546 F.2d 227 (7th Cir. 1976), 76-1370, Hathaway v. Mathews

Docket Nº76-1370.
Citation546 F.2d 227
Party NameLaura HATHAWAY, d/b/a R.N. Nursing Home, Plaintiff-Appellant, v. David MATHEWS, Secretary, United States Department of Health, Education& Welfare, et al., Defendants-Appellees.
Case DateDecember 21, 1976
CourtUnited States Courts of Appeals, Court of Appeals for the Seventh Circuit

Page 227

546 F.2d 227 (7th Cir. 1976)

Laura HATHAWAY, d/b/a R.N. Nursing Home, Plaintiff-Appellant,

v.

David MATHEWS, Secretary, United States Department of

Health, Education& Welfare, et al., Defendants-Appellees.

No. 76-1370.

United States Court of Appeals, Seventh Circuit

December 21, 1976

Argued Oct. 20, 1976.

David F. McNamar, Indianapolis, Ind., for plaintiff-appellant.

James B. Young, U. S. Atty., John Daniel Tinder, Asst. U. S. Atty., Theodore L. Sendak, Atty. Gen., Arthur T. Perry, Deputy Atty. Gen., Indianapolis, Ind., for defendants-appellees.

Page 228

Before CLARK, Associate Justice (Retired), [*] and SWYGERT and CUMMINGS, Circuit Judges.

SWYGERT, Circuit Judge.

In this case appellant challenges the decision of the Department of Health, Education and Welfare (HEW) to terminate Medicaid benefits allocated for patients in the nursing home that she operates because the home allegedly does not comply with federal standards. She contends that HEW may not cut off Medicaid payments without first granting her notice of the alleged violations and a hearing in which she can attempt to demonstrate that the home is in fact in compliance with federal standards. We agree, and reverse the judgment of the district court.

I

Appellant Laura Hathaway owns and operates the R.N. Nursing Home in Walkerton, Indiana. The Home has approximately 36 residents, all of whom rely on Medicaid to pay their bills. These payments are made pursuant to a provider agreement, required under the federal Social Security Act, between the Home and the State of Indiana. The Home has for some time been licensed as an intermediate health care facility by the State of Indiana. This license was renewed for a period of one year on December 17, 1975, indicating that the State found the Home to be in compliance with state and federal standards.

In December 1975, HEW, acting on complaints that the R.N. Nursing Home failed to satisfy federal regulations for intermediate care facilities, sent an inspection team to examine the premises of the Home. Further inspections were made in February 1976. On the basis of these investigations, HEW concluded that the Home was not in compliance with federal law. In accordance with established procedures, the Department on March 17, 1976 sent a letter to Wayne Stanton, the Administrator of the Indiana Department of Public Welfare, notifying him that federal Medicaid payments on behalf of the residents of the Home would cease after April 20, 1976.

On March 18, 1976, Stanton sent a letter to appellant informing her that because of the federal action, the State had no alternative but to decertify the R.N. Nursing Home as a provider of intermediate services. A copy of the letter from HEW was enclosed.

On March 26, 1976, Hathaway filed suit in the United States District Court for the Southern District of Indiana, seeking damages, injunctive relief, and a temporary restraining order. She contended that she had a property interest, cognizable under the due process clause of the fourteenth amendment, in the continuation of Medicaid payments to the Home and that the payments therefore could not be terminated without notice of the specific areas in which the Home was deficient under federal law and a hearing in which she could have an opportunity to rebut HEW's allegations. The district court, in denying the motion for a temporary restraining order and granting the defendants' motion to dismiss, relied on three factors. First, it held that because Hathaway's relationship was with the State alone, she could not seek a remedy against the federal government. Second, it found that any requirements of due process could be satisfied by a post-termination hearing. Finally, it held that Hathaway had failed to exhaust administrative remedies available under state law. Hathaway appeals from the district court's decision.

II

The correct resolution of this case depends upon an understanding of the mechanics of the Medicaid program. Under Title XIX of the Social Security Act, 42 U.S.C. § 1396 et seq., Medicaid is a cooperative arrangement between the states and

Page 229

the federal government. Both the states and HEW provide a portion of the funds to pay claims, with the exact percentage determined by the applicable State plan. 42 U.S.C. § 1396a(a)(2). Under the Indiana State plan, Indiana pays 47.1 percent of each claim, with the remainder paid for by the federal government.

The statute calls for the states to administer the program, and to evaluate whether a particular institution is qualified to receive payments for services which it renders to Medicaid recipients. 42 U.S.C. § 1396a(a)(33)(B). Before a state can certify an institution as qualified, it must find that that institution meets all requirements for licensure under state law, see 45 C.F.R. § 249.10(b)(15)(i)(A), as well as the...

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37 practice notes
  • 370 N.E.2d 223 (Ill. 1977), 49337, Bio-medical Laboratories, Inc. v. Trainor
    • United States
    • Illinois Supreme Court of Illinois
    • October 17, 1977
    ..."expectation interest" has been recognized as a protectable legal interest. (See, e. g., Hathaway v. Mathews (7th Cir. 1976), 546 F.2d 227, 230; Case v. Weinberger (2d Cir. 1975), 523 F.2d 602, 606.) "Interruption of an existing relationship between the government and a contr......
  • 419 P.3d 366 (Okla.Civ.App. 2017), 115769, Al-Khouri v. Oklahoma Health Care Authority
    • United States
    • Oklahoma United States State Court of Criminal Appeals of Oklahoma Court of Civil Appeals of Oklahoma
    • September 29, 2017
    ...interest in continued participation in program entitling him to be terminated only for cause); Hathaway v. Mathews, 546 F.2d 227, 230 (7th Cir. 1976) (holding nursing home’s expectation of continuing to receive Medicaid payments on behalf of residents is a protected prop......
  • 419 P.3d 366 (Okla.Civ.App. 2017), 115769, Al-Khouri v. Oklahoma Health Care Authority
    • United States
    • Oklahoma United States State Court of Criminal Appeals of Oklahoma Court of Civil Appeals of Oklahoma
    • September 29, 2017
    ...interest in continued participation in program entitling him to be terminated only for cause); Hathaway v. Mathews, 546 F.2d 227, 230 (7th Cir. 1976) (holding nursing home’s expectation of continuing to receive Medicaid payments on behalf of residents is a protected prop......
  • Labor Certification Process for Temporary Employment in the Commonwealth of the Northern Mariana Islands (CW-1 Workers)
    • United States
    • Employment And Training Administration
    • Invalid date
    ...to prescribe rules of procedure to determine who can practice and participate in administrative proceedings before it. Koden v. DOJ, 546 F.2d 228, 232-33 (7th Cir. 1977) (citing Goldsmith v. U.S. Board of Tax Appeals, 270 U.S. 117 (1926)). Such power exists even if the agency does not have ......
  • Request a trial to view additional results
33 cases
  • 370 N.E.2d 223 (Ill. 1977), 49337, Bio-medical Laboratories, Inc. v. Trainor
    • United States
    • Illinois Supreme Court of Illinois
    • October 17, 1977
    ..."expectation interest" has been recognized as a protectable legal interest. (See, e. g., Hathaway v. Mathews (7th Cir. 1976), 546 F.2d 227, 230; Case v. Weinberger (2d Cir. 1975), 523 F.2d 602, 606.) "Interruption of an existing relationship between the government and a contr......
  • 419 P.3d 366 (Okla.Civ.App. 2017), 115769, Al-Khouri v. Oklahoma Health Care Authority
    • United States
    • Oklahoma Court of Appeals of Oklahoma Court of Civil Appeals of Oklahoma
    • September 29, 2017
    ...interest in continued participation in program entitling him to be terminated only for cause); Hathaway v. Mathews, 546 F.2d 227, 230 (7th Cir. 1976) (holding nursing home’s expectation of continuing to receive Medicaid payments on behalf of residents is a protected prop......
  • 419 P.3d 366 (Okla.Civ.App. 2017), 115769, Al-Khouri v. Oklahoma Health Care Authority
    • United States
    • Oklahoma Court of Appeals of Oklahoma Court of Civil Appeals of Oklahoma
    • September 29, 2017
    ...interest in continued participation in program entitling him to be terminated only for cause); Hathaway v. Mathews, 546 F.2d 227, 230 (7th Cir. 1976) (holding nursing home’s expectation of continuing to receive Medicaid payments on behalf of residents is a protected prop......
  • 660 N.E.2d 1379 (Ind.App. 1996), 29A04-9308-CV-284, State v. Carmel Healthcare Management, Inc.
    • United States
    • Indiana Court of Appeals of Indiana
    • January 31, 1996
    ...penalty, a hearing is required in order to allow the provider an opportunity to recoup any penalty. Hathaway v. Mathews (7th Cir.1976), 546 F.2d 227. 7. That the ten percent penalty which has previously been withheld without opportunity for a hearing, should be immediately reimbursed to Car......
  • Request a trial to view additional results
4 provisions
  • Labor Certification Process for Temporary Employment in the Commonwealth of the Northern Mariana Islands (CW-1 Workers)
    • United States
    • Employment And Training Administration
    • Invalid date
    ...to prescribe rules of procedure to determine who can practice and participate in administrative proceedings before it. Koden v. DOJ, 546 F.2d 228, 232-33 (7th Cir. 1977) (citing Goldsmith v. U.S. Board of Tax Appeals, 270 U.S. 117 (1926)). Such power exists even if the agency does not have ......
  • Part II
    • United States
    • Federal Register May 17, 2007
    • May 17, 2007
    ...authorizing that agency to prescribe the qualifications of those individuals or entities. Koden v. United States Department of Justice, 546 F.2d 228, 232-233 (7th Cir. 1977) (citing Goldsmith v. United States Board of Tax Appeals, 270 U.S. 117 (1926)). See also Schwebel v. Orrick, 153 F. Su......
  • Separate Parts In This Issue Part II Labor Department, Employment and Training Administration,
    • United States
    • Federal Register May 17, 2007
    • May 17, 2007
    ...authorizing that agency to prescribe the qualifications of those individuals or entities. Koden v. United States Department of Justice, 546 F.2d 228, 232-233 (7th Cir. 1977) (citing Goldsmith v. United States Board of Tax Appeals, 270 U.S. 117 (1926)). See also Schwebel v. Orrick, 153 F. Su......
  • Part II
    • United States
    • Federal Register February 12, 2010
    • April 20, 2008
    ...authorizing that agency to prescribe the qualifications of those individuals or entities. Koden v. United States Department of Justice, 546 F.2d 228, 232-233 (7th Cir. 1977) (citing Goldsmith v. United States Board of Tax Appeals, 270 U.S. 117 (1926)). See also Schwebel v. Orrick, 153 F. Su......