Linton by Arnold v. Commissioner of Health and Environment, State of Tenn.

• Decision Date: 23 October 1995
• Docket Number: Nos. 93-6142,s. 93-6142
• Citation: 65 F.3d 508
• Parties: , Medicare & Medicaid Guide P 43,611 Mildred Lea LINTON, by her next friend Kathy ARNOLD, on her own behalf and on behalf of all other persons similarly situated, Plaintiff-Appellee, Belle Carney, by her next friend Mary Kimble, on her own behalf and on behalf of all other persons similarly situated, Plaintiff/Intervenor-Appellee, v. COMMISSIONER OF HEALTH AND ENVIRONMENT, STATE OF TENNESSEE, Defendant-Appellee, St. Peter Villa, Inc. (93-6142); Presbyterian Homes of Tennessee, Inc. (93-6143); RHA/Sullivan, Inc. (93-6144); Cedars Health Care Center, Inc. (93-6146); McKendree Village, Inc. (93-6147), Defendants/Intervenors-Appellants. to 93-6144, 93-6146 and 93-6147.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 508

65 F.3d 508

48 Soc.Sec.Rep.Ser. 834, Medicare & Medicaid Guide

P 43,611

Mildred Lea LINTON, by her next friend Kathy ARNOLD, on her own behalf and on behalf of all other persons similarly situated, Plaintiff-Appellee Belle Carney, by her next friend Mary Kimble, on her own behalf and on behalf of all other persons similarly situated, Plaintiff/Intervenor-Appellee, v. COMMISSIONER OF HEALTH AND ENVIRONMENT, STATE OF TENNESSEE Defendant-Appellee St. Peter Villa, Inc. (93-6142); Presbyterian Homes of Tennessee, Inc. (93-6143); RHA/Sullivan, Inc. (93-6144) Cedars Health Care Center, Inc. (93-6146); McKendree Village, Inc. (93-6147), Defendants/Intervenors-Appellants.

Nos. 93-6142 to 93-6144, 93-6146 and 93-6147.

United States Court of Appeals, Sixth Circuit.

Argued Aug. 3, 1995.

Decided Sept. 15, 1995.

Rehearing and Suggestion for Rehearing En Banc Denied Oct. 23, 1995.

Gordon Bonnyman (briefed and argued), Legal Services of Middle Tennessee, Inc., Nashville, TN, for Mildred Lea Linton, Belle Carney.

Jennifer Helton Small, Asst. Atty. Gen. (argued), Office of the Attorney General, General Civil Division, Nashville, TN, for Commissioner of Health and Environment, State of Tenn.

Joel M. Hamme (briefed), Joseph W. Metro (briefed), Reed, Smith, Shaw & McClay, Washington, DC, William M. Barrick (argued and briefed), Nashville, TN, for St. Peter Villa, Inc., Presbyterian Homes of Tennessee, Inc., RHA/Sullivan Inc., Brook Meade Health Care Center, Inc., Cedars Health Care Center, Inc., McKendree Village, Inc.

Before: JONES, GUY, and BOGGS, Circuit Judges.

RALPH B. GUY, Jr., Senior Circuit Judge.

This case involves a class action suit brought in 1987 against the Commissioner of the Tennessee Department of Health and Environment (Tennessee). ¹ The plaintiffs are current or future Medicaid-eligible individuals who seek nursing facility services. ² Plaintiffs contested the validity of Tennessee's implementation of distinct part certification under Title XIX of the Social Security Act, 42 U.S.C. Sec. 1396 et seq. (Medicaid Act). ³ Under distinct part certification, a provider of a skilled nursing facility (SNF) could certify a distinct part of a facility (e.g., a wing, one side of a corridor, a floor) for Medicaid participation, for patients requiring a different level of care. ⁴ As part of distinct part certification, Tennessee allowed skilled nursing facilities, at their discretion, to "spot" certify beds for Medicaid participation. This practice allowed fewer than all beds within a particular wing or floor to be available for Medicaid recipients regardless of their required level of care. In addition, Tennessee allowed facilities to certify as Medicaid beds fewer than all beds available for residents residing in intermediate care facilities. These practices shall be referred to as the "limited bed policy." Twenty-three percent of Tennessee's Medicaid-participating nursing homes chose to have Tennessee certify beds under the limited bed policy. Under this policy, seven percent of the total beds in Medicaid-participating facilities, which would otherwise have been certified, went uncertified.

Plaintiff, Mildred Linton, receives Medicaid assistance and is severely disabled from rheumatoid arthritis. At the time this lawsuit was commenced, she was receiving an SNF level of care at the Green Valley Health Care Center, a Tennessee nursing facility. In 1986, Medicaid officials, reviewing her medical record, determined that she no longer required such a high level of care and informed her that they were reducing her care eligibility to intermediate. Green Valley, under distinct part certification, had 87 intermediate care facility (ICF) beds. Under Tennessee's limited bed policy, however, it had apportioned only 40 of those beds as ICF Medicaid beds. Green Valley informed Linton that it intended to decertify her Medicaid bed and, due to a considerable waiting list for ICF Medicaid beds, would not likely have available any ICF Medicaid beds. ⁵ The facility's action, as condoned under Tennessee's limited bed policy, would force Linton to leave the nursing home where she had lived for four years and which was located close to her family, with no assurance that a Medicaid bed would be available for her elsewhere.

Plaintiff-intervenor, Belle Carney, age 89 at the time this suit was filed, suffers from Alzheimer's disease. In 1987, she was hospitalized for two weeks and was to be discharged to a nursing home. Carney, who is eligible for Medicaid and is black, had difficulty finding a Medicaid bed. In the interim, she was shunted among a series of inadequate and unlicensed facilities.

Plaintiffs alleged under 42 U.S.C. Sec. 1983 that Tennessee's limited bed policy violated the Medicaid Act. Plaintiffs raised several challenges under the Medicaid Act, including the claim that Tennessee's limited bed policy did not meet federal distinct part standards. They also alleged that the policy had a disparate impact on black class members in violation of Title VI of the Civil Rights Act of 1964, 42 U.S.C. Sec. 2000d et seq. (Title VI), and its implementing regulations.

The district court, setting forth findings of fact and conclusions of law, pursuant to Fed.R.Civ.P. 52, found that Tennessee's limited bed policy violated distinct part certification standards and other provisions of the Medicaid Act. The court indicated that the purpose of distinct part certification was to accommodate the delivery of qualitatively different types of health care within the same facility. Tennessee's limited bed policy, in contrast, served "the interests of nursing homes who wish to participate in the Medicaid program while also maintaining a separate private pay facility offering the same type of care." Violations of distinct part certification standards included certification even when a facility did not house all ICF residents in the certified portion of the institution. Moreover, Tennessee certified beds under distinct part standards even when no separately administered unit of a facility existed at all. HCFA in interpreting the distinct part certification provision had expressly advised that spot certification did not satisfy distinct part certification: " 'Various beds scattered throughout the institution would not comprise a unit operated distinguishably' " for certification purposes. The court also found that the limited bed policy violated Title VI.

As a result of its liability determinations, the court instructed Tennessee to submit a remedial plan, including prophylactic measures to prevent or mitigate Medicaid provider attrition. Heightened attrition by Medicaid providers was of acute concern to the district court. Previously, the court had denied plaintiffs' request to enjoin preliminarily Tennessee's limited bed policy because the court found that granting relief would cause substantial harm to the plaintiffs: some providers would opt out of the Medicaid program and traumatize their Medicaid patients who, as a result of discontinuation of services, would be transferred away from families or discharged to inadequate alternative care. In response to the district court's instruction, Tennessee proposed a plan that it had negotiated with plaintiffs. The four-part remedial plan consisted of two introductory parts, followed by two substantive parts addressing the laws found to have been violated, the Medicaid Act and Title VI. The Medicaid Act remedies were included in Part III, entitled "Plan Regarding Distinct Part Certification." That part required Medicaid providers to certify all available, licensed nursing home beds within their facilities ("full certification") and to admit residents on a first-come, first-serve basis; prohibited involuntary transfer or discharge based upon source of payment; and adopted procedures for provider withdrawal from the program, including patient protection and disincentives to discourage provider attrition. Providers who chose to withdraw from the system were required to retain current Medicaid patients and comply with Medicaid requirements as to such patients (the so-called "lock-in" requirement). Providers who withdrew would be excluded from Medicaid participation for two years after withdrawal (the so-called "lock-out" requirement). Part IV addressed Title VI violations and was entitled "Defendant's Plan to Redress the Finding of Unintended Disparate Impact on Minorities' Access to Nursing Homes." Its remedies included draft rules for Title VI civil rights compliance and enforcement, added staff to Tennessee's Office of Civil Rights Compliance, and incorporated by reference the measures adopted in Part III of the plan. The district court adopted the plan without amendment.

On July 30, 1990, 25 days after the district court had entered final judgment in this action, defendant-intervenors pursuant to Fed.R.Civ.P. 24 filed a motion to intervene for purposes of appeal. Defendant-intervenors are five licensed nursing homes in Tennessee. Only defendant-intervenor RHA/Sullivan, Inc., certified fewer than all of its patient beds under the Medicaid Act. The others certified all of their patient beds, however, they prefer private-paying residents over Medicaid recipients as patients, and therefore are impacted by the remedies adopted, including the lock-in provision. See Linton v. Commissioner of Health & Env't, 973 F.2d 1311, 1318 n. 12 (6th Cir.1992). Defendant-intervenors sought to intervene in this action because they want to allot beds occupied by Medicaid residents to non-Medicaid residents financially capable of paying higher occupancy rates. See id. at 1317. The district court denied their motion as untimely and determined they lacked standing.

On appeal, we reversed. Id. Plaintiffs and Tennessee then moved to modify the mandatory lock-in provision by replacing it with an optional one, which motion the court granted. In addition, the lock-out provision has been revised to allow the...