On June 8, 2023, in Health and Hosp. Corp. of Marion Cty. v. Talevski, the U.S. Supreme Court in a 7-2 decision held that the federal Nursing Home Reform Act (FNHRA),¹ a Spending Clause statute, created a private right of action under the Civil Rights Act, 42 U.S.C. § 1983, if the nursing facility violates either the restraint and seclusion or the post-discharge provisions of FNHRA. This case applies to state or locally owned nursing facilities, but the decision may have broad financial, compliance, and regulatory ramifications for other nursing facilities. This GT Alert discusses how the Court’s interpretation of “residents rights” will impact FNHRA and the effects this decision may have for other nursing facilities.

The Court relies on Section 1983, which provides a right of action if an entity acting under color of state law deprives a person of “any rights . . .secured by the Constitution and laws.” Since Section 1983 is limited to actions under color of state law, and since the receipt of federal funds, by itself, is insufficient to surmount that hurdle, the holding appears to be limited to those nursing facilities owned or operated by state or local governmental entities. See Blum v. Yaretsky, 457 U.S. 991 (1982) (receipt of Medicaid funding does not by itself transform a nursing facility into a state actor); Lugar v. Edmondson Oil Co., Inc., 457 U.S. 922 (1982). Given that a minority of nursing facilities are owned or operated by state or local governmental entities, the impact of this opinion may be limited, although current and future plaintiffs may attempt to expand the holding.

In Talevski, the defendant nursing home is owned and operated by a state governmental entity and is therefore subject to Section 1983. FNHRA largely is composed of statutory requirements that Congress laid out for Medicaid-participating states and “nursing facilities.” Social Security Act § 1902(a)(28). Those include “[r]equirements relating to residents’ rights,” §1919(c) (boldface deleted), two of which Talevski’s complaint invoked.

The first requires nursing facilities to “protect and promote” residents’ “right to be free from . . . any physical or chemical restraints imposed for purposes of discipline or convenience and not required to treat the resident’s medical symptoms.” § 1919(c)(1)(A)(ii) (referred to herein as “the unnecessary-restraint provision”). The second appears in a subparagraph concerning “[t]ransfer and discharge rights,” § 1919(c)(2)(A) (boldface deleted) and tells nursing facilities they “must not transfer or discharge [a] resident” unless certain enumerated preconditions, including advance notice of such a transfer or discharge, are met. See e.g., §§ 1919(c)(2)(A)–(B).

In prior cases, especially Gonzaga Univ. v. Doe, another Spending Clause case, the Court has held that to invoke Section 1983 to vindicate a right created by another federal statute, that other statute must “unambiguously confe[r]” individual rights, making those rights “presumptively enforceable” under Section 1983. 536 U. S. 273, 283-84 (2002). Similarly,  in Talevski the Court reasoned that the statute expressly used the term resident’s “right” when it described the prohibited conduct at the hearing. The Court concluded that the fact that administrative remedies also were available did not blunt the impact of the statute’s express use of the term “right” or limit the application of Section 1983. In addition, the Court also stated that FNHRA does not expressly limit private rights of action by residents.

The two dissenters, Justices Thomas and Alito, disagreed with the application of Section 1983 and linked the conditions or broad compliance requirements with states and nursing facilities that receive federal Medicaid funds. While all the compliance with requirements are intended to benefit residents, the requirements are agreed to between the State and the nursing  facility and the obligations are similar to contract terms between these two parties.

The nursing facility industry has been impacted in the past by a lack of reimbursement and variation in legal requirements, and this new interpretation may bring increased litigation and ambiguity to the industry – especially if expanded to all nursing facilities. As such, Talevski may place additional financial stress on the nursing home sector.   

¹ The 1987 FNHRA provides guidelines and minimal standards that nursing homes must meet. It also created a Nursing Home Residents' Bill of Rights.