Can Plaintiffs Sue to Enforce Conditions in Spending Clause Legislation?

Steven D. Schwinn, University of Illinois Chicago School of Law

The Supreme Court will hear arguments on Tuesday in Health and Hospital Corporation of Marion County v. Talevski. The case tests whether a state-owned nursing-home resident can sue under Section 1983 for violations of standards of care that the state must satisfy in order to receive Medicaid funding. Here's my Preview, from the ABA Preview of United States Supreme Court Cases, with permission:

FACTS

In January 2016, Gorgi Talevski entered Valparaiso Care and Rehabilitation (VCR), a government-owned nursing home, after his family determined that he needed professional care for his dementia. Shortly after he moved to VCR, Gorgi’s condition deteriorated rapidly. He lost his abilities to feed himself and to communicate in English (instead speaking only in his native Macedonian), among other cognitive and physical functions that he exhibited upon entering VCR.

Gorgi’s family discovered that VCR had been prescribing six powerful psychotropic drugs as part of his regimen. (VCR says that they prescribed drugs, including these six and others, in order “to arrest his decline and ameliorate his behavior.” In particular, VCR claims that Gorgi “repeatedly acted in a violent and sexually aggressive manner toward members of VCR’s staff and female residents.”) Gorgi’s family filed a grievance with the Indiana State Department of Health and hired a private neurologist, who ordered the drugs stopped. Gorgi’s condition improved, and he could feed himself again. (VCR contends that Gorgi’s aggressive behavior did not improve, however.)

During the same period, VCR temporarily transferred Gorgi two or more times to an all-male facility about an hour-and-a-half away. (Gorgi returned to VCR in between the temporary transfers.) Around December 2016, a physician at the second facility determined that Gorgi should not return to VCR. So VCR transferred Gorgi through an involuntary discharge to a dementia facility in Indianapolis.

Gorgi’s family filed a grievance with the Indiana State Department of Health. A state administrative law judge ruled that VCR violated Gorgi’s discharge rights. But the only relief available was readmittance to VCR. Fearing that VCR would retaliate against him, Gorgi’s family moved him to another nursing home.

Gorgi’s wife, Ivanka Talevski, sued VCR on Gorgi’s behalf. She alleged that VCR wrongfully used chemical restraints on Gorgi and impermissibly transferred him in violation of the Federal Nursing Home Reform Act (FNHRA). The district court ruled in favor of VCR, but the United States Court of Appeals for the Seventh Circuit reversed. This appeal followed.

CASE ANALYSIS

Congress enacted the FNHRA to establish minimum standards of care that nursing homes must meet in order to qualify for federal Medicaid funding. The FNHRA sets certain rules for nursing-home facilities, and it sets certain “[r]equirements relating to residents’ rights.” In return for receiving federal Medicaid funds, state nursing-home facilities must comply with these rules and respect these rights.

Two of those rights are at issue here. The first one protects nursing-home residents against “chemical restraints imposed for purposes of discipline or convenience and not required to treat the resident’s medical symptoms,” except “to ensure the physical safety of the resident or other residents” and only under specific physician instructions. 42 U.S.C. § 1396r(c)(1)(A). The second one prohibits a nursing home from transferring a resident unless “the safety of individuals in the facility is endangered,” among other specified exceptions. 42 U.S.C. § 1396r(c)(2).

But just because the FNHRA establishes those rights, a nursing-home resident cannot necessarily sue to enforce them. That’s because the FNHRA is a federal spending program; it sets conditions for states on the receipt of federal funds (in this case Medicaid funds). In that way, the FNHRA, like other spending programs, creates benefits and obligations between the federal government and the states. While the FNHRA sets standards for the benefit of nursing home patients, the question is whether those patients can sue to enforce those rights. (Just a quick technical note, with important implications: individuals sue to enforce federal rights under another statute, 42 U.S.C. § 1983, or just “Section 1983.” That law, first enacted in 1871, authorizes individuals to sue defendants who are acting “under color of law” for violating their rights under the Constitution or federal law. We’ll hear the parties reference Section 1983 throughout the oral argument.)

Under Court precedent, a person can sue to enforce rights created by a federal spending program only when that program has certain characteristics. In particular, Congress must have intended that the program, or a provision in it, benefits the plaintiff; the rights can’t be “vague and amorphous” so as to “strain judicial competence”; and the program “must unambiguously impose a binding obligation on the States.” Blessing v. Freestone, 550 U.S. 329 (1997). All this means that a plaintiff must demonstrate that a federal spending program unambiguously creates an individual right that protects the plaintiff. Gonzaga University v. Doe, 536 U.S. 273 (2002). That’s a high bar, and the Court hasn’t found that a federal spending program created an individually enforceable right since 1990.

Against this backdrop, VCR argues first that congressional spending programs do not create enforceable rights under Section 1983 at all. VCR says that Congress enacted Section 1983 with common-law contractual principles in mind. According to VCR, those principles preclude “third parties” from enforcing contracts. If a federal spending program is a contract between the federal government and a state, this means that an individual who is not a party to the contract (like a nursing home resident) can’t sue to enforce that contract, even if the contract protects them. VCR claims that this is also consistent with separation-of-powers and federalism principles in our Constitution. Finally, it contends that the Court itself has effectively recognized this in its most recent decisions, which, according to VCR, call into question whether congressional spending programs give rise to Section 1983 claims. VCR asserts that the Court should overrule its cases to the contrary.

But even if the Court continues to hold that certain federal spending programs allow Section 1983 claims, VCR argues that the FNHRA doesn’t. VCR says that Congress has created “more than sufficient [other] individualized remedies” for nursing-home residents “to foreclose resort to Section 1983.” Moreover, it claims that the two rights asserted by Talevski “come nowhere close to meeting the stringent criteria” in Blessing and Gonzaga.

Talevski counters that congressional spending programs like the FNHRA can create rights, and that the plain text of Section 1983 authorizes individual lawsuits to enforce them. Talevski says that the text, context, and purpose of Section 1983 all support this conclusion. He also claims that the Court’s precedents and specific congressional ratification of those precedents support this conclusion. Talevski asserts that these sources should guide the Court’s ruling, not the common law of contracts in the 1870s. But even if the common law of contracts governs, Talevski says that “the prevailing rule in this country in the early 1870s was that third parties could sue to enforce contracts for their benefits,” and so Section 1983 authorizes lawsuits to enforce rights in federal spending programs even under VCR’s historical argument.

Talevski argues next that Congress clearly intended to allow individual lawsuits to enforce the FNHRA’s rights against chemical restraint and involuntary discharge. He says that the FNHRA’s text, structure, history, and purpose all support this conclusion. For example, he points out that the FNHRA repeatedly refers to residents’ “rights,” that the FNHRA specifically describes them as “legal rights,” and that the FNHRA rights pass to a resident’s guardian if the resident becomes incompetent. Talevski also points out that the FNHRA rights are part of a “bill of rights” that are provided orally and in writing to each resident. He claims that these rights are “fundamental” for nursing home residents, who “are among the most vulnerable individuals in our society.”

Finally, Talevski argues that the FNHRA offers no other federal mechanism for residents to hold nursing homes accountable for individual rights violations. He says that before the FNHRA these rights were secured only by regulation, and that Congress would have no reason to enact the FNHRA if regulatory enforcement sufficed. Moreover, he points out that the FNHRA “explicitly preserves access to other federal remedies outside FNHRA,” including Section 1983 actions.

The government weighed in as amicus to argue that congressional spending programs can create rights that are enforceable through Section 1983 actions. In particular, the government argues that VCR is wrong to argue that common-law contract principles should govern the Court’s interpretation of Section 1983, and that the Court should not overturn its precedents authorizing Section 1983 suits to enforce spending program rights.

But at the same time the government argues that Section 1983 is not available to protect the rights in the FNHRA. The government says that the vast majority of nursing-home residents live in private nursing homes that are not covered by the FNHRA; that Congress provided only administrative oversight and enforcement for those nursing homes; and that Congress could not have intended to create an additional and potentially conflicting enforcement mechanism (through Section 1983 lawsuits) for the small percentage of public nursing-home residents.

 

SIGNIFICANCE

The first question in this case—whether a plaintiff can sue under Section 1983 to enforce rights provided in federal spending programs—could impact the ability of millions of participants in those programs to enforce their rights in court. In particular, if the Court overrules its precedents—or lets those precedents die on the vine—participants in core social-safety-net programs like Medicaid, Medicare, the Children’s Health Insurance Program, Temporary Assistance to Needy Family, the Supplemental Nutrition Assistance Program, and the McKinney-Vento Homeless Assistance Program will not be able to sue in court to enforce their rights under those programs. Because the federal government cannot enforce rights in every instance, and because the government only reluctantly withholds federal funds for noncomplying states, this would leave millions of participants at the whim of state legislatures and state officials who administer the programs—and who too often have little regard for participants’ rights.

But even if the Court stops short on the first question, the second question could have a similarly significant impact, but for a smaller population. If the Court rules that nursing-home residents cannot sue under Section 1983 to enforce their rights under the FNHRA, those residents could only rely on administrative mechanisms and, ultimately, revocation of Medicaid funds to enforce their rights. But the federal government cannot enforce FNHRA rights in every case, and it’s loath to revoke funds when states don’t comply with the Act (because such a move would ultimately hurt nursing-home residents even more).

All that said, the Court has not authorized a Section 1983 lawsuit to enforce rights in a federal spending program since 1990. For this Court, that may cut in favor of overruling precedent—either actually or practically—that allows such suits. (As we saw this Summer, this Court is not shy about expressly overruling well-settled precedent, or acknowledging that well-settled precedent has effectively withered away.) And VCR’s historical argument (on the common-law of contracts) is pitch-perfect for this Court and its newly revitalized historical approach. (That’s not to say that VCR’s argument is right. As several amici point out, it’s not. But the Court’s newly revitalized historical approach only concerns itself with “the historical record compiled by the parties” in litigation, not (necessarily) the actual historical understanding of a particular area of law. New York State Rifle & Pistol Association, Inc. v. Bruen, 597 U.S. ___ (2022).) All this means that the case is ripe for this Court to restrict or even overturn its precedents allowing Section 1983 claims to enforce rights in federal spending programs.