State v. Neiswanger Mgmt. Servs., LLC

• Decision Date: 20 February 2018
• Docket Number: No. 28, September Term, 2017,28, September Term, 2017
• Citation: 457 Md. 441,179 A.3d 941
• Parties: STATE of Maryland v. NEISWANGER MANAGEMENT SERVICES, LLC, et al.
• Court: Court of Special Appeals of Maryland

457 Md. 441
179 A.3d 941

STATE of Maryland
v.
NEISWANGER MANAGEMENT SERVICES, LLC, et al.

No. 28, September Term, 2017

Court of Appeals of Maryland.

February 20, 2018

ARGUED BY Joshua N. Auerbach, Asst. Atty. Gen. (Meghan K. Casey and Raja Mishra, Asst. Atty. Gen., Brian E. Frosh, Atty. Gen. of Maryland, Baltimore, MD) on brief, FOR APPELLANT.

K’Shaani Smith, Murnaghan Appellate Advocate Fellow, Public Justice Center, Baltimore, MD, FOR AMICUS CURIAE FOR PUBLIC JUSTICE CENTER, AARP, AARP FOUNDATION, LONG TERM CARE COMMUNITY COALITION, MARYLAND LEGAL AID AND NATIONAL CONSUMER VOICE FOR QUALIFYING LONG-TERM CARE

ARGUED BY Sara Lord (Alan C. Horowitz, Arnall Golden Gregory LLP, Washington, DC; Scott D. Nelson and John J. Murphy, Walker, Murphy & Nelson, LLP, Rockville, MD) on brief, FOR APPELLEES.

ARGUED BEFORE: Barbera, C.J., Greene, Adkins, McDonald, Watts, Hotten, Getty, JJ.

Adkins, J.

457 Md. 448

Statutory interpretation is a complex task for any court, and requires careful reflection upon the text of the statute, and the intent of the legislative body. These complexities are compounded when we consider a statute's relationship with equitable

179 A.3d 946

doctrines. The Maryland General Assembly has enacted a comprehensive scheme to identify and protect the rights of individuals in nursing facilities in Maryland called the Patient's Bill of Rights. Md. Code (1982, 2015 Repl. Vol.), §§ 19–343 et seq . of the Health–General ("HG") Article. In this case, we are asked to decide whether the Attorney General has authority to request injunctive relief against a nursing facility pursuant to two different provisions of the Patient's Bill of Rights.

457 Md. 449

FACTS AND LEGAL PROCEEDINGS

Neiswanger Management Services, LLC ("Neiswanger") operates four Maryland nursing facilities¹ located in Anne Arundel County ("New Annapolis"), Montgomery County ("NMS Silver Spring" and "NMS Springbrook"), and Prince George's County ("NMS Hyattsville").² 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 Neiswanger and other related corporate and individual defendants. The Complaint alleged violations of the Patient's Bill of Rights, and the Maryland False Health Claims Act, HG §§ 2–601 et seq. Count One, the subject of this appeal, related to allegedly unlawful resident discharges from Neiswanger facilities in violation of HG §§ 19–345, 19–345.1, and 19–345.2, as well as multiple provisions of COMAR.³

The State alleged that Neiswanger engages in a widespread pattern of unlawful involuntary discharges of residents from their nursing facilities. These practices include involuntary discharges to homeless shelters or "sham assisted living facilities" with operators who unlawfully exploit residents' public benefits. Neiswanger discharged residents to shelters or facilities far from residents' hometowns and families. Many evicted residents are ultimately hospitalized, at the State's expense, with serious or life-threatening medical complications caused by the evictions.

457 Md. 450

To support its claims about the breadth of Neiswanger's alleged misconduct, the State asserted that during a 17–month period, from January 1, 2015 to May 31, 2016, Neiswanger issued involuntary discharge notices to at least 1,061 residents. In 1,038 of these discharge notices, Neiswanger stated that the resident was discharged for failure to pay, or for failure to arrange for payment from Medicare,⁴ Medicaid,⁵ or another third-party payor.

179 A.3d 947

By contrast, the State observed that during the same 17–month period, all of Maryland's other 225 licensed nursing facilities issued approximately 510 involuntary discharge notices. It claimed that "more than 700 people" who "reside in the five NMS facilities," could be affected by Neiswanger's unlawful discharge practices.

The State provided detailed factual narratives of eight Neiswanger residents' discharges between October 2015 and August 2016. These residents were improperly discharged to family members' homes, homeless shelters, or predatory unlicensed assisted living facilities in violation of the Patient's Bill of Rights. One resident was left outside a family member's home on a hot day. Residents were sent to unfamiliar locations. In many cases, Neiswanger failed to communicate with residents and their family members regarding discharge plans. Three of the named residents had been evicted from Neiswanger facilities on multiple occasions over a period of several years.

The State asserted that Neiswanger unlawfully discharges residents to benefit from the public-insurance payment system for residents of nursing facilities in Maryland. Medicare recipients

457 Md. 451

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.

The Complaint charged that Neiswanger "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. The State alleged that Neiswanger 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 claimed that Neiswanger unlawfully discharges Medicaid recipients to make room for more lucrative Medicare recipients in violation of HG § 19–345(b)(1)(ii).

The State alleged that in executing these practices, Neiswanger 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). The timing of Neiswanger's discharge notices is also allegedly improper. The State claims that Neiswanger 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). Neiswanger allegedly fails to properly document discharges or provide residents and families with a written statement containing statutorily-required information about discharges.

457 Md. 452

The State also asserted that Neiswanger violates HG § 19–345.2 by failing to engage in discharge planning, develop appropriate post-discharge plans of care, or comply with other statutory procedures required before an involuntary discharge or transfer. Neiswanger allegedly does not

179 A.3d 948

arrange for post-discharge medical care for discharged residents, or provide a 3–day supply of current medications upon discharge. Neiswanger also violates its statutory obligation to place involuntarily discharged residents in safe and secure environments, in violation of HG § 19–345.2(c)(2).

The State also alleged that Neiswanger violates HG § 19–344(c)(5)(ii) ("C & A Clause") by failing to "cooperate with and assist" residents and their agents in applying for long-term care coverage from the medical assistance program. Specifically, Neiswanger "ignor[es] resident requests for assistance," "delay[s] the submission of required paperwork to the Department of Health and Mental Hygiene,"⁶ or "impedes the submission of the long-term care applications of Medicare/Medicaid dual eligibles ...."

Relying on HG §§ 19–344(c)(6)(iii) ("Enforcement Clause") and 19–345.3(c) ("Injunction Clause"), Count One⁷ of the State's Complaint sought an injunction to prohibit Neiswanger 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

457 Md. 453

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 Neiswanger had a good faith basis for believing that the resident is ineligible for...