Administrative Measures Against Care Service Providers: Ensuring Healthy Business Continuity through Enhanced Compliance

As Japan faces an aging population and declining birthrate, the demand for elderly care services is increasing year by year. Care service providers are required to operate appropriately under the Japanese Long-Term Care Insurance Act. If they violate this act, they risk administrative penalties that not only jeopardize the continuity of their care business but also significantly impact the lives of the users and staff of care facilities and services.

This article will explain the types and contents of administrative penalties for care service providers in Japan. Furthermore, it will provide detailed guidance on how to comply with legal regulations to avoid such penalties.

Overview of Administrative Actions in the Japanese Nursing Care Business

In the operation of nursing care businesses, if there is suspicion of improper management, the business may receive guidance or administrative actions from the authorities. This article explains the content of administrative actions and the difference between them and administrative guidance.

What Are Administrative Actions for Nursing Care Facilities?

Administrative actions for nursing care facilities are legal measures imposed by administrative agencies on care service providers based on the provisions of the Japanese Long-Term Care Insurance Act. These actions aim to ensure the quality of care services and protect the rights of users.

For nursing care providers, administrative actions include the revocation or suspension of their designation under the Long-Term Care Insurance Act.

The Difference Between Administrative Guidance and Administrative Actions

Administrative guidance refers to advice and guidance provided by administrative agencies to businesses when there is suspicion of legal violations. On the other hand, administrative actions have legal binding force and impose specific obligations on businesses or restrict their rights.

Administrative guidance is defined under Article 32 and Article 32-2 of the Administrative Procedure Act as follows:

In providing administrative guidance, those involved must take care not to deviate from the scope of the duties or jurisdiction of the relevant administrative agency and must be aware that the content of the guidance is realized solely through the voluntary cooperation of the other party.
2. Those involved in administrative guidance must not treat the other party unfavorably on the grounds that they did not comply with the guidance.

Source:e-Gov Law Search | Administrative Procedure Act

If improvements are not observed after receiving administrative guidance, there is a risk of receiving legally binding administrative actions. It is crucial for businesses that receive administrative guidance to promptly review and address the issues to avoid administrative actions.

Types and Details of Administrative Actions in Japan

Understanding the difference between administrative guidance and administrative actions, this section will delve into the specific types and details of administrative actions.

Revocation of Designation

The most severe administrative action for care service providers is the “Revocation of Designation.” Care facilities operate their businesses in accordance with the Long-Term Care Insurance Law, having been designated by administrative agencies. If this designation is revoked, the care facility can no longer receive care compensation and will be unable to continue its operations.

Furthermore, once an administrative action of designation revocation is received, the facility cannot obtain a new designation for five years from the date of revocation (Long-Term Care Insurance Law, Article 70, Paragraph 6). Additionally, if the entity is a corporation, its officers and facility managers are also ineligible to receive designation (the same article, Paragraph 6-2).

Suspension of Designation’s Effect

Similar to revocation, the suspension of a designation’s effect is an administrative action with coercive power over the operation of care services. However, unlike revocation, the suspension is only for a set period, and the actions taken may include stopping the acceptance of new users or reducing care compensation. The care business can continue during the suspension period.

Improvement Orders

An improvement order is an administrative action where an administrative agency mandates a care facility to make improvements based on legal provisions. Upon receiving an improvement order, the care facility is directed to submit an improvement report by a specified deadline and take corrective measures.

While an improvement order is the lightest of administrative actions, it carries legal binding force. Non-compliance can lead to heavier penalties such as suspension or revocation of designation. Improvement recommendations are similar to improvement orders, but they lack legal binding force as they are part of administrative guidance. However, they also require the submission of an improvement report, and non-compliance may result in an improvement order, which is an administrative action.

Main Violations Subject to Administrative Actions in Japan

The types of administrative actions with legal binding force in Japan include revocation of designation, suspension of designation, and orders for improvement. We will explain in detail the main violations that are subject to these three types of administrative actions.

Staffing Standard Violations

In the caregiving business, the necessary number of staff is specified for each type of service by designated standards. If a caregiving facility or business fails to secure and allocate the regulated number of staff, it constitutes a staffing standard violation and is subject to administrative action.

For example, if the capacity of a community-based day service (daycare) is ten or fewer people, at least one nursing or caregiving staff member must be assigned. Additionally, for home-visit care services, it is required to have at least 2.5 full-time equivalent qualified home-visit caregivers.

Operating with fewer staff than the staffing standards require or employing unqualified staff for business operations are acts that violate staffing standards and are subject to administrative action.

Operational Standard Violations

Operational standard violations refer to acts that breach the operational standards specified for each business, such as record-keeping and management methods.

For instance, violations include inadequacies in documents such as service plan records or failures to adequately explain and ensure understanding of the number and frequency of home-visit care services to users.

Fraudulent Claims for Care Compensation

Fraudulent claims for care compensation in caregiving businesses are also violations and subject to administrative action. If fraudulent claims are discovered, under the Japanese Long-Term Care Insurance Act (Article 22, Paragraph 3), the amount of the fraudulent claim must be returned, and an additional 40% of the repayment amount is collected as a surcharge.

Specific examples of fraudulent claims include:

• Fictitious billing, where services that were not actually provided are falsely claimed to have been provided
• Inflated billing, where the service provision time is exaggerated in the claim
• Claiming for additional requirements without meeting the staffing criteria, falsely indicating compliance

False Applications

Acts of providing false explanations or reports to administrative officials during the application for designation or during the audit for renewal are considered false applications and are subject to administrative action. False applications often involve concealing facts such as staffing standard violations or operational standard violations, despite being aware of them.

The Impact of Administrative Actions on Nursing Care Facilities in Japan

When a nursing care facility in Japan receives an administrative action due to violations, the impact extends not only to the business itself but also to its staff and clients. This article provides a detailed explanation of the consequences that arise when a facility is subject to such actions.

Effects on Business Continuity

If a nursing care facility is subject to an administrative action, the continuation of the care business can become challenging. In particular, the revocation of designation under the Japanese Long-Term Care Insurance Law means that the facility can no longer operate within the system and becomes ineligible to receive care compensation. Furthermore, the facility will not be able to obtain a new designation for five years from the date of revocation.

In the case of a suspension of designation, the facility will be unable to provide services for a certain period, significantly impacting the business. Even if it is an improvement order, the publication of the facility’s name can lead to negative repercussions for the business, a risk that cannot be denied.

Impact on Staff

A nursing care facility that has received an administrative action may find it difficult to continue employing its staff due to the effects on business continuity. Additionally, for managers, the public disclosure of the administrative action can impact their employment opportunities at other care facilities.

Impact on Clients

Beyond the impact on the care business and its staff, the clients of the facility are also significantly affected. If a facility’s designation is revoked due to an administrative action, insurance coverage is lost, and clients must bear the full cost of services, making payment difficult.

If clients struggle to pay and the facility can no longer provide care services, there is a risk that clients will not receive adequate services, potentially leading to a drastic change in their quality of life.

Strategies to Avoid Administrative Actions Against Care Facilities in Japan

To operate a care service business smoothly, it is crucial to avoid administrative actions at all costs. Here, we will explain the key points to prevent such actions.

Establishing a Compliance System

To avoid administrative actions, it is important to clearly define a compliance policy at the care facility and establish a system that emphasizes compliance throughout the organization. Compliance means that a company operates under a proper system while adhering to laws and social rules.

By centralizing rules and regulations based on compliance, you can clarify their content, enabling staff to take appropriate actions.

Thorough Staff Education

To prevent administrative actions, it is essential to enhance the awareness of compliance among all staff members. By regularly holding compliance training sessions, staff can raise their awareness of legal compliance and ethics, and acquire the correct knowledge and response skills.

Proper Record Management

In the continuous operation of a care service business, it is important to properly manage records of care services provided and documents that serve as the basis for claiming care compensation, ensuring they are always available for verification. By thoroughly implementing proper record management, you can prevent deficiencies in documentation and avoid violations due to negligence.

Strategies for Responding to Administrative Actions at Care Facilities in Japan

While avoiding administrative actions is essential, even with the measures discussed thus far, the risk of unforeseen negligence or unpredictable circumstances cannot be reduced to zero. If your care facility is suspected of a violation that could lead to administrative action, it is crucial to promptly implement the appropriate response strategies.

Executing the correct response at the right time is indispensable for the operation of a care business. Here, we will explain the response strategies for care facilities when a violation that may lead to administrative action is identified.

Consulting with a Lawyer

If a violation at your care facility is pointed out, consider promptly consulting with a lawyer knowledgeable in the Japanese Long-Term Care Insurance Act. The laws that form the basis of administrative actions can be complex and difficult to comprehend, and there are cases where procedures progress without a clear understanding of the reasons for the action.

Lawyers are legal professionals who can accurately identify the cause of the indicated administrative action and advise on the appropriate response. It is important to take the necessary measures and procedures at the right time, so we recommend consulting with a lawyer as soon as possible.

Developing and Implementing an Improvement Plan

Once the content and cause of the violation subject to administrative action are clear, it is necessary to develop and implement an improvement plan to address the issues. By creating a specific improvement plan, reporting it to the administrative authorities, and ensuring its implementation, you can eliminate the risk of unexpected adverse actions.

Consulting with a lawyer can provide you with professional advice on the format and wording when creating improvement plan documents, and also make it easier to proceed smoothly with the submission process to the administrative agencies.

Establishing Measures to Prevent Recurrence

In conjunction with developing and implementing an improvement plan, it is also necessary to work on solving the root of the problem to prevent recurrence. To prevent the violation from happening again, it is very important to establish a compliance system and enhance the awareness and ethical standards of all staff members.

By consulting with a lawyer, you can receive expert advice on establishing a compliance system and framework. To prevent recurrence, the opinions and advice of specialists are invaluable.

Conclusion: Ensuring Sound Operation of Care Services with the Support of Attorneys

Care services in Japan should be operated based on the Japanese Long-Term Care Insurance Act, and it is crucial to continue a sound business operation without receiving administrative sanctions. Enhancing the compliance system and ethical awareness across the organization is essential in providing care services on a regular basis.

Being well-informed about the types and contents of administrative sanctions, and having prepared compliance systems and response strategies for administrative guidance in advance, can help avoid administrative sanctions and continue operating a sound care service business. Furthermore, if any suspected violations are pointed out, it is possible to take appropriate action promptly.

Guidance on Measures Provided by Our Firm

The caregiving industry in Japan is governed by a complex web of laws, including the Long-Term Care Insurance Act, the Elderly Welfare Act, and the Companies Act. Monolith Law Office serves as legal counsel for the National Association of Caregiving Service Providers and caregiving service providers across various prefectures, possessing extensive know-how related to laws concerning caregiving businesses.

Areas of practice at Monolith Law Office: Corporate Legal Affairs for IT & Startups