A decision by the nation’s highest court to review a case challenging whether state-owned nursing homes are shielded from federal lawsuits filed by residents has the potential to deal yet another blow to the nursing home industry.
The U.S. Supreme Court on Wednesday granted a petition for a writ of certiorari for the case, Health and Hospital Corporation of Marion County, et al., v. Gorgi Talevski, by his next friend Ivank Talevski.
The case involves former nursing home resident Gorgi Talevski, whose family filed a lawsuit in Indiana federal court in 2019.
The lawsuit alleged that the Valparaiso nursing home violated an array of resident “rights” under the Federal Nursing Home Reform Act, and the Civil Rights Act of 1871 provided him a venue to to enforce those rights, according to the petition.
Specifically, Talevski’s family argued that he was given psychotropic drugs to “chemically restrain” him. The family also contends that once the lawsuit was filed, he was moved to another facility about 50 miles away.
A judge for the U.S. District Court for the Northern District of Indiana dismissed the lawsuit in 2020 and Talevski appealed.
The 7th U.S. Circuit Court of Appeals reversed the federal judge’s decision, finding that two rights referenced in the case — to be free from certain chemical restraints and to remain in a facility without being transferred except in certain circumstances — were implied in the text of the Nursing Home Reform Act.
The Health & Hospital Corporation of Marion County in Indiana, which owns long-term care facility Valparaiso Care and Rehabilitation, and operator American Senior Communities LLC filed the petition asking the Supreme Court to take a second look at the lower court’s decision.
Health and Hospital Corp. of Marion County is the state’s largest nursing home owner, according to an IndyStar report, and more than 90% of the state’s nursing homes are owned by county hospitals.
Talevski’s family could have filed a medical malpractice lawsuit in state court, however, Indiana has one of the lowest monetary damage caps and malpractice claims have to go before a medical review panel of nurses or doctors that can sometimes takes years, IndyStar reporting notes.
Government owned nursing homes receive supplemental federal nursing home funds, often significantly higher payments than private-owned nursing homes.
An IndyStar investigation, however, reportedly found that those higher rates don’t necessarily translate to quality of care in some states.
A potential for increased legal exposure
While the Supreme Court’s decision to hear the case will not challenge the legality of the supplemental funding mechanism, it may dissuade health systems like Health and Hospital Corporation of Marion County from owning nursing homes in the future.
“It will make those companies that have not been subject to any liability here, because they’re state-owned, not willing to own these facilities because of the exposure that they will have,” Alan Schabes, a partner at Benesch Friedlander Coplan & Aronoff LLP told Skilled Nursing News.
In the sector overall, more than 3,000 skilled nursing facilities experienced a change in ownership between 2016 and 2021, according to data from the Centers for Medicare & Medicaid Services (CMS).
Of the 15,560 Medicare-participating SNFs in the nation, 1,007 — amounting to roughly 7.1% — are owned by a government entity, CMS data shows.
According to a Medicaid and CHIP Payment and Access Commission (MACPAC) review of Medicaid state plans in place as of July 2019, 25 states reported some type of supplemental payment to nursing facilities.
Total Medicaid spending on nursing facility supplemental payments amounted to $3.4 billion in fiscal year 2019, MACPAC noted in its November 2021 brief.
The MACPAC analysis also highlighted instances where privately owned nursing facilities have entered into arrangements with public hospitals to be classified as a government-owned facility for the purposes of receiving supplemental payments.
“CMS has applied greater scrutiny to these types of arrangements in recent years,” MACPAC noted.
Industry stakeholders weigh in
Even though the case began in a courthouse in Indiana, some of the industry’s biggest players have already weighed in.
The American Health Care Association and Indiana Health Care Association filed a joint amici curiae brief in January in support of the nursing home industry parties, arguing that the 7th Circuit’s decision “creates an imbalance where only publicly operated nursing facilities would be subject to such claims.”
The federal and state associations also contended that the potential lawsuits the federal appeals court’s decision would bring on, if it remained intact, would be “the last thing state and local governments need” while attempting to recover from the COVID-19 pandemic.
The brief also noted an increase in personal injury lawsuits filed by or on behalf of residents — including those involving the Public Readiness and Emergency Preparedness Act (PREP Act).
In a statement emailed to Skilled Nursing News, AHCA/NCAL said they were pleased to see SCOTUS take up the case on Monday and hoped the justices would clarify that state courts are the proper venue with respect to litigation.
Companies featured in this article:
American Senior Communities, Health and Hospital Corp. of Marion County
