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Anderson v. Ghaly, __ F.3d __, 2019 WL 3227461 (9th Cir. July 18, 2019)

Nursing home residents may sue DHCS under Section 1983 to enforce successful nursing homes transfer and discharge decisions.

The Federal Nursing Home Reform Amendments (FNHRA) impose various requirements on nursing homes receiving reimbursement under Medicaid. As pertinent here, they require a nursing home that transfers, discharges, or refuses to readmit a hospitalized resident to inform the resident of his or her right to appeal that decision. The state-established appeals process must provide a “fair mechanism” by which residents may challenge a decision. Medi-Cal’s appeals process allows residents contesting a transfer or discharge to appeal the nursing home’s decision to the California Department of Health Care Service (DHCS). Either party may file a petition for writ of administrative mandate in the superior court to contest a DHCS decision. However, while the superior court may order DHCS to vacate the hearing decision, no provision expressly allows the court to order compliance with its decision.

Three former nursing home residents sued the DHCS under 42 U.S.C. § 1983 for violating FNHRA. They alleged that their nursing homes engaged in “dumping” by sending them to a hospital for medical treatment and then refusing to readmit them; that they prevailed at DHCS hearings challenging those readmission decisions; that their nursing homes nevertheless refused to readmit them; and that the DHCS declined to enforce its own readmission decision. The residents’ lawsuit sought to compel DHCS to enforce their FNHRA right to an enforceable administrative readmission decision. The district court dismissed their complaint, ruling that they had no rights under FNHRA that were enforceable under § 1983.

The Ninth Circuit reversed, holding that FNHRA’s provisions requiring states to “provide for a fair mechanism . . . for hearing appeals on transfers and discharges of residents” create a statutory right to appropriate redress after a favorable administrative appeal—a right that is enforceable in a § 1983 action. The Ninth Circuit rejected the district court’s conclusion that FNHRA created no private rights because it imposes duties primarily on states. In addition, the Ninth Circuit found the right to enforce a favorable administrative decision was not too vague to enforce under § 1983, and that FNHRA unambiguously imposes a binding obligation on states to provide a “fair mechanism” for an administrative hearing regarding transfer and discharge decisions using language that is “mandatory, not precatory.”  The Ninth Circuit also rejected the DHCS’s argument that, in the FNHRA and other state law, Congress and California legislated comprehensively, impliedly foreclosing actions under § 1983.

Having cleared a procedural path for the residents to sue, however, the Court ultimately concluded that the residents’ complaint did not plausibly allege a violation of their FNHRA rights. The residents complained of the lack of a state agency to enforce readmission, but they failed to allege that California law provided no mechanism whatsoever for enforcing administrative transfer, discharge, and readmission decisions. California could provide an enforcement mechanism other than agency enforcement, in the court’s view.  Accordingly, the Ninth Circuit vacated the dismissal and remanded to allow the residents to replead. 

The bulletin describing the Ninth Circuit’s decision was originally prepared for the California Society for Healthcare Attorneys (CSHA) by H. Thomas Watson and Peder K. Batalden, Horvitz & Levy LLP, and is republished with permission. For more information regarding this bulletin, please contact H. Thomas Watson, Horvitz & Levy LLP, at 818-995-0800 or htwatson@horvitzlevy.com.

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