The Supreme Court has announced that it will consider a case next term that has the potential to upend several decades of jurisprudence involving the Medicaid program. It involves a complicated area of the law, and in writing about this topic in the past, we have described the developments in this area of the law as a “saga.” In granting review in the case of Health and Hospital Corporation of Marion County v. Talevski, 6 F.4th 713 (7th Cir. 2021), the Supreme Court may have signaled that it intends to clarify this unsettled area of the law, and thus this “saga,” once and for all.
In 1987, Congress enacted the Federal Nursing Home Reform Act (FNHRA) out of concern that federally-funded nursing facilities were providing poor quality of care to nursing home residents. Social Security Act section 1919, 42 U.S.C. 1396r. In order to impose the requirements of the new law on nursing home operators, Congress amended both the Medicare and the Medicaid statutes and imposed a series of obligations on these facilities. For example, nursing homes are required to guarantee a free choice of physician to their residents. A resident has a right to privacy and confidentiality, and to be free of restraints.
State Medicaid plans also face an obligation to ensure that nursing homes receiving Medicaid payments by the state plan are in compliance with the FNHRA. Specifically, section 1902(a)(28) of the Social Security Act requires that a state plan for medical assistance must ensure that nursing homes receiving payments under the state Medicaid plan “satisfy all requirements” of the FNHRA. This is just one in a long list of requirements with which State Medicaid agencies are required, as a condition of receiving the federal share of the cost of providing Medicaid in the state, to comply.
States must remain in compliance with all the requirements of section 1902. For example, states must make medical assistance available “with reasonable promptness.” Social Security Act § 1902(a)(8). States must “provide for making medical assistance available” to all who qualify. Social Security Act § 1902(a)(10). States must assure that Medicaid beneficiaries have a free choice of providers. Social Security Act § 1902(a)(23). And, as we explained above, states must assure compliance with the FNHRA.
As we have described in the past, a question arises when a state arguably violates a requirement of section 1902: what right does an aggrieved beneficiary or health care provider have to challenge the state’s violation of the statute? Or, as allegedly happened in the Talevski case, what happens when a state-run nursing home allegedly violates the requirements of the FNHRA? Can the person who was harmed by the violation sue the state (or the state-run facility) in federal court?
In 1990, the Supreme Court answered this question in the affirmative. In Wilder v. Virginia Hospital Association, 496 U.S. 498 (1990), the Supreme Court held that if a health care provider wanted to challenge a state Medicaid plan’s purported violation of a provision of section 1902 that, at the time, required Medicaid payments to be “reasonable and adequate to meet the costs which must be incurred” by an efficiently-run health care institution, it could do so using the federal civil rights statute: section 1983 of title 42 of the United States Code. Section 1983was enacted in the aftermath of the Civil War and was designed to secure the rights of former slaves from interference from state officials. Under the statute, a state official, acting under color of state law, cannot deprive an individual present in the state of a “right, privilege or immunity” granted by the Constitution or of a law enacted under the authority of the Constitution. In holding that 42 U.S.C. 1983 could be used to enforce the requirements of the Medicaid program in the federal court system, the Supreme Court affirmed similar decisions by the federal courts dating back to the very early days of the 1960s-era Great Society programs.
Over the past 30 years, however, the Supreme Court has gradually chipped away at the central holding of the Wilder decision. But at the same time, the Supreme Court has not overruled the Wilder decision, despite being presented with multiple opportunities to do so. The Talevski case may present that opportunity.
Facts of the case
Mr. Gorgi Talevski was a resident of Valparaiso Care and Rehabilitation in Indiana. Mr. Talevski had been diagnosed with dementia and could no longer live at home. According to the complaint filed in the lawsuit, the nursing home dispensed psychotropic medications to Mr. Talevski that exacerbated his dementia. Also, according to the complaint, the facility transferred Mr. Talevski to another nursing home against his and his family’s wishes.
If both these allegations were shown to be correct at a trial, they are possibly a violation of the FNHRA. Section 1919(c)(1)(A)(ii) of the Social Security Act protects the right of a nursing home resident to be free of chemical restraints used for the purposes of discipline or convenience, and section 1919(c)(2)(A) of the Act protects the right of a nursing home resident to not be transferred or discharged unless the nursing home complies with the requirements of the statute. And so, the question for the Court is whether Mr. Talevski’s wife, who filed the lawsuit on his behalf, can have her claims heard in federal court using the federal civil rights statute as her basis to do so.
The district court in Indiana held that the complaint could not be heard in federal court, on the theory that the provisions of the FNHRA do not confer a private right of action to an individual nursing home resident. In the district court’s view, the federal civil rights statute could not be used as a means for the federal courts to hear the case in light of the chipping away of the Wilder decision that has occurred over the past three decades.
The United States Court of Appeals for the Seventh Circuit overturned the district court’s decision. According to the Seventh Circuit, notwithstanding the weakening of the Wilder decision over the years, federal courts have a clear basis to hear Mr. Talevski’s lawsuit. In so holding, the Seventh Circuit followed similar decisions in other appellate courts.
Heading to the Supreme Court
The Supreme Court has agreed to hear the nursing home’s appeal of the Seventh Circuit’s decision. Other decisions pending in other appellate courts have also presented the Supreme Court with the opportunity to clarify, once and for all, whether the Wilder decision is still good law; in fact, the State of South Carolina – taking note of the grant of review in the Talevski decision – has asked the Supreme Court to review an adverse decision involving its Medicaid program from the United States Court of Appeals for the Fourth Circuit. So: what might we expect?
As we said above, over the past three decades, the Supreme Court has significantly curtailed the Wilder decision. For one thing, the courts limit the use of section 1983 to challenging a state official’s action that has deprived an individual of a clear and unambiguous right granted under federal law. In a case called Blessing v. Freestone, 520 U.S. 569 (1997), decided seven years after Wilder, the Supreme Court created a three-part test to assess whether a private right of action using the civil rights statute could be heard in federal court:
- Did Congress intend that the provision in question benefit the plaintiff?
- Is the right so “vague or amorphous” such that the federal courts cannot competently apply the right?
- Does the statute impose a binding obligation on the state?
And not only that – this three-part test presupposes that Congress has created a federal right for the plaintiff in the first place; it is not enough that the plaintiff is just alleging a violation of federal law. In other words, if all that Mr. Talevski is alleging is that the state-run nursing home violated the FNHRA, he’s out of luck. He will need to show that they deprived him of a clear and unambiguous right that was created to benefit him (and similarly-situated individuals), that is not “vague or amorphous,” and that is created based on a clearly imposed obligation on the state.
The problem facing many plaintiffs challenging putative violations of the Medicaid Act is that many of the provisions of the Medicaid law are not clear and unambiguous. For example, as we have said above, Medicaid benefits must be made available “with reasonable promptness.” But what is “reasonable”? What is “prompt”? Another provision of the Medicaid law requires that payment rates be “sufficient to enlist enough providers” to make care available to Medicaid beneficiaries. But what is “sufficient”? What is “enough”? Over the past 20 years, lower courts have found these and other provisions of the Medicaid Act unenforceable.
So where does this leave Mr. Talevski if the Supreme Court overrules Wilder? Where does it leave a putative Medicaid beneficiary whose claim for medical assistance is not adjudicated “with reasonable promptness”? Where does this leave a disproportionate share hospital whose payment rates have been cut so that they are no longer “sufficient to enlist enough providers”? Unfortunately, the options are not great – but they are not non-existent.
One option would be to challenge the recalcitrant state official in state court. We recently wrote about a decision in the Arkansas Appeals Court where this strategy seemed to work to secure access to a rare drug for an Arkansas Medicaid beneficiary. But of course, the whole reason that the federal civil rights statute was enacted in the first place is that state officials and state courts cannot always be counted on to ensure access to federally-created rights.
Another option would be to bring a challenge against CMS for approving a non-compliant state Medicaid plan. Soon-to-be-retiring Justice Breyer suggested this option in a case called Douglas v. Independent Living Centers of Southern California, 565 U.S. 1010 (2012) a decade ago. Finally, an aggrieved beneficiary or provider can complain to CMS.
All of these options have their drawbacks. Depending on how the Supreme Court rules in the Talevski case in its next term, we may need to assess whether they are adequate.