Corrupt SF City Attorney Chiu Covered Up LHH Settlement

Corrupt SF City Attorney Chiu Covered Up LHH Settlement

City Attorney Alleged LHH Should Not Need Re-Certification … But
LHH Settlement Agreement Requires Re-Certification

Patrick Monette-Shaw

City Attorney’s Legal Defenses Were “Dead to Rights,”
But Then He Rolled Over and Played Dead

•••••••••• October 25, 2022 ••••••••••

by Patrick Monette-Shaw
The proposed settlement involving Laguna Honda Hospital (LHH) requires the approval of the San Francisco Health Commission, the Board of Supervisors, and Mayor London Breed. It is a smokey backroom political deal that required City Attorney David Chiu to drop his Federal lawsuit and the three administrative appeals he had filed in exchange for the settlement agreement. These lawsuits named US Department of Health and Human Services secretary Xavier Becerra. It is a grave, costly mistake!

Why is it that after first saying LHH should not have to face re-certification, Chiu then did an about-face and agreed to drop both his Federal lawsuit and the three administrative appeals that only essentially delays LHH’s application for re-certification?

The settlement agreement is shrouded in secrecy and is not a transparent process shared openly with members of the public.

City Attorney’s Legal Filing Efforts

Chiu’s diligent efforts in filing his three appeals and his Federal lawsuit are known and open to the public.

Federal Lawsuit in US District Court

Chiu’s Federal lawsuit — filed in US District Court on August 3rd, 2022 — clearly stated that LHH should not have to be re-certified at all, and that CMS had improperly terminated LHH’s provider participation agreement and federal funding. Chiu had written:

“Further, Laguna Honda should not need to be recertified at all. Laguna Honda has filed three successive administrative appeals challenging the Centers for Medicare & Medicaid Services’ (“CMS’s”) termination of the facility and the statement of deficiencies that led to CMS’s decision to terminate Laguna Honda as a Medicare and Medicaid provider. If Laguna Honda is successful in its administrative appeals, Laguna Honda will obtain an order finding that CMS improperly terminated Laguna Honda’s Medicare and Medicaid provider agreements, and restoring Laguna Honda as a Medicare and Medicaid provider.”

Had Chiu prevailed with his Federal lawsuit, the entire fiasco would have ended abruptly, and LHH would have been “made whole,” ending the complete dispute.

Count One of Chiu’s lawsuit was titled “Violation of APA (5 USC § 706(2)(A) — Arbitrary and Capricious.”

The Administrative Procedure Act (APA) governs arbitrary and capricious conduct, which is defined as “willful and unreasonable action without consideration or regard for the facts and circumstances.” Arbitrary and capricious is a standard for judicial review and appeal, often seen in administrative law cases (such as the three administrative appeals Chiu filed with the US DHHS.).

The APA requires courts — including the US District Court, Northern District of California — to “hold [as] unlawful and set aside” [any] agency action that is “arbitrary, capricious [or] an abuse of discretion,” which is what Chiu had alleged.

Count Two of Chiu’s lawsuit was titled “Violation of Procedural Due Process under the United States Constitution.” Chiu alleged CMS had terminated “Medicare and Medicaid reimbursements {to LHH] without just cause before the validity of Laguna Honda’s termination as a Medicare and Medicaid provider has been adjudicated through the administrative appeals process.” Therein, LHH was deprived of due process protections under the US Constitution.

Chiu’s lawsuit concluded with a “Prayer For Relief” asking the District Court to “Issue an injunction requiring Defendants to extend Medicare and Medicaid funding to Laguna Honda until Laguna Honda’s administrative appeal is finally resolved …”

So, the California Department of Public Health (CDPH) acted arbitrarily and capriciously when it recommended that CMS terminate LHH’s Medicare and Medicaid provider agreement, and suspended all new admissions to LHH. CDPH and CMS violated LHH’s due process protections under the US Constitution.

Then, Chiu did an about-face and agreed to drop his assertion of due process violations in exchange for agreeing to the proposed smokey backroom deal settlement agreement on October 12th, 2022.

Why would he drop his sound Federal lawsuit? What was in it for the City or for LHH? What is in it for Chiu?

Administrative Appeals to US DHHS

Chiu’s three administrative appeals to the US DHHS Department Appeals Board were crystal clear: He sought to have CMS’ survey findings and cited deficiencies reversed and rescinded, and sought to have LHH’s termination as a CMS provider reversed and overturned.

Chiu’s second appeal, dated April 25th, 2022 stated:

“For all of the reasons set forth herein [for an expedited Appeal], Laguna Honda respectfully requests that the DHHS, Departmental Appeals Board reverse CMS’ survey findings and imposition of remedies, including CMPs and DPNA between January 14th, 2022 and February 2nd, 2022, related to CDPH’s findings and rescind the deficiencies under F689 issued under Statements of Deficiencies dated December 16th, 2021 and January 21st, 2022 …”

The acronym “CMPs” stands for Civil Monetary Penalties, and “DPNA” stands for Denial of Payment for New Admissions. CDPH and CMS had levied penalties of $409,000 against LHH, it is thought, which Chiu believed were excessive and should have been reversed (overturned as fines improperly levied).

Chiu’s third appeal dated May 282, stated:

“CMS terminated Laguna Honda’s provider agreement as of April 14th, 2022. This appeal challenges the notice of termination and seeks to reverse that termination because CMS based that six-month cycle on the flawed F689 deficiency tag finding. …

Because a successful outcome to this appeal would mitigate the harm to those patients, Laguna Honda respectfully requests an expedited hearing.”

Again, why would Chiu drop his three sound administrative appeals to the US DHHS Department Appeals Board, since they were crystal clear? The survey findings, monetary penalties, and denial of new admissions (DPNA) should all have been reversed, the deficiencies should have been reversed. And the CMS termination notice should also have been overturned, eliminating the need for LHH to apply for CMS re-certification with two CDPH re-certification inspection surveys.

By dropping both the Federal lawsuit and the three appeals, Chiu essentially agreed to require that LHH face re-certification by CMS. This left the ban on new admissions in place when patients desperately seek admission, and left the unresolved problem of permanently eliminating 120 beds at LHH.

Why would Chiu agree to it?

Sudden Smokey Backroom Deal “Settlement Agreement”

The Westside Observer received an automated press release via e-mail from the California Department of Public Health (CDPH) Office of Public Affairs (OPA) on October 12th. It contained a joint statement between CMS, CDPH, and the City and County on developments related to LHH, indicating the three agencies had reached an “agreement in principle” to settle ongoing administrative proceedings and federal court litigation. It’s thought to be a tentative settlement agreement.

Later the same day, San Francisco City Attorney David Chiu’s office issued the same joint statement press release, and San Francisco’s Department of Public Health (SFDPH) and LHH also issued the same press release.

The Joint Statement indicated LHH will be allowed to continue receiving Medicare and Medicaid reimbursements for LHH’s [current] patients through November 13th, 2023.

The sudden proposed settlement agreement is contingent on LHH addressing quality improvements needed to ensure resident health and safety. The agreement asserts LHH as “aiming” to seek re-certification. “Aiming” is a dubious term, at best, and not at all reassuring.

The proposed agreement indicates transfers and discharges of current residents will remain paused only until February 2nd, 2023, with a possibility of a further extension contingent on LHH’s performance.

The press release indicated the “City” (presumably the City Attorney’s Office) will submit the settlement agreement “in principle” to the Health Commission and Board of Supervisors, and the settlement agreement “will be executed and implemented once the Board [of Supervisors] and Mayoral approval have been secured.”

Slouching Towards Bedlam

The era of providing skilled nursing care to San Francisco’s most vulnerable and poorest residents is clearly falling apart, and the center has not held. But there may be no “second coming” to save skilled nursing beds from extinction.

The CDPH Press Release on October 12th and subsequent media coverage suggest additional issues not addressed in the agreement, including LHH’s 120-bed cut, the continued halt of admissions, perhaps until November 2023, and several other unresolved issues.

Health Commission Approves Settlement Agreement

On October 18th, within just six days following CDPH’s October 12th Press Release, the seven-member Health Commission entered an hour-long closed session. The session included City Attorney advice regarding Chiu’s Federal lawsuit in US District Court (Case No. 3-22CV-4500) against US DHHS and Xavier Becerra — and the proposed settlement agreement.

After deliberating with Chiu, the Health Commission voted to waive the attorney-client privileged portion of the Closed Session and disclose that the Commission had taken action to approve the proposed settlement.

Clearly, the Commission rammed the settlement agreement through the approval process without disclosure to the public. They denied the public’s right to see or weigh in on full details of the agreement — despite multiple public records requests, including two records requests from the Westside Observer. The agreement, shrouded in secrecy, will be heard next by the Board of Supervisors.

City Attorney Chiu participated in a Zoom call with members of the San Francisco Gray Panthers advocacy group and other invited public health advocates on Monday, October 17th prior to the Health Commission’s meeting.

He did so because City officials were concerned about whether the Gray Panthers would support the settlement agreement. Were City officials worried about the support of other community groups?

Unresolved Issue: Eliminating 120 Beds

To put this in context, CMS adopted a new rule in 2016 requiring that any new skilled nursing facilities built after 2016 applying to obtain CMS provider participation reimbursement agreements could only have two-person bedrooms. When LHH began its application for re-certification, CMS asserted that LHH was starting over as a facility seeking new admission to the provider participation program; CMS considered it to be a new facility that must comply to the 2016 two-person new rule.

LHH, which opened in 2010, has 120 three-bedroom suites that were permissible when the architects designed the LHH replacement facility. So, LHH would now have to convert 120 three-bedroom suites to two-person rooms, therein losing 120 beds. That will result in forcing more and more patients who need long-term skilled nursing care into out-of-county facilities, adding up to hundreds of patients every few years.

During the Zoom call with the Gray Panthers prior to the Health Commission’s meeting, in response to a direct question about CMS’s insistence that LHH permanently eliminate 120 beds, Chiu would only meekly hide behind saying that the settlement agreement is “silent on the issue.”

City Attorney David Chiu and the full Health Commission both had to have known that, had Chiu prevailed, de-certification would be overturned. That means LHH would not need to apply for re-certification at all (which Chiu had alleged in his Federal lawsuit). Nor would it be held to the two-person bedroom 2016 rule, which would prevent having to eliminate 120 beds at LHH.

As it is, LHH lost 420 beds due to the massive cost overruns during the rebuild of the replacement project. It went from the planned 1,200 beds to just 780 beds when it opened. Losing another 120 beds at LHH means San Francisco will have lost a total of 540 SNF skilled nursing facility (SNF) beds at the LHHs campus alone. This loss ignores an already acute shortage of SNF bed capacity in-county, forcing more people into out-of-county placements. If LHH loses the 120 SNF beds, it will shrink from 769 to just 649 beds — just over half of the 1,200 beds it had for decades prior to its replacement project in 2010.

LHH’s acting CEO, Roland Pickens, suddenly started referring to the issue of the two-person bedrooms during the Health Commission’s October 18th hearing as an issue involving two-person bathrooms, rather than bedrooms. The sudden change to referring to it as a bathroom problem wasn’t explained, and none of the Health Commissioners asked about it.

Unresolved Issue: Blocking New Admissions

Chiu may not have informed the Gray Panthers and other invited healthcare advocates during the October 17th Zoom call that the proposed settlement agreement is probably also “silent” on the resumption of new admissions to LHH. Still, that appears to be the case because CDPH’s Press Release and media coverage have not mentioned whether the settlement agreement will allow new admissions to resume, assuming the Board of Supervisors approves the settlement agreement.

New admissions to LHH have already been blocked for seven months, since April 2022, because CMS has refused to pay for Medicare and Medicaid new admissions through the DPNA penalty when CMS decertified LHH.

LHH has not sought other funding reimbursement sources (including supplemental City or State funding sources) since April 14th. It may take until November 2023 for LHH to obtain re-certification, given LHH’s slow progress in readying staff for CMS and CDPH reinspection surveys, which portends new admissions to LHH may end up blocked for a 19-month period.

Both the 120-bed reduction problem and the halt of new admissions to LHH reportedly result in a backlog of patient discharges from SFGH at great expense for an acute care hospital, preventing new admissions to SFGH.

Unresolved Issue: LHH Nursing Home Administrator

As the Westside Observer reported on June 5, 2022 the last time LHH was run by a licensed Nursing Home Adminstrator (NHA) was 18 years ago between 1998 and 2004 when Larry Funk was CEO. Funk was replaced when he and LHH doctors voiced opposition to the “flow project” — placing younger, able-bodied behavioral health patients from SFGH into LHH. It was an act of expedience due to the lack of behavioral health beds and facilities in San Francisco. Funk and several doctors opposed the move because LHH was not equipped and adequately staffed to provide the appropriate level of care to mental health patients.

LHH has been under the thumbs of SFDPH and SFGH management since 2004, with disastrous results.

The proposed settlement agreement is also “silent” about hiring both a NHA and an Assistant Nursing Home Administrator that Mr. Pickens had indicated on June 30 would be hired. The Health Commission didn’t disclose whether it is taking action to fill the NHA and ANHA positions at LHH quickly — since nursing home administrators are licensed to be experts in following CMS regulations governing skilled nursing facilities.

The Board and the Commission must end the flow project. And the settlement agreement must include hiring the needed NHA and ANHA positions. The Board of Supervisors and the Mayor must take action to budget for, prioritize, and rapidly hire the NHA and ANHA positions!

Other Unresolved “Silent” Issues

Although members of the Health Commission may have received information on other unresolved issues during its closed session meeting on October 18th, the public was not informed about other significant issues.

First, was the S203,885 payment the Health Commission agreed the City must pay to settle Chiu’s Federal lawsuit is a new additional fine? Or was Chiu able to renegotiate the $409,000 fines and civil monetary penalties CDPH and CMSA had previously assessed against LHH? The public deserves the truth about this significant issue.

Second, was former City Attorney Louise Renne asked to drop and withdraw her separate Federal class action lawsuit filed on behalf of LHH residents? Was that a part of the settlement agreement Chiu reached?

Finally, the San Francisco Chronicle reported on October 13th that Chiu claimed “the settlement also includes a new [important] dispute resolution process [for the future] to avoid the kind of crisis that Laguna Honda and its regulators landed in this year.” Unfortunately, no details of any proposed new “dispute resolution process” has been made publicly available. And was the Health Commission informed of any new processes during its Closed Session briefing by the City Attorney? It’s hard to believe Chiu’s withdrawn Federal lawsuit would have pushed CDPH or CMS into issuing any new rulemaking efforts or dispute resolution regulations.

Failure to disclose these facts significantly disadvantages San Franciscans and the City’s most vulnerable residents who rely on Medicaid for their healthcare coverage. Denying full details of other potentially “silent” provisions in the settlement agreement before it is adopted and enacted by the Board of Supervisors and Mayor London Breed further relinquishes the public’s rights.

The whole Settlement Agreement should be public information immediately available. Otherwise, the Board of Supervisors will vote on it without input from an informed public.

Monette-Shaw is a columnist for San Francisco’s Westside Observer newspaper, and a member of the California First Amendment Coalition (FAC) and the ACLU. He operates stopLHHdownsize.com. Contact him at monette-shaw [at] westsideobserver.com.