John O'Connor

Suppose you had a poor credit score and wanted to improve it. By fixing the problem, you could repair a damaged rating. And if the reason for the bad number was not really your fault — say due to inaccurate information — you could easily have the erroneous score fixed.

But what if you are a skilled care operator, and your Five Star rating was arbitrarily reduced? Fixing the root cause hardly ensures the score will be fixed. In fact, it may not even entitle you to a hearing so you can explain your side of the story, a federal appeals court ruled earlier this month.

The case involves an Illinois provider who corrected cited F-tags — deficiencies the facility disagreed with, by the way.

The Seventh Circuit’s appellate court determined that the operator could have obtained a hearing to contest the deficiencies — but lost that option once it entered into a plan of correction with the state survey agency. Moreover, neither Medicaid rules or the Constitution offered an avenue for challenging the findings that led surveyors to cite the facility — which led to the Centers for Medicare & Medicaid Services downgrading the nursing home’s rating.

So even though the government’s Five Star Quality Rating System is the benchmark used by virtually every organization that compares nursing homes, the court found the alleged stigma associated with a reduced rating was not enough to justify due process protections.

However, should the lowered ratings lead oversight agencies to impose new or harsher penalties in the years to come, the nursing home can challenge those actions at that time, the court ruled.

How incredibly magnanimous. That is sort of like saying even though you were punished for a crime you were not convicted of committing, the punishment and resulting fallout will stand. But if you are wrongly accused again in the future, it’s okay if you call your lawyer.

I suppose it could be argued that the provider made a misstep, legally speaking. For while the operator challenged the citations through administrative procedures, it ultimately decided to submit a plan of correction rather than challenge the findings on which they were based. That plan of correction did successfully resolve the state’s F-tag concerns. However, the deficiency findings remained on the nursing home’s record and were ultimately reported to the Centers for Medicare & Medicaid Services.

After the nursing home’s rating fell from five stars to two (based on state health department’s deficiency findings that it disagreed with), it sought an opportunity for a hearing in order to tell its side of the story. CMS subsequently corrected the star rating from two to four. Why not the original five stars? Because CMS suddenly discovered the earlier higher score was “in error.”

Those requests were denied at both the state and federal level, which prompted the facility to sue. Ultimately, the appellate court agreed that “Bryn Mawr has been stigmatized.” But the decision added the facility’s pain had not been serious enough “to show that any of its rights have been altered.” As a result, the operator “was not entitled to an opportunity to challenge the deficiency findings in a hearing.” Game. Set. Match.

Life can be full of teaching moments. Here are three lessons providers can take from this case:

1) If you get jerked around by inspectors, you’re guilty until proven innocent.

2) Should that happen, you may not get a hearing to explain why you are innocent.

3) CMS reserves the right to still stick it to you after the dust settles, should the agency suddenly discover a favorable score was “in error.”

Actually, there’s an implied fourth lesson here as well:

When it’s a nursing home being deprived of justice, there is no such thing as a slam-dunk case.

John O’Connor is McKnight’s Editorial Director.