Supreme Court

Nursing homes under county or state control could see an explosion of lawsuits following a Thursday US Supreme Court ruling that maintains the right of nursing home residents and their survivors to sue in federal court over key care provisions.

Health and Hospital Corp. v. Talevski revolved around the Federal Nursing Home Reform Act of 1987 and whether the oversight and regulatory elements of the Medicaid system preempted individuals from bringing private court actions to seek redress for violations of their rights in nursing homes.

Thursday’s 7-2 ruling, experts said, more broadly protects the right of any individual to sue for civil rights violations, even when federally funded programs being run by states have existing mechanisms to address such concerns.

The Court’s majority upheld a lower ruling against the Health and Hospital Corporation of Marion County, a public entity that operates nearly 80 nursing homes in Indiana. HHC had argued that the state Medicaid system’s existing oversight pathways were the right avenue for aggrieved parties to seek recourse.

The ruling could have far-reaching implications for people beyond just those living in nursing homes, including those who rely on all kinds of federal benefits managed by government partners.

The new and explicit interpretation of a 150-year-old legal statute referred to as Section 1983 also could drive up the number of costly lawsuits nursing homes face.

James Segroves, partner at Reed Smith and legal counsel for the American Health Care Association, called the ruling “disheartening to the hundreds of government-owned and operated nursing homes.” Residents, he added, deserve recourse but already have it through state and federal court systems. 

“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,” Segroves said in a statement. 

“Now, these publicly-owned nursing homes may face additional suits seeking millions of dollars in damages,” he added. “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.”

Norris Cunningham, a member attorney at Stoll Keenon Ogden PLLC who represents nursing homes, said he was still reeling from the decision Thursday night.

“I believe it is safe to presume that we will see many more claims against governmental and quasi-governmental entities like the defendant in Talevski,” he told McKnight’s Long-Term Care News. “Moreover, these actions under Section 1983 will not be subject to the protections and limitations that typically accompany the state law negligence and medical malpractice claims. Simply put, we may see higher jury verdicts in these cases since the 1983 action will not be subject to any state law damage caps.”

A dementia patient declines

Gorgi Talevski was a dementia patient, and his family moved him to HHC’s Valparaiso Care and Rehabilitation’s nursing home when they could no longer care for him. Valparaiso is operated by American Senior Communities for HHC.

Talevski’s wife filed suit in 2019, claiming that her husband’s condition deteriorated after he was prescribed psychotropic medications. She also alleged that the facility refused to readmit Mr. Talevski after sending him to a psychiatric facility, triggering an involuntary transfer without their consent.

Despite complaining about their concerns to state regulators, the family did not receive immediate relief and eventually decided to leave Mr. Talevski in his new facility, three hours from their home, to prevent another traumatic move.

Their case sought to address alleged violations of Mr. Talevski’s rights under the Nursing Home Reform Act. HHC argued that because the act was passed pursuant to the Congressional spending clause, the government was the only entity with the authority to uphold protections. Essentially, the corporation argued that in return for federal funds, the states agree to comply with federally imposed conditions and help enforce them.

But the court’s majority held firm to years of precedence, finding that an 1870s statute enacted to help individuals sue for federal protections after the Civil War should not be interpreted narrowly. The majority found that allowing private lawsuits would do nothing to thwart the federal government’s ability to continue its own enforcement methods.

“We discern no incompatibility between private enforcement … and the statutory scheme that Congress has devised for the protection of those rights,” Justice Ketanji Brown Jackson wrote for the majority, allowing the case to proceed in a lower court.

A spokesman for HHC said Thursday it was continuing to analyze the impact of the decision on public resources.

 “HHC brought this case because it has a fiduciary duty to focus its scarce public resources on the health care needs of historically underserved populations,” the company said in a statement. “HHC’s goal was 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.”

Difference of opinion

Justices Clarence Thomas and Samuel Alito dissented.

In his dissent, Alito wrote that allowing a private right to sue under Section 1983 will “upend” a “careful balance” created by the Nursing Home Reform Act’s federal and state enforcement channels.

“Allowing §1983 suits will upset this balance by allowing any plaintiff to demand damages regardless of the remedial regime that states establish pursuant to their explicit authority under the act,” Alito wrote.

“Moreover, whenever a plaintiff files suit, the determination about noncompliance will be taken away from federal and state authorities and given to courts,” he added. “And because the remedies offered under §1983 will often dwarf the relief available under FNHRA’s … remedies, §1983 will swallow the centralized state and federal review mechanisms the Act imposes.”

Cunningham said the language in the Court’s opinion, as well as the margin, made it clear the case wasn’t the “close call” decision that many healthcare attorneys expected.

In Indiana, there will be outside ramifications, said Randy Fearnow, a partner at Quarles & Brady, which had filed a friend-of-the-court brief on behalf of providers in Talevski when it was at the Circuit Court level.

“We pointed to the disproportionate impact a decision in favor of Talevski would have on Indiana providers,” Fearnow told McKnight’s. “That concern is now a reality. … The vast majority of government-owned nursing facilities are in Indiana, a state with a highly developed system for adjudicating claims against healthcare providers. Plaintiffs will now be able to circumvent the existing state system and seek recovery instead in federal court under a federal statute which would also allow them to recover attorneys’ fees, relief which is not available under state law.”

Fearnow predicted the ruling would lead to upending of Indiana’s Medical Malpractice Act, especially if the plaintiffs’ bar feels incentivized “by the prospect of fee recovery.” An actuary has also found that liability coverage in Indiana could also increase by two-thirds.

“Now that the Court has spoken, Indiana providers will have to pay close attention to the insurance market and double down on efforts to limit liability associated with nursing home care,” Fearnow said.