California nursing homes got insider access to Newsom’s health care regulators. Here’s how14 min read
On April 9, California nursing homes were already in a state of crisis. Employees were staying home, fearing for their safety without proper protection. Facilities reported deaths daily.
At 12:30 p.m. that day, the chief advocate for California’s nursing home industry dispatched an email to officials at the California Department of Public Health. The email listed seven urgent concerns facing nursing homes, including child care and housing for workers.
The most detailed priority on the list: “The continuing bleed of $$$ to respond to COVID.”
“We’ve been working … on getting rate increases but making that happen sooner than later will help,” the industry advocate wrote.
Increased protective equipment for staff members and testing were the final items on the list.
Those priorities came from Craig Cornett, the CEO of the California Association of Health Facilities, an industry group representing 80 percent of the nursing homes in the state.
Cornett’s email to the Department of Public Health, among a flurry he sent in the early weeks of the pandemic, highlights how one industry official gained open-door access to the department that regulates his clients, according to emails and documents obtained by The Sacramento Bee through a public records request.
Cornett asked for standards to be relaxed and regulations to be waived. He recommended that COVID-19 patients be housed by one of his for-profit clients — a move that would make them eligible for higher federal payments. He swapped ideas with state officials about moving patients to a hospital ship and solicited their expertise on antibody testing.
All of this came while Cornett and a host of industry officials were asking Gov. Gavin Newsom to grant nursing homes immunity from criminal prosecution and make it harder to sue when residents get sick or die. (Newsom has yet to endorse or reject the idea.)
The largely for-profit nursing home industry has been long criticized for cutting staff and benefits to save costs, which, according to experts, can allow for dangerous infections to spread.
And over the past four months, nursing homes have suffered the brunt of the pandemic across the country. In California, at least 2,480 residents and 92 nursing home employees have died because of COVID-19 — about 42 percent of the pandemic death toll, according to state data.
As a longtime finance director in the state Senate and a well-regarded figure in Sacramento’s political scene, Cornett is well-versed in the Capitol playbook and California’s sprawling bureaucracies. The emails and documents show Cornett in regular contact with his regulators from early morning to late at night as he attempted to steer public health decisions to favor the facilities he represents.
And in turn, state officials reached out to him when they were in need.
On March 20, the day after Newsom issued a stay-at-home order, the state floated the idea of clustering COVID-19 patients in separate facilities as a way to control the pandemic. Cassie Dunham, chief of field operations at the California Department of Public Health, emailed Cornett to say she was researching which facilities had “the best potential” since her staff could not inspect them all themselves.
“If there’s opportunity for CAHF to do some of that legwork for us that would be fantastic.”
Cornett wrote back three minutes later: “I suspect that we can help.”
Cornett’s solution: move patients to shuttered nursing homes that could be brought back online.
Weeks later, he’d suggest sending patients to some of the 26 facilities tied to Plum Healthcare Group LLC, one of the largest nursing home chains in California. Facilities that accepted new COVID-19-positive patients stood to get up to $800 per day from the federal government, experts say — about four-times the normal daily rate.
Ultimately, the state and the nursing home industry abandoned the plan altogether. COVID-19 was racing through nursing homes too quickly. Too many residents were getting seriously sick. And it was becoming increasingly clear that people who didn’t appear to be sick could spread the virus to even the top-performing nursing homes.
‘Regulatory issues … may need to be waived’
Cornett was engaging with state officials in the earliest days of the pandemic, as it was becoming clear COVID-19 would sweep through facilities like it did in Washington state.
In early March, Cornett — who is not a registered lobbyist — dispatched an email to Dr. Charity Dean, assistant director of public health for the state. He vowed to send her a list of regulations that the industry wanted a break on.
“I mentioned that we have a list of potential regulatory issues that we think may need to be waived or relaxed as we all try to prevent the spread of COVID-19 to nursing facilities,” Cornett wrote in the March 5 email. “We are trying to narrow that list down and will send that list along soon.”
In a memo two days later, Cornett spelled out the request to change California’s minimum staffing requirements — among the strictest in the country — that was unworkable as employees called in to stay with children amid a cascade of school closures. He also asked to streamline regulations so that they could cut off visitation rights to friends and family of nursing home residents.
Even industry critics agree that both of those requests might have been reasonable.
But they say the arrangement blurred boundaries between the nursing home lobby and the department that regulates the $10 billion industry. It also raises stark questions about the future of major policy discussions involving the industry hardest hit by COVID-19 — most notably on the liability waiver.
The close relationship between the nursing home industry and its regulators has been a decades-old problem, said Stephen M. Garcia, an attorney who specializes in nursing home litigation. The health department for years, he said, has catered to the industry and given it a “rubber stamp.”
“In the state of California, the Department of Public Health is an arm of CAHF. It is merely a tentacle of CAHF,” Garcia said. “And CAHF is nothing more than a piper for those who pay exorbitant dues to them.”
At one point, the emails show, Cornett grew frustrated that his organization’s interests weren’t being adequately reflected in the policies coming out of the department, which conducts inspections and enforces regulations that California nursing homes must follow.
In an 8:51 p.m. April 16 email to a deputy director, he wrote that officials were sowing confusion among facilities he represented and the guidance didn’t match what he’d been told earlier in the day.
“I am also concerned that we got no heads up about this, given the obvious questions and blowback it would generate,” he wrote. “I would like to discuss tomorrow, if we can find time.”
In an interview, Cornett said the state has been conferring with stakeholders from other medical industry groups throughout the pandemic. It’s been “standard practice” for industry officials who represent workers to weigh in on forthcoming regulatory changes and be involved in the COVID-19 response.
“I think it’s not unusual, and appropriate, frankly, to have feedback from the people who actually operate these programs and operate these facilities,” Cornett said.
“I believe the state thinks it’s important to hear from the people who actually are on the ground, actually doing the work so that they can understand how this guidance is going to work and how it will be interpreted,” Cornett said. “Everybody’s aim is to keep COVID out of the buildings and to try to respond well and prevent infections.”
Likewise, Kate Folmar, deputy secretary with the California Health and Human Services Agency, said this kind of collaboration among health officials, industry leaders, labor groups and critics was a fundamental part of responding to the pandemic. There have been at least 1,000 email conversations between the state and those groups, Folmar said.
“These partnerships have been key as we have worked together to address the COVID-19 pandemic,” she said.
Nursing home advocates slam easy access
California healthcare officials have in recent years been heavily criticized for allowing dangerous problems to fester at nursing homes.
In 2018, a state audit slammed the state Department of Public Health for putting patients at risk by not fulfilling many of its oversight responsibilities, leading to a troubling increase in cases of substandard care at nursing homes. The health department refuted many of the auditors’ findings.
Given such problems, nursing home experts and industry critics said it’s troubling California relied heavily on Cornett for advice when there are untold numbers of dialed-in people who should have been consulted for major decisions. In their view, having an advocate with unfettered access to the top health officials crafting a pandemic policy set a dangerous precedent.
“It’s deeply troubling to think that the nursing home lobbyists were whispering in the ear of the people who were writing the guidelines that would determine — not only how they treat people — but potentially whether they’d be liable for deaths if those guidelines were followed,” said Jamie Court, president of Consumer Watchdog, a consumer advocacy group.
“It just shows what happens in crises when people with political power and money get to have an inside line on determining policy because everyone’s panicked.”
Cornett disagreed with the assertion that he was lobbying and laughed at the implication that what he was doing amounted to anything inappropriate.
“I think it’s absurd, frankly,” he said.
To be sure, it’s unclear exactly how much Cornett’s access influenced policy. However, on April 10 — the day after Cornett sent his priority list — Newsom announced a series of actions benefiting nursing homes.
Among them: hotel accommodations and cash stipends for nursing home employees and increased access to testing and protective equipment. The budget he signed Monday included at least $114 million from the general fund for increased rate reimbursements related to the pandemic. If the federal disaster emergency continues, the state will commit an additional $28.5 million per month.
The budget deal also indicates the state health department will audit nursing home finances to determine whether state and federal reimbursements were used correctly.
Cornett and his organization, which tallied $5 million in member dues last year, have been aggressive advocates for their industry even before COVID-19 looked like a crisis in California.
At a conference last November in Palm Springs, the group listed among its biggest threats “Democratic super‐majorities” in California. It followed a talk two months earlier where Cornett said that “ultra super majorities have implications” and walked through legislation his industry opposed — bills focused on financing, facility transparency, and staffing mandates.
The November conference featured registered lobbyists talking to attendees about how to persuade lawmakers. And Cornett himself touted his seat at the table and connections at the Capitol.
Access like that, he said in November, would pay dividends in the new year specifically because of his skill and that of his organization in “creating relationships with players in the new Governor’s Administration and new California legislators.”
Early idea to create COVID-19 hubs
Financial strain in the for-profit nursing home industry is nothing new. The pandemic raised the stakes.
Nursing home trade groups for years have decried federal reimbursement rates as being too low. The American Health Care Association, which represents nursing homes, commissioned a report in 2017 into Medicaid reimbursements. It found that “financial challenges and future uncertainty paints a difficult picture for the nursing center sector” and called for “major overhauls in how the services are funded.”
About 70 percent of the country’s 15,600 nursing homes are for-profit facilities, according to federal data. The New York Times reported that the lowest-rated homes were disproportionately operated for profit. Many in the industry, including Plum, have increasingly leaned on the U.S. Department of Housing and Urban Development for financial backing.
Facing a surge in staff call-outs as employees feared for their safety, Cornett in his April 9 email to a trio of health deputies said workers needed accommodations, child care, and a message of support.
The most detailed priority: Money.
“Given the tightness of finances for most SNFs, and the continuing bleed of $$$ to respond to COVID, the ability of more facilities to pay out hazard pay, incentive pay, OT, etc., or to continue it really depends on when they can get more financial resources from the state or federal governments,” Cornett wrote. “We’ve been working with DHCS on getting rate increases but making that happen sooner than later will help.”
As was the case across the country, officials in California considered housing COVID-19 patients in nursing homes with other COVID patients. That way, the thinking went, infections could be clustered together rather than sprinkled across the state, further spreading the virus.
According to the emails reviewed by The Bee, Cornett discussed the plan with one of the state’s largest for-profit nursing home enterprises, Plum Healthcare Group LLC. The group, Cornett wrote, had several facilities that were close to hospitals. And its CEO, he said, was willing to hear from the state.
A Medicare rule change last year increased the amount of money available for newly admitted patients. Whereas a typical long-term care resident resulted in a $200 reimbursement from the state, sick patients discharged from hospitals, including those with COVID-19, could be worth up to $800 per day.
“We will send you a list of prospects for COVID+ buildings and wings today. We’ve got some info. But want to put it into a better form,” Cornett wrote on April 8. “If you need to get started right away, I would start with Plum Healthcare. … They got a very wide footprint across the state, with many facilities close to hospitals.”
The plan never gained traction because of the potential for transmission among people who weren’t showing symptoms. It became clear to health experts that COVID-19 would infiltrate nursing homes in communities where the virus already was. Likewise, the logistics of moving COVID-19-positive residents were impractical.
But there may have been another factor. Three of Plum Healthcare’s buildings had already become epicenters for the deadliest COVID-19 outbreaks in the state. At least 29 residents at Redwood Springs Healthcare Center in Tulare County have died. Thirteen have died at Huntington Valley Healthcare Center in Orange County. And at Canyon Springs Post Acute in Santa Clara County, 12 residents have died.
Plum is the parent company for all three. David Oates, the company’s contracted spokesman, said none of the Plum-affiliated facilities ended up accepting any COVID-positive patients. Oates said the talks about moving patients were hypothetical and led by industry and state officials. They never took root.
“We are proud of the work and dedication of the frontline healthcare professionals who have done everything in their power to keep patients healthy and communities safe,” Oates said in a statement. “We are grateful for their effort and their commitment to the patients entrusted to their care.”
“… We have always maintained the mantra of quality care for residents and staff over profits,” he said.
Prior to the pandemic, about 75 percent of all nursing homes did not meet standards for nurse staffing and nearly two-thirds had infection control violations, said Charlene Harrington, professor emerita of nursing at UC San Francisco.
Facility owners kept money flowing by cutting staff and giving workers inadequate benefits and low wages, creating “a perfect storm” for COVID-19 infections to kill as sick workers brought the disease inside, she said.
“They’ve gotten what they wanted … for a number of years, so then they’ve taken advantage of this epidemic to get even less oversight and more money,” Harrington said.
“A lot of nursing homes see it as a business opportunity, unfortunately. These tend to be the worst quality nursing homes in the state,” Harrington said. “We know from our research that the nursing homes that are more likely to have COVID are the ones that have the lowest staffing and that had the poorest quality.”
Industry wants to be shielded from lawsuits
Few issues are more important to the nursing home industry than protecting itself from expensive lawsuits as the death toll has mounted. In early April, as Cornett was wrangling to get more money and other services from the state, he was also pushing Newsom to issue an executive order shielding nursing homes from lawsuits and liability.
The April 9 letter from Cornett’s group includes the precise language that they wanted Newsom to endorse.
“In recognition of these extraordinary and unprecedented circumstances,” it says, “such facilities, plans, physicians, professionals, and employees shall be immune from any administrative sanction or criminal or civil liability or claim for any injury, death, or loss…”
“… All state statutes and regulations are hereby waived to the extent necessary to achieve this immunity,” the draft order says.
The proposed order says it would take “clear and convincing evidence of willful misconduct” for a claim to pay out. It was a necessary change, they argued, so that health care workers and administrators wouldn’t slow their decision-making during a rapidly evolving pandemic out of fear of being sued.
A dangerously low amount of personal protective equipment and other supplies were already creating problems statewide, the letter said. Therefore, the industry groups said, nursing homes and other facilities shouldn’t be held responsible for problems that arose from “maximizing appropriate care for the greatest number of patients likely to benefit from these resources.”
Critics panned the proposal.
California Advocates for Nursing Home Reform called it an “unprecedented request to shield the best-financed group of healthcare providers in the state from accountability.” They also said in a statement it was an effort to avoid consequences for years of inaction, infection control violations, and cost-cutting moves that had dangerous ramifications.
“The grant of immunity sought by the providers would declare open season on long term care residents for abuse and neglect,” the group said.
Garcia, the nursing home lawyer, likewise demanded in an eight-page letter that Newsom reject the call for immunity. He said industry groups were trying again to slam the door shut on the 1991 law that gave families and advocates a path to sue for wrongdoing and hold facilities to account.
“They are trying to reverse this thing without public hearings, without opportunities for others to be heard,” Garcia said in an interview. “Because they know that gives them absolute, carte blanche immunity forever.”
Newsom has generally stayed silent, at least publicly, about his intentions for the liability waiver. A spokeswoman said only that he has not taken action yet but did not elaborate.
Mike Dark, a staff attorney for the California Advocates for Nursing Home Reform, said he’s not ready to call it dead, given the nursing home industry’s influence and deep pockets.
“The industry is very powerful and can reach deep into the state government, as you’ve seen in the emails that you’ve found,” he told The Bee. “And so I’m not confident it will be on hold forever. I hope so.”
And some lawmakers, including Sen. Richard Pan, D-Sacramento, are talking about public hearings to investigate what happened in the state’s nursing homes and how to prevent additional outbreaks.
Assemblyman Jim Wood, D-Santa Rosa, said an oversight hearing “is appropriate.” He said he’s been concerned about nursing home safety since 2016, when he called for a joint legislative audit to identify “weaknesses” in the facilities.
The pandemic, Wood said, is revealing additional flaws. It’s also time to evaluate how workers often have to take on multiple jobs in nursing homes to make a decent wage, and how that transient model affects infection control.
Until those questions are answered, Wood said, he’s not comfortable supporting limiting facilities’ liabilities.
“I think giving blanket immunity without knowing what may or may not have been done,” he said, “would be an abdication of our oversight responsibility as a body.”
Bee staff writer Hannah Wiley contributed reporting.