June 15, 2023
A Win with the Status Quo for Social Programs
Edward R. Utley Professor of Health Law and Professor of Law, Boston University School of Public Health and School of Law
On June 8, in a low-profile yet crucial case, the U.S. Supreme Court affirmed that Medicaid beneficiaries can seek relief in federal court to enforce federal laws against states. The 7-2 decision in Health & Hospital Corporation of Marion County v. Talevski held that the Federal Nursing Home Reform Act of 1987 (FNHRA), which protects nursing home residents through amendments to Medicare and Medicaid, can be enforced by private actions under 42 U.S.C. § 1983, the federal civil rights statute that allows a person to sue individuals “acting under color of law” who violate their civil rights. Talevski did not transform current law, but it had potential to weaken federal social programs broadly, so the status quo counts as a win for the spending power as well as the Medicaid program, providers, and beneficiaries.
Section 1983 claims in spending programs have been scrutinized under Gonzaga University v. Doe, a 2002 Supreme Court decision that made it more difficult for individuals harmed by state noncompliance with federal law to enforce statutory rights but that also kept Section 1983 claims on the table. The Rehnquist Court would not revisit Gonzaga, but the early Roberts Court showed openness to revisiting precedents, and during the 2006 Term the Court granted an Arkansas petition that would have reexamined Section 1983 actions in Medicaid. The case was voluntarily mooted before oral arguments, but ever since, petitions for certiorari in similar Medicaid enforcement cases have flowed to the Court. So, when the Talevski petition was granted based on a Seventh Circuit decision that was well within the Gonzaga framework, it worried experts who understood this history.
By way of quick background: Congress exercises its spending power to “provide for the general welfare” when it enacts laws that form the nation’s safety net, and Congress usually invites states to partner in federal policies. These conditional spending programs, such as the Children’s Health Insurance Program (CHIP), Temporary Assistance for Needy Families (TANF), Supplemental Nutrition Assistance Program (SNAP), and Title X family planning, offer money to implement federal law, and in return states agree to follow federal rules.
Medicaid is one of these conditional spending programs and a statutory entitlement for both states and beneficiaries. It provides public health insurance to more than 86 million people, or nearly a quarter of the U.S. population. In addition to children, pregnant people, and people with disabilities, Medicaid also is the primary payer for long-term care, covering almost two-thirds of those receiving institutional long-term services and supports. The nearly sixty-year collaboration between the Department of Health and Human Services (HHS) and states makes it so Medicaid is a partnership but also a source of conflict. States sometimes do not deliver Medicaid’s promised benefits and have used federal Medicaid money for other purposes, so federal oversight is necessary.
The Health and Hospital Corporation (HHC) petition primed the Court to strike at the heart of conditional spending programs. If HHC and its state supporters had their way, beneficiaries denied Medicaid’s legally promised benefits would have had no recourse in federal court. Specifically, HHC presented two questions. First, whether private parties can sue states under Section 1983 to enforce conditional spending programs at all. Since 1980, the Court has blessed enforcing federal social programs’ rules against noncompliant states through Section 1983, which Congress enacted in 1871 as part of the Ku Klux Klan Act to provide a way to enforce civil rights when states did not protect their own residents. Federal courts have held both health care providers and patients can enforce Medicaid’s statutory entitlements under Section 1983. Congress rejected proposals to eliminate this private right of action over time. One irony of HHC’s fight against Section 1983 actions is that courts can issue fine-tuned decisions that address directly states’ noncompliant actions, whereas administrative action (withholding funding) is less precise.
Second, HHC argued the FNHRA is not enforceable under Section 1983, even though Medicaid requires states to cover nursing facility care, which means facilities receiving Medicaid funds must meet FNHRA standards. Gorgi Talevski had dementia and lived in a state-run nursing facility in Indiana. His family alleged the HHC nursing facility failed to provide adequate care, overmedicated him, and transferred him without permission, but administrative remedies provided them no relief. Their allegations raised the question of enforcement for the FNHRA Residents’ Bill of Rights against state entities like HHC, which the Medicaid Act does not address directly.
HHC seized a new opportunity, given the Court’s current willingness to overturn settled precedent and the history of the Roberts Court granting Section 1983 petitions in Medicaid. Yet, during oral arguments the Justices largely seemed skeptical of HHC’s sweeping requests, which would have required overruling many longstanding precedents.
This was arguably Justice Ketanji Brown Jackson’s first majority opinion with high policy stakes. Her questions during oral argument were deeply engaged with the statutory civil rights at issue, noting the law’s history and intent to protect freed slaves during the Reconstruction Era. The majority opinion noted that Congress enacted Section 1983 with plain language allowing people to sue state officials for “the deprivation of any rights . . . secured by the Constitution and laws” and making state officials “liable . . . in an action at law, suit in equity, or other proper proceeding for redress . . . .” Justice Jackson expressed doubt that a sudden, sweeping limitation on the use of this clearly-worded civil rights law would somehow correct prior misinterpretations.
The Court thus firmly rejected HHC’s argument that no federal spending program could be subject to Section 1983 actions and reiterated that state noncompliance with Medicaid could be enforced by private parties where the provision in question creates unambiguous rights, consistent with Gonzaga. Though some parts of the Medicaid Act do not meet the Gonzaga test, the Court decided that the FNHRA does because it describes patient protections and repeatedly mentions “residents’ rights.” This is the same kind of language that has given rise to private enforcement actions for other Medicaid provisions.
Justice Gorsuch and Justice Barrett (joined by Chief Justice Roberts) wrote separate concurrences, each expressing openness to more petitions like this. The concurring opinions found the FNHRA to create enforceable rights, but they were not willing to close the door to the larger theory HHC resurfaced, that Medicaid beneficiaries cannot enforce federal law because they are “third-party beneficiaries” to a “contract” between HHS and states. Under this line of thinking, only HHS could enforce Medicaid rules, never health care providers or patients.
Justice Thomas’s lengthy dissent expressed doubt that Congress has any conditional spending power rooted in the General Welfare Clause. To be clear, the Court has held the power to spend is a standalone enumerated power since 1936, and the Rehnquist Court found conditional spending to be unremarkable when fashioning the four-part analytical test for evaluating it in South Dakota v. Dole. Justice Thomas’s radical approach would effectively force Congress to start over on most social programs. Notably, this dissent was joined by no other justices, even though Justice Alito has appeared receptive to such arguments in the past. Justice Alito’s dissent perceived the FNHRA to have adequate administrative remedies that would preclude Section 1983 actions.
The concurrences and dissents have the effect of inviting more litigation over Section 1983 actions in federal spending programs. As I have written elsewhere, the New Roberts Court has abundantly demonstrated, often through health law and policy, an openness to overturning long-established precedent. And, many of these decisions indicate a renewed federalism revolution. To name just a few examples: the Court limited OSHA’s power to protect worker safety in NFIB v. Department of Labor; overturned Roe v. Wade in Dobbs v. Jackson Women’s Health in the name of returning abortion regulation “to the people and their elected representatives”; and limited federal agencies’ authority upon anointing the novel major questions doctrine in West Virginia v. EPA, among other key decisions.
With this chaotic legal landscape in mind, Talevski is notable for simply maintaining the status quo. Perhaps counterintuitively, keeping private rights of action available to Medicaid providers and patients, whose statutory rights are violated by states with some regularity, can even be seen as federalism-enhancing, because federal courts can craft narrower remedies. HHS has few options: withhold funding, partially or entirely, or work with states to come into compliance. Withholding funding is a blunt tool that could harm providers and patients, as states generally do not hold extra Medicaid money in reserve and would find ways to cut costs. Further, HHS does not have capacity to detect and investigate every single state action that violates the Medicaid Act. Former administrators of HHS repeatedly have written in amicus briefs that they rely on Section 1983 actions to know when states are noncompliant. These actions protect vulnerable populations, such as Gorgi Talevski, and Medicaid enrollees.
The ability to seek redress in court for enforcement of statutory civil rights is critical for access to justice, and holding in favor of HHC’s arguments would have controverted the purpose of Section 1983 as one of the nation’s oldest civil rights tools. Medicaid covers a disproportionate number of Black and other people of color, and so limiting Section 1983 actions would have had a disproportionate impact on these low-income populations and the providers who care for them. Further, the “great unwinding” of Medicaid eligibility that is occurring with the end of the COVID-19 public health emergency creates a new moment of precarity. Many who are or will be disenrolled are legally eligible but face administrative hurdles and may need Section 1983 actions in the near future. In addition, with Arkansas’s governor and House Republicans proposing work requirements all over again, other forms of administrative disenrollment are back on the table.
A ruling in favor of HHC would have meant that millions who rely on federal programs would not be able to stop a state from violating their statutory rights. HHC tapped into a theory that has resurfaced for decades, as recently as 2015, but has never taken hold. If HHC had won, it would have undermined federal social programs, very likely in the name of federalism. Though private rights of action in Medicaid have been maintained, stay tuned – more petitions are sure to come.
Nicole Huberfeld is the Edward R. Utley Professor of Health Law at Boston University's School of Public Health and Professor of Law at the Boston University School of Law. She also is co-director of the BU Law Program in Reproductive Justice.