Americana Healthcare Corp. v. Schweiker
| Decision Date | 18 August 1982 |
| Docket Number | 81-2482,81-2755,81-2873 and 81-1507,Nos. 81-1522,s. 81-1522 |
| Parties | AMERICANA HEALTHCARE CORPORATION, et al., Plaintiffs-Appellees, v. Richard SCHWEIKER, Secretary of Health and Human Services, Defendant-Appellant. TURTLE CREEK CONVALESCENT CENTERS, INC. d/b/a Northside Healthcare Center, Plaintiff-Appellee, v. Richard SCHWEIKER, Secretary of Health and Human Services, Defendant-Appellant. CARE INNS, INC., d/b/a Clarksville Healthcare Center, Plaintiff-Appellee, v. Robert F. SMITH, Acting Administrator, Donald L. Blinzinger, Administrator of Indiana State Dept. of Public Welfare, and The Indiana Dept. of Public Welfare, Defendants-Appellants. CARE INNS, INC., d/b/a Clarksville Healthcare Center, Plaintiff-Appellee, v. Richard SCHWEIKER, Secretary of the Department of Health and Human Services, Defendant-Appellant. Laura HATHAWAY, d/b/a R. N. Nursing Home, and Judy Carrothers, Plaintiffs-Appellees, v. Richard SCHWEIKER, Secretary of Health and Human Services, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Thomas W. Crawley, Chicago, Ill., Gary L. Shaw, Deputy Atty. Gen., Indianapolis, Ind., for defendants-appellants.
David F. McNamar, Indianapolis, Ind., for plaintiffs-appellees.
Before CUMMINGS, Chief Judge, COFFEY, Circuit Judge, and TEMPLAR, Senior District Judge. **
Consolidated in this case are appeals from four separate orders of the United States District Court for the Southern District of Indiana, Indianapolis Division. 1 Each of the orders appealed from granted the plaintiffs' request for injunctive relief prohibiting the defendants from terminating the plaintiffs' participation in the Medicare program and/or from terminating the payment of matching funds from Medicaid services without affording plaintiff an opportunity for a pre-termination hearing. We reverse.
The circumstances leading to the grant of injunctive relief in each case appealed from are set out below.
Prior to October, 1980 Americana Healthcare Center of Elkhart ("Americana-Elkhart") located in Elkhart, Indiana had been certified to participate in the Medicare program as a skilled nursing facility and had entered into a provider agreement with the U. S. Department of Health and Human Services (Department) for the provision of skilled nursing services to eligible patients.
The statutory requirements for participation in the federally funded Medicare program are set forth in Title 18 of the Social Security Act, 42 U.S.C. § 1395 (1976 and Supp. IV, 1980). The U. S. Department of Health and Human Services administers this program which provides health insurance benefits for aged and disabled persons by making payments directly to the institution or individual providing the health service or care. 42 U.S.C. § 1395cc(f) (1976 and Supp. III, 1980). In order to receive payment for services rendered to a Medicare patient, an institution must meet the conditions of participation prescribed by the Social Security Act and accompanying regulations. See 42 U.S.C. § 1395 (1976 and Supp. III, 1980) and 42 C.F.R. § 405.1011 et seq. (1981). 2 If an institution meets the conditions of participation it then becomes eligible to execute and enter into a one-year renewal provider agreement with the United States Government. 42 U.S.C. § 1395cc (1976 and Supp. III, 1979). Institutions certified as Medicare providers are subject to periodic surveys by state agencies designated by the Secretary to evaluate compliance with federal standards. 3 42 U.S.C. § 1395aa (1976 and Supp. IV, 1980) and 42 C.F.R. § 405.1904 (1981). If the institution fails to maintain compliance with the prescribed conditions of participation, a report of the survey is sent to the Secretary of the U. S. Department of Health and Human Services and the Secretary then has the authority to terminate the institution's provider agreement at any time or decline to renew the provider agreement at the close of the one-year period. 42 U.S.C. § 1395cc(b)(2) (1976 and Supp. III, 1979) and 42 C.F.R. § 489.53(a)(3) (1980).
A letter dated October 22, 1980 from the U. S. Department of Health and Human Services notified Americana-Elkhart that an onsite survey conducted by the Indiana State Board of Health in August of 1980 demonstrated that Americana-Elkhart had deficiencies which "seriously limit your (their) capabilities to render adequate care and insure the health and safety of your (their) patients" and that the Department would not renew Americana-Elkhart's provider agreement with the Department which expired on December 1, 1980. 4 The Department's letter informed Americana-Elkhart that it could request that the Department through its subdivision, the Health Care Financing Administration, to reconsider its decision within 60 days of the notice. 5 The letter also requested that the Department be advised within 10 days of the notice if the listed deficiencies had been corrected.
Americana-Elkhart requested a reconsideration and an evidentiary pre-termination hearing of the Department's decision, asserting that it had corrected most of the deficiencies and asking that publication of notice of nonrenewal be deferred pending reconsideration. The Department denied the request for an evidentiary pre-termination hearing but pursuant to Americana-Elkhart's request for reconsideration, a resurvey of the facility was conducted. On the basis of the resurvey results showing that the facility was still not in compliance with all Medicare conditions of participation, the Department reaffirmed its decision to deny renewal of Americana-Elkhart's provider agreement. After the resurvey the Department informed Americana-Elkhart of its decision and included with its letter a list of the facility's continuing deficiencies. In addition, the letter stated that the effective date of the nonrenewal would be extended until January 31, 1981 to allow adequate time for public notice to residents or their families to allow them to find alternative facilities in which they could receive care. Finally, the letter informed the facility of its right to request within 60 days an administrative hearing before an Administrative Law Judge.
42 C.F.R. § 442.20(b) (1981) requires that a state Medicaid agency must terminate or refuse to renew a Medicaid agreement it has with a facility once the U. S. Department of Health and Human Services decides to terminate or refuse to renew a Medicare agreement with a skilled nursing facility. 6 Thus as a result of the U. S. Government's determination that Americana-Elkhart was not eligible for continued participation in the Medicare program the Indiana Department of Public Welfare decertified the nursing home from participation in the Indiana Medicaid program.
On January 27, 1981 the plaintiffs brought this action in the federal district court alleging that the administrative procedures allowing only for a post-termination hearing violated the Due Process Clause of the United States Constitution and the federal statutes. In addition, the complaint alleged that the U. S. Department of Health and Human Services' refusal to grant a pre-termination hearing made it an appealable final order of an administrative agency under 42 U.S.C. § 405(g) (Supp. IV, 1980).
Following a hearing the district court granted a preliminary injunction prohibiting the U. S. Department of Health and Human Services and the Indiana Department of Public Welfare from terminating the plaintiff's participation in the Medicare and/or Medicaid program without a pre-termination hearing. 7
Americana Health Care Center of Indianapolis-Midtown (Americana-Midtown) was another certified skilled nursing facility participating in the Medicare program prior to October, 1980. By letter dated October 24, 1980 the U. S. Department of Health and Human Services notified Americana-Midtown that based upon the results of an onsite survey conducted from August 25 to 29, 1980 it had been determined that Americana-Midtown had deficiencies that "seriously limits your (their) capability to render adequate care and insure the health and safety of your (their) patients" and thus the Department would not renew its provider agreement with Americana-Midtown which was scheduled to end December 1, 1980. Attached to the letter was a four-page statement of deficiencies which formed the basis for the nonrenewal. 8
The U. S. Department of Health and Human Services letter also informed the facility of its right to request that the Department reconsider its decision. Americana-Midtown requested reconsideration contending that it had corrected the majority of the alleged deficiencies. The Indiana State Board of Health as agent of the U. S. Department of Health and Human Services conducted a resurvey of the facility and based upon the results of that resurvey reaffirmed its original decision not to renew Americana-Midtown's provider agreement but extended the effective date of the nonrenewal to January 31, 1981 to allow adequate time for public notice to allow the transfer of patients to an eligible and certified facility. The Department informed the facility of its decision by letter detailing the deficiencies of the nursing home and informing the plaintiff of its right to request a hearing within 60 days. In addition to the request for a resurvey, the plaintiff also requested that the defendant conduct a pre-termination evidentiary hearing which request was subsequently denied by the U. S. Department of Health and Human Services.
In accordance with the provisions of 42 C.F.R. § 442.20(b) the Indiana Department of Public Welfare also decertified Americana-Midtown as a Medicaid provider based upon the Department of Health and Human Services nonrenewal decision and the facility's deficiencies.
On January 27, 1981 this action was filed in the district court...
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