Case 3:22-cv-04500-AGT Document 1 Filed 08/03/22 Page 1 of 27
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`DAVID CHIU, State Bar #189542
`City Attorney
`JESSE C. SMITH, State Bar #122517
`Chief Assistant City Attorney
`YVONNE R. MERÉ, State Bar #173594
`Chief Deputy City Attorney
`SARA J. EISENBERG, State Bar #269303
`Chief of Complex and Affirmative Litigation
`WAYNE SNODGRASS, State Bar #148137
`Chief of Government Litigation
`TARA M. STEELEY, State Bar #231775
`Chief of Appellate Litigation
`HENRY L. LIFTON, State Bar #319005
`Deputy City Attorney
`City Hall, Room 234
`1 Dr. Carlton B. Goodlett Place
`San Francisco, California 94102-4682
`Telephone:
`(415) 554-4655
`Facsimile:
`(415) 554-4699
`E-Mail:
`Tara.Steeley@sfcityatty.org
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`Attorneys for Plaintiff
`CITY AND COUNTY OF SAN FRANCISCO
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`UNITED STATES DISTRICT COURT
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`NORTHERN DISTRICT OF CALIFORNIA
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`Case No. 3:22-CV-4500
`
`COMPLAINT FOR DECLARATORY AND
`INJUNCTIVE RELIEF
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`
`Trial Date:
`
`
`CITY AND COUNTY OF SAN
`FRANCISCO,
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`
`Plaintiff,
`
`
`vs.
`
`UNITED STATES DEPARTMENT OF
`HEALTH AND HUMAN SERVICES;
`XAVIER BECERRA, Secretary of the
`Department of Health and Human Services;
`and DOES 1-25,
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`
`Defendants.
`
`
`None set
`
`CCSF’S COMPLT FOR DECL./INJUNC. RELIEF
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`INTRODUCTION
`1.
`Throughout its 150-year history, Laguna Honda Hospital and Rehabilitation Center
`(“Laguna Honda”) has provided skilled nursing and rehabilitation services to San Francisco’s most
`vulnerable residents, including seniors, adults with disabilities, and others who cannot care for
`themselves. For many, Laguna Honda provides the last safety net for patients who must, or wish to,
`receive health care in the Bay Area near friends, family, and their communities. Because of its
`commitment to serve the underserved, Laguna Honda often provides a last resort for patients who have
`nowhere else to go, and serves a critical need for San Francisco.
`2.
`Laguna Honda relies on federal and state funding through the Medicare and Medicaid
`programs. Ninety-eight percent of Laguna Honda’s patients are Medicare or Medicaid beneficiaries.
`They have no other means of financial support. And because federal funds makeup sixty-seven
`percent of Laguna Honda’s operating budget, the facility’s participation in both programs is necessary
`to pay for the critical care the facility provides to San Francisco’s underserved. Laguna Honda cannot
`stay open without these essential funds.
`3.
`Laguna Honda has recently faced challenges. After distinguishing itself among skilled
`nursing facilities nationwide through its successful response to the COVID-19 pandemic, the
`California Department of Public Health (“CDPH”) recently cited Laguna Honda for deficiencies in
`care. Those deficiencies related to preventing contraband, such as cigarette lighters and drug
`paraphernalia, on campus, infection prevention and control, as well as two missed doses of a
`medication. Laguna Honda takes these deficiencies seriously and has worked hard to correct them.
`Although Defendants terminated Laguna Honda’s Medicare and Medicaid provider agreements as a
`result of the deficiencies, Laguna Honda is on its way to correcting all deficiencies and is confident
`that it will submit an application allowing it to be recertified as a Medicare and Medicaid provider by
`the end of the year.
`4.
`But that recertification cannot come in time for Laguna Honda and especially its
`patients and their loved ones in the community. According to Defendants, Laguna Honda must
`transfer or discharge all of its remaining 610 patients—a daunting number—close its doors, and stop
`providing critical services for San Francisco’s most vulnerable residents, all in just what is now a little
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`over a month, by September 13, 2022. Defendants are well aware that it is impossible for Laguna
`Honda to comply with the unrealistic September 13 deadline that they imposed. Simply put, there are
`not enough skilled nursing beds or facilities in the San Francisco Bay Area, in California, or in nearby
`states to care for Laguna Honda’s 610 patients, many of whom have a combination of behavioral
`health challenges, substance use disorders, and other complex social and medical needs. And the
`impossibility of the September 13 deadline is only exacerbated by Defendants’ recent decision to
`temporarily pause all discharges and transfers from Laguna Honda. Though San Francisco welcomes
`the pause so that Laguna Honda can do the work to bring the facility back into compliance without
`forcing patients out of the hospital, the pause makes it even less reasonable to impose a September 13
`deadline.
`5.
`Likewise, Defendants have determined that they will cease the federal funding that is
`essential for Laguna Honda’s operations on September 13, 2022. Laguna Honda cannot operate
`without federal funding, and it cannot get recertified before that date. 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. But that
`administrative appeal will not be decided before September 13. Thus, Laguna Honda “might well be
`forced to close its doors, and the residents might have to be transferred during the very period when
`the hearing and post-hearing briefing . . . are taking place.” International Long Term Care, Inc. v.
`Shalala, 947 F. Supp. 15, 18 (D.D.C 1996). Defendants’ arbitrary September 13 date renders illusory
`the due process protections that Laguna Honda should receive through the administrative appeals
`process. And, even though patients cannot be relocated at this time because of the pause in transfers
`and discharges, Defendants remain unmovable on their arbitrary September 13 cutoff date for federal
`funding. Come September, Laguna Honda faces the very real prospect of having to provide services
`//
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`to over 600 Medicaid and Medicare patients, without the funding and resources necessary to provide
`quality care.
`6.
`Defendants created this impossible situation knowing that Laguna Honda would have
`no choice but to agree to their unreasonable demands. When Defendants terminated Laguna Honda’s
`Medicare and Medicaid provider agreements on April 14, 2022, the San Francisco Department of
`Public Health (“SFDPH”) was compelled to prepare a closure plan to continue federal funding. In that
`plan, SFDPH proposed a termination and recertification process that would not require relocating
`existing patients while SFDPH pursued Laguna Honda’s recertification. Defendants refused. SFDPH
`then asked for 18 months to ensure that patients were transferred or discharged in a safe and
`appropriate manner. Defendants refused. SFDPH also asked to be allowed to phase transfers so the
`most vulnerable patients would be transferred last. Again, Defendants refused. Instead, Defendants
`stuck with their unreasonable and impossible-to-satisfy demand that Laguna Honda transfer all patient
`populations simultaneously, including those in end of life or palliative care, and all by their
`unreasonable September 13 deadline to transfer all patients and close the facility. With no other
`option, SFDPH had no choice but to agree to that deadline.
`7.
`Defendants’ unreasonable conduct has given Laguna Honda and its patients a Hobson’s
`choice. According to Defendants, Laguna Honda cannot stay open and it cannot close before
`transferring or discharging its patients. Laguna Honda cannot transfer or discharge patients, but it
`must transfer or discharge hundreds of patients by September 13. Laguna Honda will not receive
`federal funding after September 13, but it cannot operate without federal funding. Laguna Honda has
`availed itself of the right to appeal its termination as a Medicare and Medicaid provider, but it must
`close its doors and transfer all patients before that appeal can even be decided. SFDPH has repeatedly
`sought guidance from Defendants to resolve these conflicts, including in a July 15, 2022 letter from
`San Francisco’s City Attorney that raised many of the same concerns that are the subject of this
`complaint, only to be ignored or rebuffed at every turn.
`8.
`Because of Defendants’ arbitrary and capricious conduct, San Francisco now has no
`choice but to seek declaratory and injunctive relief to stop the harm Defendants have caused to the
`City and County of San Francisco (“San Francisco” or “City”), Laguna Honda, and its patients.
`4
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`JURISDICTION AND VENUE
`9.
`The Court has jurisdiction under 5 U.S.C. Sections 703–706 (Administrative Procedure
`Act), 28 U.S.C. Sections 1331 (action arising under the laws of the United States) and 1346 (United
`States as a defendant). This Court has further remedial authority under the Declaratory Judgment Act,
`28 U.S.C. Sections 2201(a) and 2202 et seq.
`10.
`Defendants’ actions constitute final agency action and therefore are judicially
`reviewable within the meaning of the Administrative Procedure Act (“APA”). 5 U.S.C. §§ 704, 706.
`11.
`Venue properly lies within the Northern District of California because Plaintiff,
`San Francisco, resides in this judicial district and a substantial part of the events or omissions giving
`rise to this action occurred in this District. 28 U.S.C. § 1391(e)(1).
`DIVISIONAL ASSIGNMENT
`12.
`Assignment to the San Francisco or Oakland Division of this District is proper under
`Civil Local Rule 3-2(c)–(d) because a substantial part of the acts or omissions that give rise to this
`action occurred in the City and County of San Francisco.
`PARTIES
`13.
`Plaintiff City and County of San Francisco is a municipal corporation organized and
`existing under and by virtue of the laws of the State of California, and is a charter city and county.
`14.
`Defendant United States Department of Health and Human Services (“HHS”) is an
`agency of the United States government and bears responsibility, in whole or in part, for the acts
`complained of in this Complaint. CMS is part of HHS.
`15.
`Defendant Xavier Becerra is the Secretary of HHS. He is sued in his official capacity.
`Secretary Becerra is responsible for implementing and fulfilling HHS’s duties under the United States
`Constitution and the APA.
`16.
`Does 1 through 25 are sued under fictitious names. Plaintiff San Francisco does not
`now know the true names or capacities of said Defendants, who were responsible for the alleged
`violations, but pray that the same may be alleged in this Complaint when ascertained.
`//
`//
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`I.
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`FACTUAL ALLEGATIONS
`LAGUNA HONDA PROVIDES CARE TO SAN FRANCISCO’S MOST VULNERABLE.
`17.
`Laguna Honda is one of the largest skilled nursing facilities in the United States. It
`represents one of the most extensive commitments by any local public entity to therapeutic skilled
`nursing and rehabilitative care for seniors, adults with disabilities, and those with chronic diseases
`needing skilled nursing or rehabilitative care. Once referred to as the last almshouse in the country,
`Laguna Honda provides healthcare for San Francisco’s most vulnerable residents who cannot care for
`themselves.
`18.
`Like many facilities that provide skilled nursing services, Laguna Honda has faced
`challenges in recent years. Laguna Honda has been cited by federal and state surveyors for
`deficiencies in patient care related to preventing contraband (such as cigarette lighters and drug
`paraphernalia) in the facility and infection prevention and control, as well as two missed doses of a
`medication. Patient care is Laguna Honda’s highest priority, and Laguna Honda leadership takes these
`issues seriously. With the help of hired expert consultants, Laguna Honda is working hard to correct
`any existing deficiencies and to create new protocols aligned with industry best-practices that will
`prevent deficiencies from occurring in the future.
`19.
`But Laguna Honda’s recent challenges do not diminish its long history of success and
`importance to the community:
`• Laguna Honda provides a nationally-recognized program for people with Alzheimer’s
`and other dementias.
`• Laguna Honda provides the only dedicated skilled nursing facility for HIV/AIDS in the
`San Francisco Bay Area.
`• Through its award-winning restorative care program that assists patients to retain and
`reclaim physical competency, every year as many as 240 people complete
`rehabilitative therapy at Laguna Honda and move to a lower level of care or
`independent living.
`• While other facilities faced COVID-19 outbreaks that caused great suffering and loss
`of life, Laguna Honda distinguished itself through its successful and life-saving
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`response to the pandemic. Starting in early March 2020, the facility implemented
`cutting-edge infection prevention and control systems to protect its patients, and in
`2020, Laguna Honda received the top honor from the California Association of Public
`Hospitals and Health Systems for its response to the COVID-19 pandemic.
`20.
`Every day, Laguna Honda clinicians and staff dedicate themselves to high-quality,
`individualized care for the facility’s over 600 patients, including by providing group living facilities
`for people with developmental disabilities, treatment for multiple sclerosis, Parkinson’s and other
`degenerative diseases, therapeutic services for traumatic brain injuries, services for people with
`psychosocial difficulties, end-of-life care emphasizing comfort and dignity, and the complex system of
`care required for people with multiple diagnoses.
`II.
`DESPITE LAGUNA HONDA’S LONG HISTORY OF SUCCESS, CMS TERMINATED
`LAGUNA HONDA’S PROVIDER AGREEMENTS.
`
`21.
`Laguna Honda relies primarily on federal funding, through the Medicare and Medicaid
`programs, to provide care for its patients. Without continued federal funding, Laguna Honda cannot
`operate and provide quality care for its patients. Laguna Honda’s monthly budget is approximately
`$26 million and the facility receives almost $18 million each month from Medicare and Medicaid
`reimbursements.
`A.
`The Medicare and Medicaid Programs
`
`22.
`The Medicare program is a federally-administered and funded program for individuals
`65 and older and disabled individuals who are eligible for Social Security benefits. 42 U.S.C. §§ 426;
`1395c. The Medicaid program (known in California as Medi-Cal) is a joint federal and state program
`that provides medical insurance to low income individuals who are aged, blind, disabled, pregnant,
`young children, or members of families with dependent children. 42 U.S.C. §§ 1396 et seq.
`23.
`Both the Medicare and Medicaid programs require facilities, including skilled nursing
`facilities (“SNFs”), to meet the Medicare conditions of participation to be eligible to participate in
`each program and receive reimbursement for services rendered to Medicare or Medicaid patients. 42
`U.S.C. §§ 1395i-3, 1396r; 42 C.F.R. § 483.1 et seq. To receive reimbursement, providers, such as
`SNFs, must enter into provider agreements with CMS. 42 U.S.C. § 1395cc(a)(1). Under the provider
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`agreements, the provider agrees to provide services on the terms of the program. In return, CMS
`agrees to reimburse providers for services rendered to beneficiaries and not to terminate the provider
`without just cause and due process. See 42 U.S.C. §§ 1395f(b); 1395cc(b)(2), (h)(1)(A); CMS
`Publication 100-07, State Operations Manual, Chapter 3, § 3005D.
`24.
`CMS enforces the Medicare conditions of participation by conducting periodic surveys
`of participating facilities. 42 U.S.C. § 1395i-3(g). CMS also enters into agreements with state survey
`agencies to carry out surveys of skilled nursing facilities. 42 U.S.C. § 1395aa; 42 C.F.R. § 488.330.
`In California, the state survey agency is the Licensing & Certification Program within CDPH.
`25.
`If CMS or CDPH determines that a facility is not in substantial compliance with a
`condition of participation, it assesses that deficiency using a scope and severity rating and documents
`the deficiency on a Statement of Deficiencies (also known as a CMS Form 2567). 42 C.F.R.
`§ 488.408. A facility that CMS or CDPH finds to be out of substantial compliance must submit a Plan
`of Correction within 10 days of receiving a Statement of Deficiencies. 42 C.F.R. § 488.402(d). If a
`facility’s deficiencies do not pose immediate jeopardy to a patient’s health or safety, CMS has two
`options—it may terminate the facility’s provider agreement immediately or allow the facility to
`participate for an additional 6 months. 42 C.F.R. § 488.412(a). During that six-month period, CMS or
`CDPH conducts revisit surveys to determine whether the facility has returned to substantial
`compliance. If a facility is not in substantial compliance at the end of the 6-month period, CMS
`terminates the provider agreement. 42 C.F.R. § 488.412(d).
`B.
`CMS’s and CDPH’s Enforcement Actions against Laguna Honda
`
`26.
`In July 2021, Laguna Honda self-reported two illicit drug overdose incidents where the
`patients were taken to an emergency department before ultimately returning to the facility. Based on
`this report, CDPH surveyed Laguna Honda in October 2021, completing the survey on October 14,
`2021. Over two months later, on December 16, 2021, CDPH issued a Statement of Deficiencies that
`assessed two deficiencies based on Laguna Honda’s failure to eliminate all illicit drugs and contraband
`(such as cigarette lighters) from the facility. CDPH found that those two deficiencies amounted to
`substandard quality of care, meaning that Laguna Honda was out of substantial compliance with the
`Medicare conditions of participation. In its letter to Laguna Honda, CDPH stated that it recommended
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`that CMS impose a civil monetary penalty and terminate Laguna Honda’s provider agreements by
`April 14, 2022, if Laguna Honda did not achieve substantial compliance by that date. Laguna Honda
`submitted a Plan of Correction for the deficiencies on December 27, 2021, which CDPH accepted on
`January 14, 2022.
`27.
`On January 21, 2022, CDPH completed a revisit survey of the facility where it found
`that three patients continued to possess illicit drugs and contraband and that staff did not properly
`dispose of the confiscated contraband. Again, CDPH determined Laguna Honda was out of
`substantial compliance with the Medicare conditions of participation, and recommended that CMS
`terminate Laguna Honda’s provider agreements on April 14, 2022. CDPH further recommended that
`CMS deny payments to Laguna Honda for newly admitted patients. On February 24, 2022, CMS
`issued a notice approving the remedies that CDPH recommended, including levying civil monetary
`penalties, denying federal reimbursements for new patients, and imposing the April 14, 2022,
`termination date.
`28.
`Beginning March 16, 2022, CDPH conducted a second revisit survey. On March 22,
`2022, CDPH found Laguna Honda to be in immediate jeopardy to patient health or safety, meaning a
`deficiency likely to cause serious injury, harm, impairment, or death, after concluding that three
`patients were in possession of contraband or using illicit substances. After accepting Laguna Honda’s
`Plan of Correction, five days later, on March 27, 2022, CDPH removed the immediate jeopardy
`finding. But, when the revisit survey ended the next day, on March 28, 2022, CDPH continued to find
`deficiencies related to use and possession of illicit substances, as well as new, previously unidentified
`deficiencies.
`29.
`On March 30, 2022, CMS issued a notice to Laguna Honda that it remained out of
`substantial compliance with the Medicare conditions of participation and confirming that CMS still
`intended to terminate Laguna Honda’s Medicare provider agreements effective at 12:01 a.m. on
`April 14, 2022 (“Termination Notice”).
`30.
`CMS and CDPH conducted a third revisit of the facility starting April 11 and ending
`April 13, 2022. At the exit interview, representatives of CMS and CDPH verbally informed Laguna
`Honda that the facility was not in substantial compliance. Surveyors identified new issues with
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`infection prevention and control, as well as two missed doses of a medication. CMS did not give
`Laguna Honda any time to cure these previously unidentified deficiencies because CMS terminated
`Laguna Honda’s provider agreements the following day.
`31.
`Laguna Honda has filed three successive administrative appeals with CMS. The first
`two appeals, dated February 15, 2022, and April 25, 2022, challenged the December 16, 2021
`Statement of Deficiencies and associated civil monetary penalties. On May 28, 2022, Laguna Honda
`filed the third appeal, challenging the March 30, 2022 Termination Notice. The administrative law
`judge has consolidated all three appeals; Laguna Honda’s brief is currently due September 5, 2022,
`and CMS’s is due October 7, 2022, with a hearing to be scheduled soon thereafter. The appeals
`challenge CMS and CDPH’s pattern and practice of failing to provide timely Statements of
`Deficiencies prejudicing Laguna Honda’s ability to respond to and correct any deficiency. They also
`challenge Defendants’ unwritten zero-tolerance policy of requiring Laguna Honda to “eliminate” all
`illicit drugs and contraband in the facility, an unlawful standard that started the six-month cycle
`resulting in termination of Laguna Honda’s provider agreements. On information and belief,
`Defendants have not imposed that unlawful standard on other facilities. Laguna Honda has undertaken
`significant efforts since October 2021 to address the occurrence of illicit drugs and contraband in the
`facility, but given the complexities of the patient population and that Laguna Honda is not a locked
`facility, it is impossible to comply with Defendants’ strict liability policy.
`III. CMS ABUSED ITS DISCRETION BY ARBITRARILY TERMINATING FUNDING
`ON SEPTEMBER 13 AND REQUIRING ALL PATIENTS TO BE RELOCATED BY
`THAT DATE.
`
`32.
`In the March 30 Termination Notice, CMS stated that it would exercise its discretion to
`provide funding for a transition period following termination of the facility if the facility submitted a
`notification of closure under 42 C.F.R. § 483.70(l). Federal regulations require that such a notification
`include an approved closure plan providing for the relocation of the patients of the facility. Id. But
`federal regulations do not mandate that the closure occur within any set period of time.
`33.
`Thereafter, CMS representatives advised SFDPH to prepare a Closure and Patient
`Transfer and Relocation Plan (“Closure Plan”) that would meet the requirement of 42 C.F.R.
`§ 483.70(l), as well as a CMS Recertification Milestone Document (“Milestone Document”) detailing
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`Case 3:22-cv-04500-AGT Document 1 Filed 08/03/22 Page 11 of 27
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`milestones that, if met, would put Laguna Honda on a defined path to recertification in the Medicare
`and Medicaid programs and thus prevent the closure plan from going into effect. In accordance with
`CMS’s direction, SFDPH spent several weeks preparing these documents and, on May 9, 2022,
`submitted them to CMS.
`34.
`Despite encouraging SFDPH to prepare and submit the Milestone Document, CMS
`changed course and rejected it that same day, without explanation. CMS also indicated that it was
`contemplating a four-month deadline for terminating Laguna Honda’s funding, with the possibility of
`a two-month extension.
`35.
`CMS and CDPH then reviewed SFDPH’s proposed Closure Plan and demanded
`extensive revisions. Although federal law delegates authority to CDPH to approve closure plans under
`federal law, upon information and belief, CMS provided extensive direction to CDPH in reviewing
`SFDPH’s proposed Closure Plan.
`36.
`In its proposed Closure Plan, SFDPH stated that “a patient-centered transfer or
`discharge of all of [Laguna Honda’s] current patients will take up to eighteen months, or until
`November 9, 2023.” (Emphasis in original.) SFDPH also explained why 18 months was required,
`noting the large size of Laguna Honda, “the limited availability of SNF beds and beds in other
`appropriate placements in the San Francisco Bay Area and California,” and the “complexity of its
`patient population, many of whom have a combination of behavioral health needs, substance use
`disorders, and other complicated social and medical factors.”
`37.
`CDPH rejected this proposed timeline, stating that 18 months “is not acceptable for
`transfer of residents given [CMS’s] proposed timeline for funding to continue for 4 months” with a
`[possible] 2-month extension for “extenuating circumstances.” Without addressing SFDPH’s practical
`concerns about the length of time it would take to safely transfer hundreds of patients, CDPH
`instructed SFDPH that “[t]he plan should include activities and timelines to complete transfers within
`4 months [i.e., by September 13]”—the same date that CMS said it would terminate federal funding.
`CMS and CDPH did not explain—and have never explained—why they selected this unreasonable
`deadline. Nor have they explained why a longer timeline would not better serve the common goal of
`ensuring that patients are “transferred to the most appropriate facility or other setting in terms of
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`Case 3:22-cv-04500-AGT Document 1 Filed 08/03/22 Page 12 of 27
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`quality, services, and location, taking into consideration the needs, choice, and best interests of each
`resident.” 42 U.S.C. § 1320a-7j(h)(1)(C).
`38.
`SFDPH’s proposed Closure Plan also stated its intent to have interdisciplinary teams
`complete comprehensive assessments for each patient at Laguna Honda prior to transfer. SFDPH
`explained that because these assessments would take one to two hours per patient, staff would need
`until August 15 to complete the assessment process. As detailed in the proposed Closure Plan, this
`was an ambitious timeline at best, requiring staff to conduct 50 assessments every week. CDPH
`responded that SFDPH’s proposal was “unacceptable,” because it would not “meet [CMS’s] required
`timeline” to transfer all patients out of the facility by CMS’s arbitrarily selected September 13
`deadline.
`39.
`SFDPH also proposed that patients be transferred or discharged based on a tiered
`system that would allow patients who did not require significant healthcare treatment to be moved
`before patients with more complex needs. CMS and CDPH rejected this aspect of the proposed
`Closure Plan as well, directing SFDPH to transfer all patient populations simultaneously, including
`those in end of life or palliative care.
`40.
`As indicated in its initial proposed Closure Plan, SFDPH was concerned about the non-
`tiered approach and informed CMS and CDPH that relocation of all patients within 4 months was not
`possible—much less in the best interest of patients—given the shortage of SNF beds locally and
`statewide (see ¶¶ 47-50, infra) and the complexity of its patient population. But CMS would not
`continue discretionary funding for Laguna Honda past May 13, 2022, without an approved plan; and
`CDPH would not approve a plan that contained a realistic closure deadline because of CMS’s required
`timeframe. And without CMS funding, Laguna Honda would not have the funds necessary to continue
`to provide care to its patients during the transition period. Laguna Honda had no choice but to
`resubmit a plan that complied with CMS’s and CDPH’s unreasonable demands.
`41.
`Accordingly, on May 13, 2022, SFDPH submitted a revised Closure Plan that
`incorporated CMS’s and CDPH’s arbitrary deadline and time frames. The revised plan required
`Laguna Honda staff to conduct 78 patient assessments every week—over 50 percent more than
`SFDPH thought was manageable. It abandoned the tiered transfer protocol SFDPH wanted to follow.
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`Case 3:22-cv-04500-AGT Document 1 Filed 08/03/22 Page 13 of 27
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`And it included the four-month deadline mandated by CMS. It explained: “Per CMS, Laguna Honda
`is required to transfer or discharge all of its current patients within four months from the approval of
`the Closure Plan (approval of which is anticipated on May 13, 2022, with four months from that date
`being September 13, 2022), with a possible 2-month extension based on extenuating circumstances as
`approved by CDPH and CMS.”
`42.
`CDPH, which upon information and belief was acting at the direction of CMS,
`approved the revised plan.
`43.
`Although federal regulations do not mandate that closure occur within any set period of
`time and allow the Secretary of HHS discretion to continue funding until the last patient is safely
`transferred or discharged from the facility, CMS and CDPH confirmed in several subsequent
`communications that federal funding will not be continued past September 13, 2022, and that all
`Medicare and Medicaid patients must be relocated by that date. This arbitrary and capricious decision
`constitutes an abuse of discretion.
`44.
`Nonetheless, Laguna Honda has used best efforts to comply with CMS’s and CDPH