Why a Nursing Home Case Heard by SCOTUS Could Have Sweeping Implications 

Larger implications surrounding a nursing home case to be heard by the U.S. Supreme Court on Nov. 8 has both operators and civil rights activists anxiously awaiting a decision.

For SNF operators, the case could determine whether state-owned nursing homes are shielded from federal lawsuits.

Far-reaching questions regarding Medicaid beneficiaries and their rights in federal court are on the table too. In other words, a ruling in favor of state-owned nursing homes could make it harder for Medicaid beneficiaries to seek relief in federal court when they believe their rights are being violated by state officials.

While the case only examines Medicaid beneficiaries, other federal programs could come under the same scrutiny. Paul Garcia, partner at Hooper Lundy & Bookman PC, said the case opens up monumental limitations when it comes to people’s access to courts.

If people don’t have a private right of action to federal court, that could have “enormous national impact” across multiple industries, Garcia told Skilled Nursing News.

A ruling in favor of the plaintiff residents – where state-owned nursing homes aren’t shielded from federal lawsuits – means more liability for such owners, according to Lori Proctor, a partner at Wilson Elser Moskowitz Edelman & Dicker LLP.

With more potential lawsuits coming down the pike – in the event the case goes that way – government entities may be less likely to continue or open publicly-run nursing homes in future, she said.

About 6.5% of the nation’s 15,000 nursing homes are owned by state, county or municipal governments, according to data collected by the Centers for Medicare & Medicaid Services (CMS).

The Talevski case and questions it raises

The lawsuit alleges that Indiana-based Valparaiso Care & Rehabilitation violated an array of resident “rights” under the Federal Nursing Home Reform Act and the Civil Rights Act of 1871 provided a venue to enforce those rights.

Specifically, Gorgi 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.

Marion County and operator American Senior Communities petitioned the Supreme Court to take a second look at the lower court’s decision; SCOTUS decided to review the case in May.

Looking ahead to Tuesday, SCOTUS is considering one broad and one narrow question in this case, according to Garcia. The first is whether the courts should reexamine its prior holding that spending clause legislation can give rise to a private right of action under Section 1983, a provision of the Civil Rights Act of 1871.

Five decades of judicial precedent could be overturned if the court does reexamine spending clause legislation which could undermind congressional intent that people can use federal courts to enforce rights under federal programs.

If enforcement is left up to Health & Human Services (HHS) instead, legal experts say millions of Americans would be at risk – limited capacity and funding would lead to inadequate federal enforcement.

The second question is more nuanced, Garcia said, and that is whether provisions of the Federal Nursing Home Reform Act create a hybrid right of action under Section 1983. In other words, state-owned nursing homes may be subject to more liability than private entities.

Mark Reagan, a managing shareholder at Hooper Lundy & Bookman who has represented the American Health Care Association (AHCA) and the California Association of Health Facilities (CAHF) in the past, said the court could dismiss the case based on the second question.

Congress didn’t intend Medicare or Medicaid certification requirements to include a private right of action to federal court, according to Reagan.

More liability, less incentive for publicly-owned SNFs

A ruling in favor of the Talevski family could open up publicly-owned facilities to legal fees. Publicly-owned facility budgets that are usually protected from such uses could be forced to pay for plaintiffs’ lawyers representing residents, according to Proctor.

“It’s a very interesting little slice of law that is being discussed – it’s the only area where there is a potential that a publicly-owned facility would be exposed to more liability than privately-owned facilities,” said Proctor.

In all other circumstances, such laws are generally geared to protect a governmental agency that is providing a public service from liability, while leaving privately-owned entities exposed, she said.

AHCA, along with statewide chapters like the Indiana Health Care Association (IHCA), jointly filed amicus briefs calling out the 7th Circuit – namely that the court erred in ruling that Congress created a federal cause of action for plaintiffs under the Federal Nursing Home Reform Act.

“Long story short, your McDonald’s of the world, if I could use a core restaurant analogy, is not subject to [Section 1983] litigation, but Cook County, Illinois, where McDonald’s at least used to be based, would be subject to that litigation,” said James Segroves, partner at Reed Smith LLP and an attorney on behalf of the associations.

The 7th Circuit ruling creates an imbalance where only publicly operated nursing facilities would be subject to such claims, IHCA said in a statement. IHCA and AHCA want the high court to clarify that there is not a federal cause of action given existing federal and state regulation greenlighting state courts as appropriate venues for such litigation.

“Residents currently have access to recourse through the state’s regulatory and legal framework … this lawsuit in no way strips their rights or jeopardizes their ability to access the courts to enforce state compliance,” IHCA said in a statement.

LeadingAge Vice President of Legal Affairs Jon Lips echoed the association’s sentiments. A ruling that upholds the right to bring a private action against government-owned nursing homes under Section 1983 might be a “deterrent or disincentive” public owners from owning facilities.

Such a ruling could also bring an imbalance between nursing home residents in public and privately-run facilities – those living in governmentally-owned or operated nursing homes would have rights not available to residents living in privately-owned facilities.

“Residents who live in a governmentally-operated nursing home could seek to enforce certain requirements and obtain remedies (i.e., damages) through a private right of action, while those living in private nursing homes could not,” Lips said in a statement to SNN.

A question of precedent and argument tactics

Maame Gyamfi, senior attorney for the AARP Foundation, said in an email that precedent is on the side of Medicaid recipients if the court reexamines spending legislation. Congress has used its spending clause power to pass many laws that give rights to people who participate in federal public programs, including the Medicaid and supplemental nutrition assistance programs.

A decision siding with Marion County would reject “years of precedent” and, in turn, weaken the ability of people to protect themselves and hold violators accountable, according to Gyamfi.

She added that the broad nature of the question before the court – whether people can bring lawsuits before Section 1983 to enforce their federal civil rights – is also at risk.

“All nursing facility residents should be able to enforce their right to be free from chemical restraints and illegal discharges,” she said. “When nursing facilities violate these rights, the residents need to be able to seek the protection of the courts.”

While precedent goes back almost 50 years, Garcia pointed out that the Roberts Court has been a little more willing to overturn prior rulings, especially when they don’t agree with the underlying premise.

“Generally they wouldn’t overrule precedent, or if they did, it would be very narrow … but the current construction of the Roberts Court seems more willing to make deep decisions that have national implications,” noted Garcia, referring to the recent decision to overturn Roe v. Wade.

Still, legal experts and the Department of Justice (DOJ) in its amicus brief expect SCOTUS to rule in favor of Marion County; the government entity has a stronger argument in determining whether provisions of the Federal Nursing Home Reform Act create a hybrid right of action.

“Regardless of the answer to question number one, the underlying Nursing Home Reform Act was not rights producing and therefore is not privately actionable against a public entity,” added Reagan.

The case is ultimately about Congressional intent, Segroves said; it doesn’t make much sense that Congress would have created this kind of “disparate litigation scheme.”

The skilled nursing industry and those that more broadly participate in the Medicare and Medicaid programs would be best served by the Supreme Court ruling on that narrower point, he said.