August 2, 2019

The United States Court of Appeals for the Ninth Circuit (“Federal Appellate Court”) stated in its opinion filed on July 18, 2019, “The Medicaid Act requires that states participating in Medicaid “provide for a fair mechanism . . . for hearing appeals on transfers and discharges of residents” of nursing homes covered by Medicaid. 42 U.S.C. § 1396r(e)(3). The question in this case is whether nursing home residents may challenge a state’s violation of this statutory requirement under 42 U.S.C. § 1983. We hold that they may.”

The Federal Nursing Home Reform Amendments (FNHRA) imposes various requirements as a prerequisite for nursing homes to be reimbursed under Medicaid (42 U.S.C. § 1396r). Among FNHRA’s provisions are standards for residents’ “[t]ransfer and discharge rights.” Those standards require that “[a] nursing facility must permit each resident to remain in the facility and must not transfer or discharge the resident from the facility unless” one of six circumstances applies. If a nursing home does seek to transfer or discharge a resident, it must first provide notice to the resident which must, among other required information, inform the resident of her “right to appeal the transfer or discharge under the State process established under subsection (e)(3) of this section.”

Subsection (e)(3) states, “The State, for transfers and discharges from nursing facilities effected on or after October 1, 1989, must provide for a fair mechanism, meeting the guidelines established under subsection (f)(3) of this section, for hearing appeals on transfers and discharges of residents of such facilities; but the failure of the Secretary to establish such guidelines under such subsection shall not relieve any State of its responsibility under this paragraph.”

California Law

California’s implementation of Medicaid is known as the California Medical Assistance Program, or Medi-Cal. The Medi-Cal program provides for appeals on transfer and discharge decisions, as required by FNHRA. Nursing home residents who believe they are being or have been erroneously transferred or discharged may appeal the nursing home’s decision to the California Department of Health Care Services (DHCS). In addition, if the resident “has been hospitalized . . . and asserts his or her rights to readmission . . . and the facility refuses to readmit him or her, the resident may appeal the facility’s refusal.” “The refusal . . . shall be treated as if it were an involuntary transfer under federal law, and the rights and procedures that apply to appeals of transfers and discharges of nursing facility residents shall apply to the resident’s appeal under this subdivision.” A DHCS hearing decision may be appealed by either party via a writ of administrative mandamus to a state superior court; after a successful appeal, the superior court may order DHCS to vacate the hearing decision. There is, however, no provision allowing the superior court in the mandamus proceeding to order compliance with the decision.

California law also provides a private right of action for “[a] current or former resident or patient of a skilled nursing facility . . . against the licensee of a facility who violates any rights of the resident or patient as set forth in the Patients Bill of Rights . . . or any other right provided for by federal or state law or regulation.” Cal. Health & Safety Code § 1430(b).

The Plaintiffs’ Claims

Each of the plaintiffs alleged that he was subject to “dumping,” the practice of sending a resident to a hospital for medical or mental health treatment but refusing to readmit the resident after discharge from the hospital. The plaintiffs maintain that because Medi-Cal provides less compensation than Medicare or private insurance, nursing homes have a strong financial incentive to engage in dumping if Medi-Cal is paying for the resident’s stay. “Dumping,” the plaintiffs allege, is “one of the biggest problems” nursing home residents in California face.

Using the appeals process established by the State, all three plaintiffs challenged their respective nursing homes’ refusal to readmit them after their hospitalization, and all three prevailed. None, however, has been readmitted. Each plaintiff’s respective nursing home continues to refuse readmission, and, the plaintiffs allege, both DHCS and the California Department of Public Health (CDPH) have taken the position that the agencies are not obligated to enforce decisions resulting from the appeals process.

The plaintiffs sought declaratory and injunctive relief. California moved to dismiss the complaint, arguing that the FNHRA provision was not enforceable under § 1983. The district court agreed, concluding that the residents “have no private federal right enforceable through § 1983.” The plaintiffs appealed.

Federal Appellate Court Opinion

The Federal Appellate Court stated that FNHRA expressly states that the appeals process, mandated by FNHRA as a condition of federal funding, provides residents with a right to use that process, as well as notice of that right: “the district court’s underlying reason for its conclusion—that a statute cannot create rights when phrased as a directive to the state—is wrong.”

The Federal Appellate Court stated: “We hold that, in delineating the requirements that states provide for an appeals process, Congress created a right benefiting nursing home residents, including the Residents here. The district court erred in concluding otherwise … The right to an appeal under FNHRA, we hold, includes within it provision for some state-provided process capable of providing relief.”

“Our conclusion that the right to appeal includes the ability to obtain relief accords with the overall purpose of FNHRA. FNHRA was enacted to address a “broad consensus that government regulation of nursing homes, as it now functions, is not satisfactory because it allows too many marginal or substandard nursing homes to continue in operation … In light of this focus on inadequate nursing homes, Congress could not have intended FNHRA to create meaningless show trials that allow nursing homes to persist in improper transfers and discharges.”

“FNHRA directs states to “establish guidelines for minimum standards which State appeals processes . . . must meet,” 42 U.S.C. § 1396r(f)(3), but also provides that “the failure of the Secretary to establish . . . guidelines . . . shall not relieve any State of its responsibility under this paragraph,” Id. § 1396r(e)(3). Given the statutory language and structure, that “responsibility” includes provision for redressing an invalid transfer or discharge decision.” “We hold … that FNHRA’s recognition of an individual right to “a fair mechanism . . . for hearing appeals on transfers and discharges,” 42 U.S.C. § 1396r(e)(3), includes within it the opportunity for redress.”

The Federal Appellate Court held: “we have not been presented with any indication, express or implied, that Congress intended to foreclose a § 1983 remedy for enforcement of the right to an appeal under FNHRA, a right that includes the opportunity for some form of state enforcement of the result of the appeal.”

Nonetheless, the Federal Appellate Court stated: “Although we conclude that FNHRA provides the Residents with a statutory right to an appeal—a right that includes state implementation of the decision on appeal—we do not believe that the Residents’ present complaint plausibly alleges a violation of that right … [h]ere, the Residents’ complaint alleges only that state agencies—namely, DHCS and CDPH—refuse to enforce favorable hearing decisions. The complaint specifically states that FNHRA’s right to an appeal is violated because “there is no agency in California that enforces DHCS readmission orders” and that “the State has not provided residents with their right to an administrative procedure that provides for prompt readmission” after a favorable hearing decision. But we do not find in § 1396r(e)(3) the requirement that California implement hearing decisions directly through a state agency. We do not address what specific forms of redress would be necessary to comply with this provision … In short, the complaint as it currently exists does not allege that the State provides no mechanism whatsoever to enforce each administrative appeal order regarding nursing home transfers and discharges. Because the Residents have not so alleged, their complaint does not provide “enough facts to state a claim to relief that is plausible on its face” … The Residents’ failure to state a claim can perhaps be cured by repleading. We therefore vacate the district court’s dismissal of the Residents’ complaint and remand for further proceedings consistent with this opinion.”

Anderson v. Mark Ghaly, Secretary of California Department of Health and Human Service, Case: 16-16193.

If you or a loved one suffered injuries (or worse) while a resident of a nursing home in California or in another U.S. state due to nursing home neglect, nursing home negligence, nursing home abuse, nursing home understaffing, or the nursing home failing to properly care for a vulnerable adult, you should promptly find a nursing home claim lawyer in your state who may investigate your nursing home claim for you and file a nursing home claim on your behalf or behalf of your loved one, if appropriate.

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