[UPDATED]: Supreme Court Upholds Resident Right to Sue Publicly Owned SNFs

In a 7-2 ruling, the Supreme Court on Thursday morning ruled that nursing home residents and their families can sue publicly-owned nursing home facilities under the Federal Nursing Home Reform Act.

The case presented the question of whether Medicaid beneficiaries can seek relief in federal court when they believe their rights are being violated by state officials, or whether the enforcement of state-level compliance of federal Medicaid rules should be left solely to the scrutiny of CMS.

The Court upheld a 7th Circuit ruling against Health and Hospital Corporation of Marion County in a case that involved the treatment and death of former nursing home resident Gorgi Talevski, whose family filed a lawsuit in Indiana federal court in 2019. After the ruling, HHC petitioned the Supreme Court.

Legal experts who spoke to Skilled Nursing News said that while this ruling is no doubt a win for individual federal rights, the impact might not be widespread, barring certain states.

The Health and Hospital Corporation case

HHC said that it got involved in the case because it has a fiduciary duty to focus its scarce public resources on the health care needs of historically underserved populations, with the goal of trying to understand from the Supreme Court the status of the governing law on the availability of federal claims regarding its nursing home operations. 

“With the Court’s definitive answer today that Medicaid-supported nursing home residents have both administrative and federal court remedies for alleged violations, HHC will continue to work to manage those operations safely and effectively and analyze the impact of the decision on those public resources,” an HHC spokesperson told SNN. 

Ramifications of the ruling

Legal experts told SNN that the decision will now expose publicly-owned skilled nursing operators to litigation – and the costs for them may be huge.

“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 LL, said.

James Segroves, partner at Reed Smith and the American Health Care Association’s (AHCA) legal counsel, said that the ruling is disheartening to the hundreds of government-owned and operated nursing homes that are serving our nation’s seniors.

“We believe, as did the federal government, that Congress never intended to subject government-run facilities exclusively to additional legal claims for violating Medicare or Medicaid requirements of participation,” he said.

He added that publicly-owned nursing homes may face additional suits seeking millions of dollars in damages.

“Residents deserve access to recourse, which they have through current state and federal court systems,” he said. “At a time when the profession is already chronically underfunded and struggling to recover from the pandemic, subjecting these and only these government-run nursing homes to additional damages may threaten their ability to continue serving their communities.”

Perspectives on the ruling

The Constitutional Accountability Center (CAC) filed over 100 amicus briefs in the Supreme Court in favor of the Tavelski family.

CAC’s Appellate Counsel Miriam Becker-Cohen said that the court’s decision harnesses the text and history of Section 1983 of the Constitution, which enforces every right that Congress validly and unambiguously creates.

Section 1983, a Reconstruction-era statute, creates an express cause of action for the deprivation of any rights secured by the Constitution and laws of the United States.

“By harnessing the text and history of Section 1983, Justice Jackson rejected once and for all the argument—which has been percolating in concurring and dissenting opinions on the Court for decades,” she said, adding that because the Federal Nursing Reform Act was passed pursuant to Congress’s Spending Clause power, the statute is incapable of conferring enforceable rights.

“As a result, the Medicaid Act and countless other rights-creating federal statutes remain enforceable in private lawsuits,” she said. “We are thrilled with this result—as should be everyone who cares about the ability of individuals to access the courts to vindicate federal rights.”

Randy Fearnow, a long-term care attorney with Quarles & Brady, said that the ruling will have a disproportionate impact on the state of Indiana, which has the highest number of government-owned nursing homes.

For some decades now, Indiana also has a mature statutory scheme for the adjudication of medical malpractice claims. The decision by the Supreme Court will have a disproportionate impact on Indiana because of that – it’ll allow plaintiffs to circumvent the existing statutory scheme. Their incentive … is that they will also be able to recover the attorney fees that they incurred in the claim, which they currently cannot do under state law.”

Fearnow said the impact across the rest of the country will be pretty minor.

“The vast majority of government-owned nursing homes are in Indiana,” he said. “There’s only a very small percentage across the rest of the country.”

Other legal experts who spoke to SNN agreed on the minimal bearings of the Supreme Court ruling, saying that it will only apply to facilities that are owned by a county, state or the Veterans Administration, which all together represent a small slice of the whole nursing home industry.

Jason Lundy, a partner at Ice Miller’s Health Care Group, said: “The big change today is that these publicly-owned facilities are now being put in the same world that the private sector and the not-for-profits have been in. It’s not going to make the sky fall on them. It’s going to be an adjustment. It’s important but it’s not changing the world as we know it.”