Ninth Circuit Revives Nursing Home Dumping Suit

SAN FRANCISCO (CN) – Elderly patients will get a second chance to sue California for failing to enforce laws that prevent nursing homes from dumping Medi-Cal patients to boost profits, the Ninth Circuit ruled Thursday.

“I think it’s a really important decision in making the state accountable for protecting these people as they are supposed to under federal law,” attorney Matthew Borden, of Braun Hagey & Borden in San Francisco, said.

U.S. District Judge Haywood Gilliam dismissed the lawsuit in 2016, finding the Federal Nursing Home Reform Act (FNHRA) of 1987 did not give individuals the right to sue states for not enforcing the law.

The Ninth Circuit on Thursday disagreed, holding FNHRA did not just create requirements for states to obtain Medicaid funding. It also created enforceable rights for the program’s beneficiaries, the three-judge panel concluded.

“The district court’s underlying reason for its conclusion – that a statute cannot create rights when phrased as a directive to the state – is wrong,” U.S. Circuit Judge Marsha Berzon wrote for the panel.

Lead plaintiff Bruce Anderson and California Advocates for Nursing Home Reform sued the state in 2015, claiming he and other elderly patients were dumped into hospitals and denied readmission to nursing homes, in violation of FNHRA. Anderson claims nursing homes dump Medi-Cal patients to increase their profits.

Skilled nursing homes get an average of $190 per day for a Medi-Cal resident – someone whose ability to pay “comes exclusively from Medi-Cal.” Patients with Medicaid and Medicare benefits, however, and those with private insurance, can pay the nursing homes more than $500 a day.

The plaintiffs also claim the practice of “nursing home dumping” has cost state more than $70 million because hospital stays are far more expensive than nursing home care.

On top of being stuck in a hospital when they’re not sick, Borden says elderly patients are also deprived of therapy and meaningful contact with others.

Federal law requires states establish a hearing process to challenge denials of readmission to nursing home patients who are temporarily hospitalized. Anderson and his co-plaintiffs had hearings administered by the state’s Department of Health and Human Services. They won the right to readmission, but the state refused to enforce its decisions.

The state claims the law only requires that it create a process for hearing appeals, not enforce the outcomes.

The Ninth Circuit panel rejected that argument Thursday, finding “Congress could not have intended FNHRA to create meaningless show trials that allow nursing homes to persist in improper transfers and discharges.”

Berzon cited a number of actions the law authorizes states to take against noncompliant nursing homes, including denial of Medicaid reimbursements, civil monetary penalties, appointment of temporary management and closures of nursing homes.

However, the Ninth Circuit also found Anderson’s complaint did not plausibly allege the state provides no mechanism for enforcing its administrative appeal decisions. The decisions could be enforced by filing a civil lawsuit in state court, the panel held.

“The complaint does not allege that this aspect of California law is insufficient to ensure the right to an appeal provided by FNHRA,” Berzon wrote.

Borden said filing a civil lawsuit would be inadequate because that process can take a year or longer while elderly patients languish in high-cost hospitals.

“The state has a number of enforcement powers,” Borden sad. “It should use those enforcement powers.”

California Department of Health and Human Services spokesman Scott Murray declined to comment, and California Attorney General Xavier Becerra’s office did not immediately respond to a request for comment.

U.S. Circuit Judge Michelle Friedland and U.S. District Judge Kathleen Cardone of the Western District of Texas joined Berzon on the panel.

Berzon was appointed by Bill Clinton. Friedland was appointed by Barack Obama, and Cardone is a George W. Bush appointee.


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