On November 8th, the U.S. Supreme Court is scheduled to hear oral arguments in Health & Hospital Corporation of Marion County (HHC) v. Talevski. The case raises the issue of whether Medicaid beneficiaries can seek relief in federal court when they believe their rights are being violated by state officials, or whether enforcement of state compliance with federal Medicaid rules should be left solely to the federal Centers for Medicare and Medicaid Services (CMS). While the case is about Medicaid, there could be implications for other federal programs beyond Medicaid where states play a role in administering or implementing them. This policy watch explains the case and what is at stake with the Supreme Court decision.
What is the Talevski Case?
Gorgi Talevski’s family filed a lawsuit against the Health and Hospital Corp of Marion County, Indiana (HHC) (a municipal corporation and political subdivision of the state that operates nursing facilities) alleging that his nursing facility’s use of psychotropic drugs as chemical restraints, involuntary transfers and attempted involuntary discharge to a dementia facility violated the Federal Nursing Home Reform Act (FNHRA). FNHRA establishes the minimum standards of care to which nursing-home facilities must follow to participate in the Medicaid program. The Talevski family sued using a federal law known as Section 1983, which parties have used for decades to enforce certain federal rights.
The family argues that “FNHRA’s rights against chemical restraint and involuntary discharge and transfer are enforceable under Section 1983 and that an adverse ruling would be disastrous for federal safety-net programs”. A federal district court dismissed the case, ruling that Medicaid enrollees cannot enforce the FNHRA. The Talevski family appealed, and the Seventh Circuit Court of Appeals reversed the district court, allowing the Talevski case to continue. HHC petitioned to have the case heard by the Supreme Court. On May 2, 2022 the Supreme Court granted the petition for certiorari and the Supreme Court will hear oral arguments on November 8, 2022.
The Court will consider two questions. The first is broadly whether the Court should reexamine its longstanding position that individuals have a right to sue in federal court to protect rights for legislation created under the Spending Clause of the constitution (e.g., federal laws including Medicaid, the Children’s Health Program, and the Supplemental Nutrition Assistance Program (SNAP)). The second, more narrow question, is assuming that individuals do have enforceable rights, are the rights guaranteed under FNHRA enforceable.
How Does Enforcement of Medicaid Requirements Work Now?
Under current law, states administer Medicaid within broad federal guidelines. There are generally two ways in which state compliance with federal requirements is enforced – through oversight from the Centers for Medicare and Medicaid Services (CMS) and through litigation in federal courts.
If CMS finds that a state is out of compliance with federal rules, the agency can work with the state to come into compliance. If states fail to come into compliance, CMS can provide notice of opportunity for a hearing and then move to withhold some or all federal matching funds until the state comes into compliance. However, the authority to withhold federal funds is rarely used because it is a very broad and blunt tool that could impede a states’ ability to come into compliance. One recent example of CMS working with a state: In July 2022, CMS used a mitigation plan to help address application processing times and backlogs of pending applications in Missouri. By September, officials responded that the state was in compliance with federal requirements for processing times. However, federal enforcement is generally not quick and the federal agency has discretion about when it steps in, unlike courts where a decision can result in immediate action.
While there is no private right of action in the Medicaid statute, a civil rights statute, Section 1983, has long provided a mechanism for individuals to enforce the rights provided to them under federal programs. There is a long history of litigation related to private enforcement of the Medicaid Act. While courts have affirmed the authority for individuals to use Section 1983 to protect Medicaid rights, the Supreme Court has issued decisions that have narrowed this authority. Currently there is a three pronged (pursuant to the cases Blessing v Freestone (1997)) and (Gonzaga University v. Doe (2002)) that courts use to evaluate whether a federal law establishes an enforceable right. The three factors that determine whether a statutory provision creates a privately enforceable right are: (1) whether the plaintiff is an intended beneficiary of the statute; (2) whether the plaintiff’s asserted interests are specific enough to be enforced; and (3) whether the statute imposes a binding obligation on the State.
Federal circuit courts have generally upheld private enforcement of rights for Medicaid enrollees (particularly in cases where the state has denied Early and Periodic Screening, Diagnostic and Treatment (EPSDT) benefits, enrollment, or care in the least restrictive setting). On the other hand, courts have also ruled that providers and enrollees do not have enforceable rights to sue for inadequate payment rates. The Courts of Appeal have issued conflicting rulings in cases brought by patients challenging a state’s decision to exclude Planned Parenthood from their Medicaid Program. The Court has previously refused to review multiple cases in which Planned Parenthood patients were found to have an enforceable right, but there is a petition currently pending.
In 2019 there were four circuit court opinions that all ruled in favor of beneficiaries right to enforce Medicaid provisions. However, during 2020, three of four circuit court decisions did not rule in favor of Medicaid enrollees, including in Planned Parenthood of Greater Texas v. Smith (2020), where the full 5th Circuit overruled a previous panel decision in Gee v. Planned Parenthood of Gulf Coast Inc. (2017) and concluded that that Medicaid patients do not have the right to challenge Texas’s decision to exclude Planned Parenthood from the state Medicaid program.
What is at Stake?
Numerous amicus briefs have been submitted in support of both parties. Indiana filed a brief joined by a number of other states, supporting Marion County and noting that that private rights of action can upset the dynamics of the state and federal administration of grant programs. The American Health Care Association and Indiana Health Care Association also filed an amicus brief supporting the county, arguing that Congress did not intend to create a private right action against public actors under Section 1983. The brief suggests it would create disparate treatment since private entities are not subject to damages under laws governing nursing facility participation in Medicare and Medicaid programs.
At the end of September, 25 amicus briefs were filed supporting Talevski. Briefs were filed by the National Health Law Program (NHeLP), other advocacy organizations, professors and scholars; population groups (including the AARP, American Cancer Society and Bazelon Center), provider groups (including public hospitals and community health centers), and federal officials (former HHS officials and former / current members of Congress). Both NHeLP and George Washington University compiled summaries of these briefs. Key points raised in these briefs include the following:
- The case could overturn over five decades of judicial precedent and undermine Congressional intent that individuals are able to use federal courts to enforce rights under federal programs.
- If enforcement is left to HHS, millions of Americans could be at risk because federal enforcement is not adequate due to limited capacity and funding.
- A decision to limit the ability of individuals to sue in federal court could deprive millions of Medicaid enrollees access to care, including children who are entitled to comprehensive coverage under EPSDT benefit and those with chronic conditions, serious life-threatening diseases and people with disabilities.
- The Court’s decision could affect the rights of millions of low-income Americans who rely on other Spending Clause programs, not just Medicaid.
What is Next?
The federal Solicitor General and the state of Indiana were granted approval to participate in oral arguments. The Supreme Court is currently scheduled to hear oral arguments for this case on November 8th and is expected to issue a ruling by the end of the term in June 2023. Separately, the Indiana Public Access Counselor issued an advisory opinion that HHC’s decision to petition the Supreme Court violated the state’s the Open Door law because HHC did not seek public input. Morgan Daly, the public policy director for the Indiana Statewide Independent Living Council, filed the open door complaint with the hope that the HHC board will hold a vote and potentially withdraw the petition. It is unclear how this will affect the case, which could have implications far beyond Marion County and Indiana.