Town Court Nursing Center, Inc. v. Beal
| Decision Date | 13 October 1978 |
| Docket Number | No. 77-2222,No. 77-2444,Nos. 77-2222 and 77-2444,77-2222,77-2444,s. 77-2222 and 77-2444 |
| Citation | 586 F.2d 280 |
| Parties | . and Emma Cooper, Mary Crawford, Hazel Kemp, Arnold L. Phillips, Delphine Taddei, Nancy Truitt, Individually and on behalf of the class of patients eligible for Pennsylvania Medical Assistance Program benefits at Town Court Nursing Center, Inc. v. Frank S. BEAL, Individually and in his capacity as Secretary of Public Welfare of the Commonwealth of Pennsylvania, and Joseph A. Califano, Jr., Individually and in his capacity as Secretary of the United States Department of Health, Education and Welfare. Appeal of Emma COOPER, Mary Crawford, Hazel Kemp, Arnold L. Phillips, Delphine Taddei and Nancy Truitt, Individually and on behalf of the class of patients eligible for Pennsylvania Medical Assistance Program benefits at Town Court Nursing Center, Inc., inAppeal of Joseph A. CALIFANO, Jr., Secretary of the United States Department of Health, Education and Welfare, in United States Court of Appeals, Third Circuit |
| Court | U.S. Court of Appeals — Third Circuit |
Before SEITZ, Chief Judge, and GIBBONS and GARTH, Circuit Judges.
Resubmitted In Banc July 10, 1978.
Before SEITZ, Chief Judge, and ALDISERT, ADAMS, GIBBONS, ROSENN, HUNTER, WEIS, GARTH and HIGGINBOTHAM, Circuit Judges.
OPINION ANNOUNCING THE JUDGMENT OF THE COURT
Appellants in No. 77-2222, a proposed class action which was consolidated with Town Court Nursing Center, Inc. v. Beal, decided today, 586 F.2d 266 (3d Cir. 1978), are six residents at the Town Court Nursing Center who contend that their due process and statutory rights would be violated by termination of Medicaid funding to the nursing home without a pre-termination hearing. Because the district court made no class-action determinations, we treat this as the appeal of the named patients only. They have appealed from an order of the district court denying their motion to extend portions of a preliminary injunction entered during an earlier phase of the litigation.
They had requested a preliminary and permanent injunction to prevent the defendants, "prior to a final determination of all appeals by Town Court Nursing Center, Inc.," from (a) terminating Town Court's Medicare and Medicaid certification; (b) removing eligible patients from Town Court; (c) discontinuing or withholding reimbursement for the care of Medicare and Medicaid patients; and (d) prohibiting future placement of other Medicaid-eligible patients at Town Court.
The district court issued a temporary restraining order on July 21, 1977, enjoining the defendants from discontinuing or withholding reimbursement for care provided to eligible patients, pending reconsideration by HEW of a preliminary decision to terminate Town Court's provider status. Following a hearing, the district court granted the preliminary injunction sought by plaintiffs. The injunction by its terms was to remain in effect pending completion of the HEW reconsideration process, and until five days after the defendants gave plaintiffs written notice of their intention again to terminate Town Court's provider status. After HEW officials notified Town Court that they had affirmed the initial decision to terminate its Medicare provider status, Town Court and the six individually-named appellants sought an order extending the preliminary injunction pending an evidentiary hearing and full judicial review. A hearing on this motion was held on September 15, 1977, after which the district court denied plaintiffs' motion to extend those parts of the preliminary injunction that enjoined removal of patients and that enjoined defendants from prohibiting the placement of new patients. We granted an injunction pending appeal that continued in effect those portions of the preliminary injunction that the district court had refused to extend.
Appellants first allege that they will suffer a de facto loss of Medicaid benefits without the protection of a prior hearing if they are subjected to the physiological and psychological harm caused by transfer from Town Court. Second, they believe they have a protected property interest in continued occupancy at Town Court so long as Town Court remains in compliance with the applicable statutes and regulations. Consequently, they say that it was an infringement of these interests not to provide an evidentiary hearing and to allow for judicial review prior to decertification of the nursing center and prior to the de facto terminations of their "rights."
In another case decided today we held that
(b)ecause a decision to decertify a nursing home as an unqualified provider is tantamount to an order to transfer a patient for his welfare, Medicaid residents threatened with transfer are entitled to some form of hearing on the existence of the condition or cause for transfer Klein v. Califano, 586 F.2d 250, 258 (3d Cir. 1978). We believe the holding in Klein to be controlling as to the issues raised by these appellants. We therefore remand this cause to the district court for a determination of what procedures will satisfy the constitutional rights of appellants prior to decertification of Town Court Nursing Center and for further proceedings consistent with Town Court, supra, and Klein, supra.
whether the home is a qualified provider and whether decertification is for the patients' welfare.
In No. 77-2444, Secretary of the Department of Health, Education and Welfare Califano has cross-appealed from that portion of the district court order which required that he "not withhold payments (from Town Court Nursing Center) for services actually provided to patients." Town Court Nursing Center, Inc. v. Beal, No. 77-2474 (E.D.Pa., Sept. 15, 1977) (). Because Medicaid certification and funding is so inextricably interrelated with federal administrative action through HEW, See Town Court, supra, 586 F.2d at 268-271, and in view of our holding that the residents of the nursing center have a right to a pre-termination hearing, that portion of the order from which Secretary Califano appeals will be affirmed.
The judgment of the district court in appeal No. 77-2222 will be vacated and the cause remanded for further proceedings consistent with Town Court, supra, and Klein, supra. Costs taxed against appellees.
The judgment of the district court in appeal No. 77-2444 will be affirmed.
In recent years the government has become increasingly involved in satisfying the medical needs of its citizens, and the Medicare 1 and Medicaid 2 programs form an integral part of this development. They represent congressional enactments for the benefit of the aged and poverty-stricken sick, those on the fringe of society. This legislation has placed the recipient in a dependent position in relationship to government, and created a situation where the recipient expects to receive the privileges which Congress has voted to provide.
Due process, which secures legitimate property interests from arbitrary government intrusion, protects many of the expectations that flow from such dependent relationship by requiring that government accord affected individuals the process that is due them before it takes a contemplated course of action that may deny such individuals the benefits they anticipate. But the imposition of due process procedures as a predicate to government action can result in reduced efficiency of government operations and the availability of fewer funds for the intended beneficiaries. Concern has been expressed that unless the procedures made available to affected individuals are carefully fashioned, their societal cost would outweigh their benefit. 3
In this case, the full Court is called upon to determine whether patients whose nursing home is about to be decertified as a qualified institution under the Medicare and Medicaid programs have any due process rights, and if so, the extent of such rights. The factual and procedural background of the controversy as well as the relevant statutory and regulatory provisions are set forth in the various opinions in the companion cases, Town Court Nursing Center, Inc. v. Beal, No. 77-2221, 586 F.2d 266 (3d Cir., 1978), and Klein v. Califano, No. 77-1896, 586 F.2d 250 (3d Cir., 1978). The appeal in this specific proceeding has been brought by six residents of Town Court Nursing Center who contend that their due process and statutory rights The opinion announcing the judgment of the Court relies on the decision filed today in Klein v. Califano, No. 77-1896, 586 F.2d 250 (3d Cir. 1978), to conclude that the Medicare and Medicaid laws and regulations grant patients a protectible property right to continued residency at the home of their choice absent specific cause for transfer, and that consequently due process requires that they be given an opportunity for a hearing before decertification of...
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