South Florida Nursing Home ordered to stay open while the owner and CMS are locked in a legal battle

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CMS had moved to kick Bayou, a south Florida nursing home, out of the Medicare and Medicaid networks in July 2014 after inspectors turned up dangerous conditions there that they said put elderly patients and those with dementia at risk.  In particular, the inspectors had found expired medication; learned that a convicted sex offender had been placed in a room with a paralyzed stroke patient and attempted to molest the patient; and found that a dementia patient had wandered out of a secure unit, ending up at a bus stop, their report said.   Bayou filed a civil action to stop the termination of the provider agreements, and when that failed, the company filed for bankruptcy. Florida’s Agency for Health Care Administration and the U.S. Department of Health and Human Services appealed the bankruptcy court’s injunction to federal court, and in March, Bayou’s attempt to dismiss the appeal was denied. The federal case eventually led to Judge Moody’s decision.  U.S. District Judge James S. Moody Jr. found in June that a bankruptcy court had wrongfully ignored the jurisdictional bar in the Medicare Act, which limits judicial review of agency decisions regarding provider agreements. The bankruptcy court had issued an injunction to keep CMS from pulling support from one of Bayou’s facilities following discovery of safety violations.  According to Judge Moody’s order, until Bayou exhausts all available administrative remedies to keep CMS from pulling its financial backing, the federal courts can’t get involved.  Judge Moody wrote the following in his order:

“There is a significant factor of human dignity at issue here that this court cannot ignore. Bayou Shores’ patients are comfortable, they know the staff, they have the same routines, and they retain some dignity and independence from this comfort and familiarity,” the court said. “It would be draconian to disrupt their dignity based on a jurisdictional debate that has resulted in significant contrary opinions among the circuit courts and lower courts.”

Bayou appealed, and on July 20, the Florida court authorized a 90-day stay pending appeal. In mid-October, the Eleventh Circuit extended the stay 10 days. On Monday, when that stay was due to expire, Judge Moody held an evidentiary hearing on Bayou’s renewed motion for stay in which Bayou relied heavily on a 2015 bankruptcy decision out of Kentucky: In re: Nurses Registry and Home Health Corp. In that case, the court suggested Judge Moody went against the plain language of the law regarding jurisdiction, according to the judge’s Monday order. Judge Moody said that for the same reasons he discussed in his June order, he doesn’t agree with the Kentucky court’s holding, but he must acknowledge the debate and that reasonable people could disagree, especially since there’s no binding authority on the issue.  In addition to finding that Bayou could be harmed if it’s forced to close up shop, he said that as of Monday it’s undisputed that Bayou is in compliance with all regulatory requirements and that its patients are receiving adequate care. He noted that many of their family members and guardians didn’t want to transfer them to other facilities despite the uncertainty of Bayou’s future because they’re happy with the care the home provides.

Florida federal court has extended its stay of a judgment that would end the Centers for Medicare & Medicaid Services’ provider agreement with a bankrupt Florida nursing home, finding that the status quo must be maintained during the home’s Eleventh Circuit appeal to avoid irreparable harm to the home and its patients.

Although the court believes its order will be affirmed by the Eleventh Circuit, it said Monday that a number of patients at Bayou Shores will have nowhere to go if the provider agreement ends and Bayou is forced to shut down. Thirty-seven of Bayou’s patients need specialized care, and the home’s administrator has identified only two facilities appropriate to take those patients — with only eight total open beds.

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