SCOTUS Decided a Case That Purported to Be About Contracts!

The issue in the case was whether nursing home residents could vindicate their rights under the Federal Nursing Home Reform Act (FNHRA) in court.  At issue in the case were the rights to be free from unnecessary physical or chemical restraints and to be discharged or transferred only when certain preconditions are satisfied.  Ms. Talevski believed that 42 U.S.C. § 1983 provided the jurisdictional hook to get her to court because it provides for a cause of action for any person deprived of rights secured by the Constitution and laws "under the the color of state law;" that is, through state action.  Of note to contracts junkies, the petitioners in the case, Valparaiso Care and Rehabilitation's nursing home (VCR), claimed that laws that derive from Congress's Spending Power are not "laws" for the purposes of § 1983.  Rather, they are "contracts," and people like Ms. Talevski are third-party beneficiaries of those contracts.  Hence, the argument goes, § 1983 does not provide a basis for individual enforcement of the FNHRA.

In Health and Hospital Corporation of Marion County v. Talevski, the U.S. Supreme Court, per Justice Jackson (right) rejected VCR's arguments in a 7-2 ruling.  Ms. Talevski brought her action, alleging mistreatment of her husband, whose dementia progressed with shocking rapidity once he became one of VCR's residents in 2016.  According to the allegations of the complaint, VCR medicated Mr. Talevski into heightened dementia.  When Ms. Talevlski discovered the problem and had his medication tapered until his mental condition was restored, VCR accused him of harassing female staff and eventually used this as grounds to have him transferred to a separate facility 90 minutes removed from his family and kept him there, in violation of a court order.  

When Ms. Talevski brought her case on behalf of her husband in 2019 against VCR and related entities, known collectively in the litigation as HHC.  The District Court granted HHC's motion to dismiss, holding that no party could enforce the FNHRA through a § 1983 action.  The Seventh Circuit reversed.  

The case comes down to a dispute over the continued force of the Court's statement in Maine v. Thiboutot, 448 U. S. 1 (1980) that "laws" in § 1983 means "laws."  Building on dictum in Pennhurst State School and Hospital v. Halderman, 451 U. S. 1, 17 (1981), HHC and the dissenters argue that laws passed pursuant Congress's spending powers are not laws.  In Halderman, the Court noted that such laws are “much in the nature of a contract,” because, “in return for federal funds, the States agree to comply with federally imposed conditions.”  If FNHRA is a contract, then Ms. Talevski is a third-party beneficiary of that contract, and under the common law of third-party beneficiaries at the time that § 1983 was adopted, third-party beneficiaries could not sue to enforce contractual rights.  

Justice Jackson disposes of this syllogism with a one-two punch.  First, relying on an amicus brief from contracts scholars, led by Friend of the Blog, Mel Eisenberg(!), Justice Jackson attacked HHC's factual claim that the common law did not recognize the rights of third-party beneficiaries to sue to enforce contractual rights.  Second, she noted that the claim arises in tort, not in contract, and so the entire notion that contracts law might apply here is "at the very least, perplexing." 

Justice Thomas, writing in dissent, does not find the notion perplexing.  He argues that treating rights arising under laws enacted pursuant to Congress's Spending Clause power creates problems with the anti-commandeering doctrine.  Although Justice Gorsuch concurred in the majority opinion, he wrote separately to note the anti-commandeering issue, which the parties did not raise in this case.  Storm clouds gather on the horizon.