Anderson v. Ghaly

• Citation: 930 F.3d 1066
• Decision Date: 18 July 2019
• Docket Number: No. 16-16193,16-16193
• Parties: Bruce ANDERSON; John Wilson; Robert Austin; California Advocates for Nursing Home Reform, Plaintiffs-Appellants, v. Mark GHALY, Secretary of California Department of Health and Human Services, Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

930 F.3d 1066

Bruce ANDERSON; John Wilson; Robert Austin; California Advocates for Nursing Home Reform, Plaintiffs-Appellants,

v.Mark GHALY, Secretary of California Department of Health and Human Services, Defendant-Appellee.

No. 16-16193

United States Court of Appeals, Ninth Circuit.

Argued and Submitted September 6, 2018 San Francisco, California

Filed July 18, 2019

BERZON, Circuit Judge:

The Medicaid Act requires that states participating in Medicaid "provide for a fair mechanism ... for hearing appeals on transfers and discharges of residents" of nursing homes covered by Medicaid. 42 U.S.C. § 1396r(e)(3). The question in this case is whether nursing home residents may challenge a state's violation of this statutory requirement under 42 U.S.C. § 1983. We hold that they may.

I

A

Medicaid is a cooperative federal-state program designed to "enabl[e] each State ... to furnish ... medical assistance on behalf of families with dependent children and of aged, blind, or disabled individuals, whose income and resources are insufficient to meet the costs of necessary medical services." 42 U.S.C. § 1396-1 ; see also Wilder v. Va. Hosp. Ass'n , 496 U.S. 498, 502, 110 S.Ct. 2510, 110 L.Ed.2d 455 (1990). Among those services is treatment at "nursing facilities," also known as nursing homes or long-term care facilities. See 42 U.S.C. § 1396d(a).

In 1982, at the urging of Congress, the Health Care Financing Administration, a subdivision of the Department of Health and Human Services and the predecessor to the Centers for Medicare and Medicaid Services (CMS), commissioned a study to review the regulation of nursing homes participating in Medicare and Medicaid. H.R. Rep. No. 100-391, pt. 1, at 451–52 (1987), as reprinted in 1987 U.S.C.C.A.N. 2313-1, 2313-271 to -272. The ensuing study, published in 1986, concluded that "[t]here is broad consensus that government regulation of nursing homes, as it now functions, is not satisfactory because it allows too many marginal or substandard nursing homes to continue in operation." Comm. on Nursing Home Regulation, Inst. of Med., Improving the Quality of Care in Nursing Homes 2 (1986). To address these issues, the study offered a series of recommendations to strengthen the regulation of nursing homes. See id. at 25.

In response, Congress amended the Medicare and Medicaid Acts "to improve the quality of care for Medicaid-eligible nursing home residents," adopting many of the study's recommendations. H.R. Rep. No. 100-391, pt. 1, at 452. Enacted as part of the Omnibus Budget Reconciliation Act of 1987, Pub L. No. 100-203, 101 Stat. 1330, the resulting amendments, the Federal Nursing Home Reform Amendments (FNHRA), imposed various requirements as a prerequisite for nursing homes to be reimbursed under Medicaid. Those requirements are codified at 42 U.S.C. § 1396r. See Grammer v. John J. Kane Reg'l Ctrs.-Glen Hazel , 570 F.3d 520, 523 n.1 (3d Cir. 2009).¹

Among FNHRA's provisions are standards for residents' "[t]ransfer and discharge rights." 42 U.S.C. § 1396r(c)(2). Those standards require that "[a] nursing facility must permit each resident to remain in the facility and must not transfer or discharge the resident from the facility unless" one of six circumstances applies:

(i) the transfer or discharge is necessary to meet the resident's welfare and the resident's welfare cannot be met in the facility;

(ii) the transfer or discharge is appropriate because the resident's health has improved sufficiently so the resident no longer needs the services provided by the facility;

(iii) the safety of individuals in the facility is endangered;

(iv) the health of individuals in the facility would otherwise be endangered;

(v) the resident has failed, after reasonable and appropriate notice, to pay ... for a stay at the facility; or (vi) the facility ceases to operate.

Id. § 1396r(c)(2)(A).

If a nursing home does seek to transfer or discharge a resident, it must first provide notice to the resident. Id. § 1396r(c)(2)(B). That notice must, among other required information, inform the resident of her "right to appeal the transfer or discharge under the State process established under subsection (e)(3) of this section." Id. § 1396r(c)(2)(B)(iii)(I).

Subsection (e)(3), in turn, sets forth specific requirements for the state-established appeals process:

The State, for transfers and discharges from nursing facilities effected on or after October 1, 1989, must provide for a fair mechanism, meeting the guidelines established under subsection (f)(3) of this section, for hearing appeals on transfers and discharges of residents of such facilities; but the failure of the Secretary to establish such guidelines under such subsection shall not relieve any State of its responsibility under this paragraph.

Id. § 1396r(e)(3).

The phrase "guidelines established under subsection (f)(3)" refers to another FNHRA provision instructing the Secretary of Health and Human Services to "establish guidelines for minimum standards which State appeals processes under subsection (e)(3) ... must meet." Id. § 1396r(f)(3). In accordance with that instruction, CMS has promulgated a series of regulations fleshing out the requirements for the state-established appeals process. See 42 C.F.R. §§ 431.200 – .246. Those regulations provide that the state "must grant an opportunity for a hearing to ... [a]ny resident who requests it because he or she believes a skilled nursing facility or nursing facility has erroneously determined that he or she must be transferred or discharged." Id. § 431.220(a). The regulations also set forth procedural requirements for the hearing itself. See id. §§ 431.240–.243. And, ultimately, if "[t]he hearing decision is favorable to the applicant or beneficiary," the regulations provide that the state "must ..., if appropriate, provide for admission or readmission of an individual to a facility." Id. § 431.246.

B

California's implementation of Medicaid is known as the California Medical Assistance Program, or Medi-Cal. See Cal. Welf. & Inst. Code §§ 14000.4, 14063. The Medi-Cal program provides for appeals on transfer and discharge decisions, as required by FNHRA. Nursing home residents who believe they are being or have been erroneously transferred or discharged may appeal the nursing home's decision to the California Department of Health Care Services (DHCS). See Cal. Health & Safety Code § 100171. In addition, if the resident "has been hospitalized ... and asserts his or her rights to readmission ... and the facility refuses to readmit him or her, the resident may appeal the facility's refusal." Id. § 1599.1(h)(1). "The refusal ... shall be treated as if it were an involuntary transfer under federal law, and the rights and procedures that apply to appeals of transfers and discharges of nursing facility residents shall apply to the resident's appeal under this subdivision." Id. § 1599.1(h)(2). A DHCS hearing decision may be appealed by either party via a writ of administrative mandamus to a state superior court; after a successful appeal, the superior court may order DHCS to vacate the hearing decision. See Cal. Civ. Proc. Code § 1094.5(f) ; see also St. John of God Ret. & Care Ctr. v. State Dep't of Health Care Servs. , 2 Cal. App. 5th 638, 647, 206 Cal.Rptr.3d 406 (2016). There is, however, no provision allowing the superior court in the mandamus proceeding to order compliance with the decision.

California law also provides a private right of action for "[a] current or former resident or patient of a skilled nursing facility ... against the licensee of a facility who violates any rights of the resident or patient as set forth in the Patients Bill of Rights ... or any other right provided for by federal or state law or regulation." Cal. Health & Safety Code § 1430(b). Under this section, a nursing home resident may seek up to $500 in damages for each violation, injunctive relief, and attorney's fees and costs. Id. ; see also Jarman v. HCR ManorCare, Inc. , 9 Cal. App. 5th 807, 811, 215 Cal.Rptr.3d 231 (2017) (holding that, under section 1430, "a plaintiff would be entitled to a measure of damages for each cause of action asserted under the statute" (emphasis omitted)).

C

The individual plaintiffs in this case—Bruce Anderson, John Wilson, and Robert Austin ("the Residents")—are former residents of certified nursing homes in California. Each alleges that he was subject to "dumping," the practice of sending a resident to a hospital for medical or mental health treatment but refusing to readmit the resident after discharge from the hospital. The Residents maintain that because Medi-Cal provides less compensation than Medicare or private insurance, nursing homes have a strong financial incentive to engage in dumping if Medi-Cal is paying for the resident's stay. "Dumping," the Residents allege, is "one of the biggest problems" nursing home residents in California face.

Using the appeals process established by the State, all three Residents challenged their respective nursing homes' refusal to readmit them after their hospitalization, and all three prevailed. None, however, has been readmitted. Each Resident's respective nursing home continues to refuse readmission, and, Plaintiffs allege, both DHCS and the California Department of Public Health (CDPH) have taken the position that the agencies are not obligated to enforce decisions resulting from the appeals process.

In October 2015, the California Advocates for Nursing Home Reform (CANHR), a nonprofit advocacy group, sent a letter to DHCS requesting that the agency enforce its decision in resident Bruce Anderson's appeal. In response, DHCS reiterated that it "ha[d] no authority to enforce its own orders," but noted that it was "looking at the issue." About a month later, CANHR met with Diana Dooley, then Secretary for the California Department of Health and Human Services, and "requested her to make the agencies over which she ha[d] oversight follow the law." Although "Secretary Dooley...