A North Carolina skilled nursing facility will be allowed to pursue a case against the state’s Medicaid agency after it denied payment for residents who couldn’t pay their share of their bill after their Social Security checks were stolen.

Residents of Valley Nursing Center in Taylorsville, NC, were assigned a “patient monthly liability,” or a portion of their cost of care that had to be covered by their income. Some residents were unable to pay their monthly liability, likely due to their Social Security money being intercepted by a fraudulent “third party,” according to court documents.

The residents applied to North Carolina’s Department of Health and Human Services for an accommodation, but were ultimately denied. Valley Nursing Center challenged the state, seeking relief for the residents’ missed payments.

In an opinion released last week, the United States District Court for the Eastern District of North Carolina denied part of the health department’s motion to dismiss the case, allowing Valley Nursing Center’s request for declaratory and injunctive relief to proceed.

The case is unique in that it’s the first to recognize a skilled nursing provider’s right to pursue a claim against a state agency based on its assignment of Medicaid payments, plaintiff’s attorney Chadwick Bogar told Bloomberg Law.