A group of owners and operators who have tried at least three times to argue that the COVID-related civil cases in which they are embroiled belong in federal court has been defeated again.

A three-judge panel of the Circuit Court of Appeals ruled Friday that the defendants in four consolidated lawsuits must face proceedings in New Jersey. They had requested last year that their case be immediately removed to federal court to consider whether the healthcare provider immunity granted through the Public Readiness and Emergency Preparedness Act would preempt the plaintiff’s arguments.

The judges remanded the case without a hearing or extended opinion, offering instead a simple two-page order. That leaves the 2023 findings of lower court judges intact and sets up a case in the New Jersey Superior Court.

Six of the 13 US Circuit Courts have issued similar rulings on the PREP Act. The Supreme Court in 2022 declined to take up a case that could have decided once and for all where COVID lawsuits against nursing homes and other healthcare providers should be heard.

In this New Jersey case, the defendants had appeared especially eager to find new arguments for federal jurisdiction. The case involves Alliance HC, doing business as Andover Subacute and Rehabilitation II; Woodland Behavioral and Nursing Center; and owners Chaim Scheimbaum and Louis Schwartz.

Andover Rehabilitation and Subacute Care I and II facilities in Andover, NJ, gained unwelcome notoriety in April 2020, when health officials removed 17 bodies from a mortuary building outside of the building amid a rampant COVID outbreak. Andover II was the largest Medicaid facility in the state with a capacity of more than 500 beds, while Andover I had nearly 160 beds. 

The state eventually took over Andover II, which was later renamed Woodland.

Andover I later operated under the name Limecrest, where it ran into more issues with COVID outbreaks as recently as last December. In January, the New Jersey State Comptroller announced it would suspend Scheimbaum and Schwartz from the state’s Medicaid program.

Multiple cases involving patients who died of COVID while under the care of Andover and Woodland were combined into one, and, per the Third Circuit’s latest ruling, all must now return to state court.

In her previous March 31, 2023, decision, US District Judge Georgette Castner expressed frustration with the companies and their owners for continuing to make slightly revised arguments in similar cases — despite the now-clear interpretation by the Third Circuit that COVID cases will generally be argued in state court.

Castner found, as previous judges had, that the cases could not automatically be removed to federal court because the companies were not acting as representatives of the federal government at the beginning of the pandemic. Instead, she wrote, they were simply complying with regulations in their every day duties.

“[T]he nursing homes here do not assist or help carry out the duties of “a federal superior,” they “are not government contractors,” they do not “have a close relationship with the federal government,” they are “not delegated federal authority,” and they do not “provide a service that the federal government would otherwise provide,” she said.

The PREP Act does allow for immediate removal to federal court if actors can be shown to be direct representatives working on behalf of the government. 

Still, defense attorneys have said they are confident providers can win PREP-covered cases in state courts, and to date there have been few high-dollar payouts for civil cases in which plaintiffs claimed negligence related to pandemic-era care.