In its written opinion filed on February 21, 2018, the Court of Appeals of Maryland (“Maryland Appellate Court”), which is Maryland’s highest appellate court, held that Maryland’s Patient’s Bill of Rights permits the Attorney General to seek injunctive relief on behalf of multiple unnamed nursing home residents who have been, or await, imminent unlawful involuntary discharges, provided the statutory standard has been met, and the Attorney General may seek injunctive relief to enforce a nursing home’s obligation to ‘cooperate with and assist’ a resident or applicant’s agent in seeking assistance from the medical assistance program on behalf of a resident or applicant.
Maryland’s Patient’s Bill of Rights is a comprehensive scheme to identify and protect the rights of individuals in nursing facilities in Maryland. Md. Code (1982, 2015 Repl. Vol.), §§ 19-343 et seq. of the Health–General (“HG”) Article. The Maryland Appellate Court was asked in the present case to decide whether the Attorney General has the authority to request injunctive relief against a nursing home pursuant to two different provisions of the Patient’s Bill of Rights.
The Underlying Facts
On December 21, 2016, the State of Maryland, through the Attorney General, filed a two-count Complaint in the Circuit Court for Montgomery County against the operator of nursing homes in Maryland, alleging violations of the Patient’s Bill of Rights and the Maryland False Health Claims Act (HG §§ 2-601, et seq).
Count One of the Complaint alleged that the defendant committed unlawful resident discharges from its Maryland nursing homes in violation of HG §§ 19-345, 19-345.1, and 19-345.2, as well as multiple provisions of COMAR. In particular, Maryland alleged that the defendant engages in a widespread pattern of unlawful involuntary discharges of residents from its nursing facilities, which includes involuntary discharges to homeless shelters or sham assisted living facilities with operators who unlawfully exploit residents’ public benefits. Maryland further alleged that the defendant discharged residents to shelters or facilities far from residents’ hometowns and families, with many evicted residents ultimately hospitalized, at the State’s expense, with serious or life-threatening medical complications caused by the evictions.
Specifically, Maryland alleged that from January 1, 2015 to May 31, 2016, the defendant nursing home operator issued involuntary discharge notices to at least 1,061 residents. In 1,038 of these discharge notices, the defendant stated that the resident was discharged for failure to pay, or for failure to arrange for payment from Medicare, Medicaid, or another third-party payor. By contrast, Maryland observed that during the same 17-month period, all of Maryland’s other 225 licensed nursing facilities issued approximately 510 involuntary discharge notices. Maryland asserted that more than 700 people who reside in the five facilities operated by the defendant could be affected by the defendant’s unlawful discharge practices.
Maryland asserted that the defendant unlawfully discharges residents to benefit from the public-insurance payment system for residents of nursing facilities in Maryland. Medicare recipients are entitled to up to 100 days’ coverage in a nursing facility after a qualifying hospital stay. For the first 20 days of a resident’s stay, Medicare pays the full reimbursement rate, and an 80% reimbursement rate for days 21 to 100. Some residents may be “dual eligibles,” who participate in both Medicare and Medicaid. When a resident has exhausted their Medicare coverage, and is eligible for Medicaid, then the reimbursement rate shifts to the Medicaid rate. Medicaid provides coverage for long-term care in nursing facilities for eligible Maryland residents, and has significantly lower reimbursement rates than Medicare.
Maryland’s Complaint alleges that the defendant strives to discharge each resident of its nursing homes at the precise point in time when the resident can be replaced by someone else with a more favorable public health insurance profile. It does this by maximizing the number of Medicare recipient residents and minimizing the number of Medicaid recipient residents. Maryland alleges that the defendant monitors residents’ public health insurance statuses to identify candidates for eviction, and times that eviction to coincide with the end of the resident’s Medicare coverage. It also claims that the defendant unlawfully discharges Medicaid recipients to make room for more lucrative Medicare recipients, in violation of HG § 19-345(b)(1)(ii).
Maryland alleges that in executing these practices, the defendant committed multiple violations of the Patient’s Bill of Rights and COMAR, including failure to give required notices, in violation of HG § 19-345.1(c)(2)(i) and COMAR 10.07.09.10(D)(8). Maryland asserts that the defendant issued discharge notices before providing residents with notice of nonpayment, in violation of HG § 19-345(a)(4). Family members often learned of discharges shortly before they occurred, the day of the discharge, or not at all, in violation of COMAR 10.07.09.09(F)(4). Maryland alleges that the defendant fails to properly document discharges or provide residents and families with a written statement containing statutorily-required information about discharges.
Relying on HG §§ 19-344(c)(6)(iii) (“Enforcement Clause”) and 19-345.3(c) (“Injunction Clause), Maryland sought an injunction to prohibit the defendant from: (1) further violations of HG §§ 19-344–19-345.2 and COMAR 10.07.09; (2) issuing notices of involuntary discharge for failure to pay except under specifically delineated circumstances; (3) discharging a resident who is a Medicaid participant or is Medicaid-eligible, without documenting the resident’s or legal representative’s failure to cooperate in applying for benefits or arranging for reimbursement; (4) discharging, for non-payment, any resident who has a pending application for Medicaid benefits, unless the defendant had a good faith basis for believing that the resident is ineligible for benefits; (5) discharging any resident to an unlicensed assisted living facility or incorporating such a facility into a post-discharge plan of care; and (6) discharging any resident to a homeless shelter, or incorporating such a discharge into a post-discharge plan of care, or discharging a resident without an identified discharge destination.
The Circuit Court Decision
The defendant moved to dismiss the Complaint. The Circuit Court dismissed Count One of the Complaint for failure to state a claim upon which relief can be granted, agreeing with the defendant that the allegations in Maryland’s Complaint, if true, “would certainly be in violation of the Patient’s Bill of Rights . . . .” but concluding that the Injunction Clause does not authorize a broad sweeping injunction against the defendant’s company practices. The Circuit Court determined that based on the plain language of the statute, the Injunction Clause authorizes injunctive relief only for an individual resident. The Circuit Court also found that Maryland lacked authority to sue for an injunction under the Enforcement Clause, because the statute does not specify injunctive relief as a means of enforcement for violations of § 19-344.9.
Maryland filed a timely appeal pursuant to Md. Code (1973, 2013 Repl. Vol.), § 12-303(3)(iii) of the Courts and Judicial Proceedings Article, which authorizes an interlocutory appeal from a court’s refusal to grant an injunction. Before the Court of Special Appeals (Maryland’s intermediate appellate court) issued a scheduling order, Maryland petitioned the Court of Appeals for a writ of certiorari, which granted certiorari to answer the following questions:
1. Did the Circuit Court err in holding that, although Health–General § 19-345.3 authorizes a court to grant “injunctive relief” to remedy violations of the discharge-related provisions of the Patient’s Bill of Rights, the statute excludes injunctive relief barring “company practices” that violate those provisions?
2. Did the Circuit Court err in holding that the statutory responsibility conferred on the Attorney General by Health–General § 19-344 for the “enforcement” of certain of its provisions related to the Medicaid application process does not authorize the Attorney General to seek, or a court to grant, a judicial injunction enforcing those provisions?
The Maryland Appellate Court Decision
The Injunction Clause
The Injunction Clause states: “A resident, resident’s agent, or resident’s attorney, or the Attorney General on behalf of the resident, who believes that an involuntary discharge or transfer that violates the requirements of § 19-345, § 19-345.1, or § 19-345.2 of this subtitle is imminent or has taken place may request injunctive relief from a circuit court.” HG § 19-345.3(c)
The Maryland Appellate Court stated that the legislative history does not explicitly state whether the General Assembly intended for the Attorney General to be able to act on behalf of multiple residents, or the breadth of relief available. Nonetheless, the Maryland Appellate Court held that broad relief, including the ability to act on behalf of multiple residents and to enjoin company practices that violate the Patient’s Bill of Rights, is consistent with the Legislature’s intent, particularly if, as Maryland alleges here, a facility’s conduct potentially affects hundreds of residents. The Maryland Appellate Court stated that its analysis is consistent both with its mandate to construe remedial statutes broadly and with its precedent concerning cases in which injunctive relief directly impacts governmental interests.
The Maryland Appellate Court held: “under HG § 19-345.3(c), the Attorney General may bring suit on behalf of multiple unnamed residents who have been subjected to, or await, imminent, unlawful involuntary discharges, provided that at least one individual’s statutory rights have been violated. Further, a court may issue complete injunctive relief for violations of HG §§ 19-345, 19-345.1, and 19-345.2.”
Enforcement Of the “Cooperate with and Assist” Clause
The Enforcement Clause states “[t]he Attorney General is responsible for the enforcement and prosecution of violations of the provisions of paragraphs (4) and (5) of this subsection.” HG § 19-344(c)(6)(iii). The Cooperate and Assist Clause (“C & A”) states “t]he facility shall cooperate with and assist the agent in seeking assistance from the medical assistance program on behalf of the applicant or resident.”
Whether the Attorney General’s authority to prosecute violations of HG § 19-344(c)(4)–(5) permits injunctive relief to enforce the requirement in the C & A Clause, that a facility “cooperate with and assist” a resident or applicant’s agent in seeking assistance from the medical assistance program, the Maryland Appellate Court stated that the statutory language and its precedent “persuades us that we would undermine the General Assembly’s intent if we were to conclude that the Attorney General lacks the ability to enforce the C & A Clause. The General Assembly intended to prevent involuntary discharges for nonpayment … As such, HG § 19-344(c)(5)(i) requires applicants, residents, or their agents to seek assistance from Medicaid. A facility’s compliance is essential to that endeavor. And ‘[w]hether an obligation has been discharged, and whether action taken or omitted is in good faith or reasonable, are everyday subjects of inquiry by courts in framing and enforcing their decrees.'”
The Maryland Appellate Court continued: “Given the Attorney General’s exclusive power to enforce agents’ obligations, … it is only logical that the Attorney General’s responsibilities also extend to enforcing a facility’s obligation. The Enforcement Clause directs the Attorney General to enforce and prosecute violations of HG § 19-344(c)(4)–(5), which includes the C & A Clause. The General Assembly’s intent to make the facility’s cooperation and assistance mandatory ‘is in itself a declaration of public interest and policy which should be persuasive in inducing courts to give relief.’ … The ability to seek injunctive relief necessarily follows.”
The Maryland Appellate Court held: “HG § 19-344(c)(6)(iii) permits the Attorney General to seek injunctive relief to require a facility to comply with its statutory obligation under HG § 19-344(c)(5)(ii) to ‘cooperate with and assist’ an agent in seeking assistance from the medical assistance program on behalf of a resident or applicant.”
The Maryland Appellate Court concluded: “We hold that HG § 19-345.3(c) permits the Attorney General to seek injunctive relief on behalf of multiple unnamed residents who have been, or await, imminent unlawful involuntary discharges, provided the statutory standard has been met. HG § 19-345.3(c) permits a court to issue complete injunctive relief for violations of HG §§ 19-345, 19-345.1, and 19-345.2. We also hold that the Attorney General may seek injunctive relief under HG § 19-344(c)(6)(iii) to enforce a facility’s obligation to ‘cooperate with and assist’ a resident or applicant’s agent in seeking assistance from the medical assistance program on behalf of a resident or applicant.”
Source State of Maryland v. Neiswanger Management Services, LLC et al., No. 28, September Term, 2017.
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