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Lawyers descend on the Department of Public Health
Gross mismanagement by the Health Commission sparks civil lawsuit at the Department of Public Health

Beleaguered Laguna Honda Hospital faces civil lawsuits

Bevy of Lawyers Target Laguna Honda Mismanagement

•••••••••• February 2024 ••••••••••

Dr. Derek Kerr and Dr. Maria Rivero
Dr.s Kerr & Rivero

Just when Laguna Honda seemed to be turning the corner on its struggle toward reform, three law firms have teamed up to expand their Class Action lawsuit. Filed in SF Superior Court on 1/16/24 (Case #: CPF-20-517064) is a new Declaration by a nursing home expert in support of the Class Action motion originating in 2020. That precursor claim, "Tommy Johnson and John Doe v. CCSF," described how 1) LHH staff had distributed unauthorized cell phone images of undressed or distressed patients – for laughs, and 2) rogue caregivers reveled in drugging - and overdosing - restless patients with pilfered LHH narcotics. The Westside Observer (WSO) covered both scandals.

What’s new about this upgraded filing is its widened perspective, striking at the core of LHH’s dysfunction. It marshals analyses by LHH consultants, regulatory agencies, and media reports to conclude that LHH has demonstrated “a colossal failure of governance and management.” Notably, the plaintiffs argue that LHH will “slip back” into its pattern of non-compliance without ongoing prodding by independent experts.

For the Plaintiffs

The three collaborating law firms are Walkup, Melodia, Kelly & Schoenberger, Stebner, Gertler,Guadagni & Kawamoto, and  Cotchett, Pitre, & McCarthy, LLP. While pursuing redress for the patient abuse scandals noted above, they also represented the Public Guardian’s Office in its related lawsuit against LHH. That case, recently settled for $2.3 million, showed that LHH failed to notify Public Guardians that their LHH clients had suffered abuse and privacy violations by smartphone-obsessed staffers. As the WSO previously reported, Stebner et al., alongside Needham, Kepner & Fish, LLP, have also sued LHH for negligence related to 12 patients who died soon after being hurriedly transferred to other facilities. So, these law firms have a sound understanding of LHH mismanagement and its harmful fallout.

Why are they striving for a Class Action lawsuit? Well, the process allows compensation for many affected persons who may not be able to pursue individual lawsuits. For courts and lawyers, it’s a more efficient way to litigate instead of handling multiple lawsuits. And Class Action lawsuits have much more social impact. The plaintiffs may aim to place LHH under Receivership to ensure that LHH reforms are durable.

Christopher Cherney
Christopher Cherney

A Receivership is a last-ditch legal remedy that strips an institution of control and places a Court-appointed expert (Receiver) in charge of all major decisions. Designed to address egregious rights violations, Receiverships aim to remake - but not close - wayward institutions. The Court restores control to the institution once it is deemed compliant. Recall that the California prison medical system was placed in Receivership in 2006 after a successful Class Action lawsuit.

Their subject matter expert, Christopher Cherney, a former Hospice volunteer, has been a licensed Nursing Home Administrator since 1997, overseeing seven skilled Nursing Facilities ranging in size from 59 to 180 beds, per his resume’.   

Most of his tenures were short, save for 14 years with Kaiser Permanente’s Post-Acute Care Center. Cherney also served as a consultant to Nursing Home chains and California District Attorneys, a Court-appointed facility compliance monitor, and a Skilled Nursing expert with the California Department of Justice. Here’s a summary of his 59-page Declaration:

Expert Opinion #1: “The hundreds of substantiated regulatory violations committed by LHH between 2019 and 2023 reflect a colossal failure…by the LHH Governing Body (the Health Commission) and LHH managers.” Specifically, “LHH incurred 243 regulatory violations between 2019-2023, 21 of which were for actual harm or for placing residents at immediate jeopardy of harm or injury.” Cherney says these violations are undercounts for two reasons: (1) surveyors were not visiting facilities during the COVID pandemic, and (2) given LHH’s size, surveyors sampled proportionately fewer residents. “Surveyor protocols meant that surveyors focused on 1.4 to 5.1 times fewer LHH residents than they would have in smaller facilities.”

The Root Cause Analysis conducted by LHH’s own Quality Improvement consultants showed that LHH’s April 2022 decertification resulted from “system-wide failures due to an absence of leadership and oversight…”

quote marks

The 2004 DPH Flow Project sought to save money – a dubious $1.7 million annually by flooding LHH with non-paying SFGH patients who were difficult to discharge and often unruly. LHH lacked the clinical and security resources to care for them safely. The warnings from experienced LHH clinicians were ignored and then suppressed. Now, those purported savings have evaporated - along with LHH’s good reputation.”

That damning analysis, summarized by the WSO, identified eight major problem areas. Cherney writes, “Numerous findings detailed shockingly bad governance and shockingly bad management.”

Cherney says that these findings were violations of the Federal Code of Regulations, which states, “The facility must have a governing body…that is legally responsible for establishing and implementing policies regarding the management and operation of the facility.” That’s because Health Commissioners, Health Director Dr. Grant Colfax, and SF Health Network head, Roland Pickens, stood by as LHH repeatedly breached “numerous facility-wide policies.”

Expert Opinion #2: “A primary governance failure was LHH’s reliance for almost two decades on hospital professionals, not nursing home professionals, to lead LHH.” Further, “LHH’s Governing Body did not hire a qualified Executive Administrator until June 2023.” These failings contributed to LHH’s “pattern of regulatory non-compliance for at least the last four years” - and LHH’s April 2022 Medicare decertification.

Expert Opinion #3: “The LHH Governing Body and executive leaders had the capacity to govern and manage competently, but with respect to protecting residents’ rights they did not.” Cherney notes that LHH successfully limited the spread of COVID by calling for City, State and Federal resources. But none of that focus, urgency and reliance on outside experts - like qualified Nursing Home Administrators - occurred after several patient care scandals.

To buttress his impression that LHH executives generally failed to protect residents’ care, Cherney tabulated data produced by LHH’s own consultants. These consultants issued monthly progress reports as LHH labored to fulfill a federally mandated Action Plan by May 2023. In January 2023, 25% of the results promised were not delivered. By May of 2023, 31% of the deliverables were lacking. He attributes this stagnation to incompetence. Multiple other failures are documented.

Following the sluggish Action Plan, LHH’s consultants developed a Sustainability Plan. The consultants met one-on-one with 11 managers to review the plan. Cherney opines that the LHH Executive Administrator should have “taken the lead role” by attending these meetings. But “in a breach of standards” he didn’t show up. Cherney predicts that “LHH will not maintain and sustain performance improvement and substantial regulatory compliance” unless the top executive engages.   

Expert Opinion #4: “If LHH does not continue to engage skilled nursing facility subject matter experts…LHH will slip back into its yearslong pattern and practice of non-compliance with regulatory and professional standards.” Cherney notes that even to create an Action Plan in response to its decertification, LHH relied on intensive coaching by consultants - mandated by federal regulators.

The Unique Gravity of LHH’s Failures

Cherney highlights the “unique gravity” of LHH’s failures. Citing his 27 years as a Nursing Home Administrator and his expert testimony in 350 nursing home cases, he emphasizes that “the failure of governance at LHH was unprecedented.”

He stresses the rarity of LHH's Medicare decertification. Among some 14,400 facilities, “Between 2019 and 2023, 0.1% or less of US nursing homes were involuntarily decertified by Medicare, and only two nursing homes with more than 200 beds were involuntarily decertified.”;

Flow Project Fallout

Obliquely, he touches on the notorious DPH Flow Project of 2004, its purge of qualified LHH managers and their replacement by unqualified lackeys from SFGH; “LHH relied for almost two decades on hospital professionals – not nursing home professionals – to lead LHH. The hospital professionals employed by LHH lacked the competence to run a large nursing home.” Worse, “…for 18 years LHH never hired a licensed nursing home administrator as its Executive Administrator.”

Clinicians who opposed the Flow Project, the usurping of LHH’s Admissions Policy, and the hostile takeover of LHH administration warned the DPH and the Health Commission against dismantling LHH’s regulatory structure. They will resonate with Cherney’s assessment;

Year after year after year, despite the drugging of 15 residents (2017, 2018), despite a sex abuse scandal involving 23 residents (2019), despite rare decertification from Medicare and Medicaid, despite access to resources unimaginable to almost any other US skilled nursing facility, and despite pledge after pledge after pledge that LHH would fix its problems and would comply with applicable nursing home regulations, LHH could not and did not fix its problems. LHH’s inability to get its governance and management act together for four years sent a strong and clear message to the community; LHH will continue to operate without accountability…This message and LHH’s actions were the height of arrogance.”

“LHH’s governance failures and corresponding lack of accountability enabled its practice of admitting residents with complex behaviors and substance abuse disorders whose needs LHH absolutely could not meet. By admitting residents whose needs it absolutely could not meet, LHH sent these uncaring and ruthless messages; (i) We will admit whomever we want; (ii)Residents with complex behaviors and substance abuse disorders aren’t worthy of compliant care.”

Cherney delves into LHH’s hapless exertions to right the ship. After getting decertified, LHH launched a series of reforms. It then conducted “Mock Surveys” to gauge its progress. So many deficiencies emerged, including seven that constituted “Immediate Jeopardy,” that LHH conceded it could not achieve recertification at the time. Yet five months later, an internal Root Cause Analysis showed that many of those deficiencies persisted. Alarmingly, these arose four years after the DPH proclaimed a “Laguna Honda Reform Plan” to ensure regulatory compliance after a 2019 patient abuse scandal. Subsequent monitoring reports reinforced these findings and “highlighted a common thread throughout – the overall failure of governance at LHH.”

Costly Arrogance and Incompetence

Interestingly, Cherney’s conclusions reflect the views expressed by several LHH expatriates now writing for the Westside Observer. He references the costs of the LHH fiasco that our colleague, Patrick Monette-Shaw, has painstakingly compiled – currently $30.6 million – but, “not including millions of additional dollars for consulting fees, legal fees, and anticipated future legal settlements.” Add to that the revenue losses caused by halting patient admissions for almost two years. (Incalculable are the human costs of depriving ailing San Franciscans access to LHH services). Cherney concludes; “These costs amount to a breach of the LHH Governing Board’s fiduciary duty to act in LHH’s best financial interest as stated in the bylaws of LHH.”

The 2004 DPH Flow Project sought to save money – a dubious $1.7 million annually by flooding LHH with non-paying SFGH patients who were difficult to discharge and often unruly. LHH lacked the clinical and security resources to care for them safely. The warnings from experienced LHH clinicians were ignored and then suppressed. Now, those purported savings have evaporated - along with LHH’s good reputation.

Reversing 20 years of mismanagement in a massive institution with many components and over 1,500 employees will take years. Recruiting qualified executives, retraining personnel, and normalizing operations will be daunting and costly. So, future misguided efforts to sabotage reforms and patient care “to save money” are expected.

Too Late for Accountability

Unfortunately, the folks who orchestrated LHH’s deformation, former Mayor Gavin Newsom, then-DPH Director Dr. Mitchell Katz, his deputy Anne Kronenberg and CFO Greg Sass, and the quisling Health Commissioners, are gone and beyond accountability. Competent LHH employees were driven out. Those who remain are ignorant of or complicit in, the debacle imposed on LHH.

Clueless SFGH colleagues with no experience in long-term care assumed it was a low-grade variant of their work. Arrogantly, they believe that long-term care is nothing special. Actually, it's a specialty rooted in whole-person care and compliance within a complex regulatory ecosystem. The delusion was that SFGH and DPH flow zealots could remake LHH as they saw fit without harming patients.

The colonization of LHH has collapsed. Sadly, it took outside experts and law firms to expose the rot. It will take outsiders to prevent a relapse.

Hat Tip: Thanks to Gray Panther member, Dr. Teresa Palmer, for alerting us to this filing.

Editor’s Footnote: Drs. Rivero and Kerr served Laguna Honda Hospital residents for 20 years and repeatedly exposed management wrongdoing.

February 2024

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