What’s at stake for Medicaid in the Supreme Court case Health & Hospital Corp v. Talevski?

On November 8thThe US Supreme Court is scheduled to hear oral arguments in Health & Hospital Corporation of Marion County (HHC) v. Talevski. The case raises the question of whether Medicaid beneficiaries can seek relief in federal court when they believe their rights have been 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 Services (CMS). Although the case involves Medicaid, it may have implications for other federal programs outside of Medicaid where states play a role in their administration or enforcement. This policy observation explains the case and what is at stake with the Supreme Court’s decision.

What is Talevski case?

Gorgi Talevski’s family filed a lawsuit against the Health and Hospital Corp of Marion County, Indiana (HHC) (a municipal corporation and a political subdivision of the state that governs medical facilities), alleging that his treatment facility used psychotropic drugs such as chemical restraints, forced transfers, and attempted involuntary discharge to a dementia facility violated the Federal Nursing Home Reform Act (FNHRA). The FNHRA establishes the minimum standards of care that nursing home facilities must follow in order to participate in the Medicaid program. The Talewskis are suing using a federal law known as Section 1983 that parties have used for decades to enforce certain federal rights.

The family argued that the FNHRA’s “rights against chemical restraint and involuntary discharge and transfer are enforceable under section 1983 and that an adverse decision would be catastrophic for federal safety programs.” A federal district court dismissed the case, ruling that Medicaid enrollees could not enforce the FNHRA. The Talewski family appealed, and the Seventh Circuit Court of Appeals reversed the district court, allowing the Talewski case to proceed. HHC applied for the case to be heard by the Supreme Court. On May 2, 2022, the Supreme Court granted the application for certiorari and the Supreme Court will hear oral arguments on November 8, 2022.

The court will consider two issues. The first is broadly whether the Court should reconsider its longstanding position that individuals have standing to sue in federal court to protect their rights over legislation created under the Constitution’s Spending Clause (e.g., federal laws, including Medicaid, the Children’s health and the Supplemental Nutrition Assistance Program (SNAP)). The second, narrower question is whether to assume that individuals have enforceable rights, whether the rights guaranteed by the FNHRA are enforceable.

How does Medicaid eligibility work now?

Under current law, states administer Medicaid within broad federal guidelines. There are generally two ways that state compliance with federal requirements is enforced—through oversight by the Centers for Medicare and Medicaid Services (CMS) and through litigation in federal courts.

If CMS finds that a state is not in compliance with federal rules, the agency can work with the state to comply. If states fail to comply, CMS can provide a notice of opportunity for a hearing and then withhold some or all of the federal matching funds until the state complies. However, the power to withhold federal funds is rarely used because it is a very broad and unwieldy tool that can impede states’ ability to comply. One recent example of CMS working with state: In July 2022, CMS used a mitigation plan to help address application processing times and the backlog of applications in Missouri. By September, officials responded that the state was complying with federal processing time requirements. However, federal enforcement is usually not swift, and the federal agency has discretion as to when to intervene, unlike the courts, where a decision can lead to immediate action.

Although there is no private right of action in the Medicaid statute, the Civil Rights Act, Section 1983, has long provided a mechanism for individuals to enforce the rights granted to them under federal programs. There is a long history of litigation related to private enforcement of the Medicare Act. While courts have upheld the authority of individuals to use Section 1983 to protect Medicaid rights, the Supreme Court has issued decisions that narrow that authority. There are currently three directions (according to the cases Blessing vs. Freestone (1997)) and (Gonzaga University v. Dow (2002)) that courts use to evaluate whether a federal statute establishes an enforceable right. The three factors that determine whether a statute 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 sufficiently specific to be enforced; and (3) whether the statute imposes a binding duty on the state.

Federal district courts have generally upheld private enforcement of Medicaid enrollees’ rights (particularly in cases where the state has denied Early and Periodic Screening, Diagnosis, and Treatment (EPSDT) benefits, enrollment, or care in the least restrictive setting). On the other hand, courts have also held that providers and enrollees do not have enforceable rights to sue for inadequate payment rates. Appeals courts have issued controversial rulings in lawsuits filed by patients challenging the state’s decision to exclude Planned Parenthood from their Medicaid program. The Court has previously declined to hear numerous cases that have found Planned Parenthood patients to have an enforceable right, but there is currently a pending petition.

In 2019, there were four district court opinions, all of which ruled in favor of beneficiaries’ right to enforce Medicaid regulations. In 2020, however, three out of four district court decisions did not rule in favor of Medicaid enrollees, including in Planned Parenthood of Greater Texas v. Smith (2020) where the full 5th The circuit reversed an earlier panel decision Gee v. Planned Parenthood of the Gulf Coast Inc. (2017) and concluded that Medicaid patients do not have standing to challenge Texas’ decision to exclude Planned Parenthood from the state’s Medicaid program.

What’s at stake?

Numerous amicus briefs have been filed in support of both sides. Indiana filed a filing, joined by a number of other states, supporting Marion County and noting that private rights of action could upset the dynamics of state and federal administration of grant programs. The American Medical Association and the Indiana Medical Association also filed an amicus brief in support of the District, arguing that Congress did not intend to create a private rights claim against public actors under Section 1983. The brief suggests that would create disparate treatment because as private entities are not subject to damages under the laws governing the participation of medical facilities in the Medicare and Medicaid programs.

At the end of September, 25 friendly notes were submitted in support of Talevski. Papers were submitted by the National Health Legislation Program (NHeLP), other advocacy organizations, professors and academics; population groups (including AARP, the American Cancer Society, and the Bazelon Center), provider groups (including community hospitals and community health centers), and federal officials (former HHS employees and former/current members of Congress). Both NHeLP and George Washington University have compiled summaries of these brief references. Key points raised in these summaries include the following:

  • The case could overturn more than five decades of judicial precedent and undermine Congress’s intent that individuals be able to use federal courts to enforce rights under federal programs.
  • If law enforcement is left to HHS, millions of Americans could be at risk because federal law enforcement is inadequate due to limited capacity and funding.
  • A decision to limit individuals’ ability to sue in federal court could deprive millions of Medicaid enrollees of access to care, including children who are eligible for comprehensive coverage under EPSDT benefits and those with chronic illnesses, serious life-threatening illnesses, 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 next?

The federal attorney general and the state of Indiana have received approval to participate in oral arguments. The Supreme Court is currently scheduled to hear oral arguments in that case on November 8th and is expected to issue a decision by the end of the term in June 2023. Separately, Indiana’s Public Access Counsel issued an advisory opinion that HHC’s decision to appeal to the Supreme Court violated the state’s open door law because HHC did not seek public contribution. Morgan Daly, director of public policy for the Indiana Council on Independent Living, filed an open house appeal in hopes that the HHC board would hold a vote and possibly withdraw the petition. It’s unclear how that will affect the case, which could have ramifications far beyond Marion County and Indiana.

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