through a period in 2011-14 when it seldom issued them.

Under an arrangement criticized by the nursing home industry, a private outside law firm, Cohen Milstein Sellers & Toll of Washington, D.C., encouraged the Attorney General’s Office to pursue lawsuits for monetary damages against for-profit chains. The firm offered legal assistance in developing the cases, and in return, it was to receive a share of any proceeds awarded in court. It would receive 21 percent of anything won against Golden Living or Grane, the same as it took last year from the state’s $2 million settlement with the Reliant Senior Care nursing home chain, which opted not to fight the same type of suit.

Josh Shapiro took office as attorney general in January, inheriting the cases from his predecessors Ms. Kane and Bruce Beemer, who was in charge of the office when the Grane case was filed in November. Although Mr. Shapiro is appealing the Golden Living dismissal, his attitude toward continuing the relationship with Cohen Milstein and pursuing nursing home litigation in the future is less certain.

“The office is re-evaluating in all aspects the best way to proceed regarding the activities of nursing homes, including the wisdom of using outside counsel in such cases,” Shapiro spokesman Joe Grace said last week. He also said the office was reviewing the meaning of Commonwealth Court’s Golden Living decision for the Grane case.

Grane attorney Mr. Cohen, who himself served briefly as acting attorney general in 1995, noted the Commonwealth Court ruling last month created an additional problem for the state’s nursing home litigation beyond the allowance for “puffery.” Although the state sought to obtain monetary penalties from Golden Living for each of many alleged violations of the state’s Unfair Trade Practices and Consumer Protection Law, the court held that only a person — not the state — can be compensated for such violations.

Unless the Attorney General’s Office is successful with its appeal, Mr. Cohen said, that ruling means the office will need a change in state law if it wants to be able to collect funds in consumer protection cases of various kinds.