At one of the nation’s largest nursing homes, an unusual regulatory maneuver is jeopardizing hundreds of vulnerable patients, resident advocates say. 

In about two weeks, federal regulators may require Laguna Honda Hospital and Rehabilitation Center in San Francisco to restart the process of transferring all residents out of the roughly 770-bed facility–a procedure that was paused last year after it turned deadly. State enforcement actions late last month against the public facility, which is owned and operated by the San Francisco Department of Public Health, revealed new details about the risks to patients who were moved out of Laguna Honda last year as the facility rushed to comply with regulators’ requirements. 

Last year, for example, a 68-year-old woman was transferred to a facility with a known COVID outbreak, where she was diagnosed with the virus and died within two weeks. In another incident, a 79-year-old man with advanced dementia, who had lived at Laguna Honda for 19 years, started eating less after his transfer to another facility and died within 10 days, the regulatory reports show. The man was previously known to be at risk for relocation-related trauma. 

Twelve of the 57 Laguna Honda residents who were transferred or discharged last year–or 21%–died within weeks or months of leaving the facility, according to a statement from Laguna Honda. 

The regulatory predicament at the 157-year-old facility is out of proportion to the violations that sparked the shutdown plan, many resident advocates and nursing-home experts say–and a resumption of the resident-transfer process, they say, will likely lead to more deaths. 

Laguna Honda reported two non-fatal overdoses to regulators in 2021, triggering a series of inspections that found regulatory violations including cigarette lighters and drug paraphernalia on campus and infection prevention problems, according to the San Francisco city attorney’s office. Although the facility worked to correct the issues, the Centers for Medicare and Medicaid Services (CMS)—the federal regulator that oversees nursing homes–terminated Laguna Honda’s participation in Medicare and Medicaid in April 2022. Such a step is “a radical intervention” rarely used by CMS, said Tony Chicotel, senior staff attorney at nonprofit advocacy group California Advocates for Nursing Home Reform. Yet the number of regulatory violations at Laguna Honda, he said, were fairly typical for a facility of its size.  

The facility’s federal funding was set to be cut off in mid-September 2022, giving Laguna Honda just a few months to transfer hundreds of residents. After some transferred residents died, regulators agreed to pause the transfers. And after the city sued regulators in an effort to avoid the forced shutdown, it reached a settlement allowing Laguna Honda to continue receiving Medicare and Medicaid payments through mid-November 2023 and continuing the pause on resident transfers until Feb. 2 of this year, with an option to extend the pause beyond that date.

“Laguna Honda strongly advocated against these transfers,” the facility said in a statement. “We warned CMS that the four-month deadline to transfer nearly 700 residents to other facilities was entirely insufficient given the complex nature of our resident population and the lack of available beds” at nursing homes in the region and state, the facility said. The citations issued late last year by the California Department of Public Health related to the resident transfers, the facility said, were the lowest level issued under state law, and the facility has filed a notice of appeal while it evaluates the allegations. “CMS and CDPH placed Laguna Honda under an impossibly short deadline to transfer or discharge residents, and that deadline has a direct relationship to the events described in the citations,” the facility said in the statement. 

CMS said in a statement to MarketWatch that it is “committed to working with state and local officials to make sure that the residents of Laguna Honda have a safe environment where they can receive quality care.” The agency has reviewed the findings of the resident-transfer investigations and “continues to work with the state to monitor the conditions at the facility and assess its compliance” with the settlement agreement, CMS said.

By law, any nursing home that does not achieve substantial compliance with federal requirements within six months must be terminated from Medicare and Medicaid participation, CMS said. Laguna Honda’s participation was terminated after “a long history of non-compliance with our health and safety standards,” including compliance problems that hit the six-month mark, CMS said. The agency said it “also relied on its discretionary authority” to terminate the participation of non-compliant facilities.

CDPH did not respond to requests for comment. 

Although Laguna Honda was founded in the 1860s to care for Gold Rush pioneers, it’s not a crumbling relic, nursing-home experts say. The nursing home now spans several LEED-certified buildings, built in 2010. It has “huge, modern, well-ventilated rooms,” said Dr. Teresa Palmer, a former attending physician at the facility. 

With the pause on resident transfers set to end on Feb. 2, Palmer, along with family members of current and former residents, advocates, and city and facility officials are calling on CMS to ensure that more residents aren’t forced out of Laguna Honda after that date. Laguna Honda has asked CMS to extend the pause on transfers, CEO Roland Pickens said at a San Francisco Health Commission meeting Tuesday. 

In a letter to U.S. Department of Health and Human Services attorneys dated Jan. 13, San Francisco city attorney David Chiu wrote that Laguna Honda is asking CMS to continue the pause on transfers and discharges until at least May 30, 2023, with a possible extension beyond that date based on the facility’s progress toward Medicare and Medicaid recertification. “Transfers should not resume now given the potential harm” to residents–an unnecessary harm, given the facility’s “progress toward recertification,” Chiu wrote. The letter requested a response by Jan. 27. The city attorney’s office has not yet received an official response, a spokesperson said.  

Restarting resident transfers “sounds egregiously irresponsible,” given the risks highlighted in regulators’ December citations regarding last year’s resident transfers, said Joseph Urban, whose mother-in-law lived at Laguna Honda for about four years before passing away last fall. Regulators are now “fully aware of the consequences of turning the program back on,” he said. 

Former San Francisco city attorney Louise Renne said she plans in the coming weeks to amend a class-action complaint she filed last year on behalf of Laguna Honda residents, seeking to stop the shutdown plan and patient transfers. Federal regulators responded in a court filing that “Laguna Honda has an extensive history of noncompliance with program requirements” and that the court lacked jurisdiction over the Medicare-related claims. A federal judge in the Northern District of California agreed that the court lacked jurisdiction and denied the class-action certification in November. 

Often, facilities with a track record of serious regulatory violations are placed in CMS’s “special focus facility” program, which involves regular inspections of all health and safety requirements. But Laguna Honda is not a current participant or candidate for the program, according to the latest special-focus list released by CMS. Regulators “could have done all kinds of sanctions before they decertified” the facility, said Charlene Harrington, professor emerita at the University of California San Francisco. 

CMS said in the statement to MarketWatch that the special focus program is separate from the authority to terminate facilities’ participation in Medicare and Medicaid, and the requirement to terminate any nursing home that isn’t compliant within six months exists regardless of whether a facility is in the special focus program.

If the resident-transfer process resumes in February, Chicotel, the California Advocates for Nursing Home Reform attorney, said he’ll do all he can to advise any residents who wish to remain at the facility to simply stay put. “We know now that some of the residents will die when they get moved. They’ll die sooner than they otherwise would have,” he said. “And I can’t sit by and let that happen.”