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NEWMAN v. KELLY

March 24, 1994

RUSSELL NEWMAN, et al., Plaintiffs,
v.
SHARON PRATT KELLY, et al., Defendants.


RICHEY


The opinion of the court was delivered by: CHARLES R. RICHEY

I. INTRODUCTION

 Before the Court are the parties' cross Motions for Summary Judgment in the above-captioned action. The Plaintiffs, four individuals affected by the District of Columbia's nursing home regulations, brought this class action under 42 U.S.C. §§ 1395i-3, 1396r (the Medicare and Medicaid statutes) on behalf of all similarly situated individuals, seeking injunctive and declaratory relief to bring the District's nursing home regulations into compliance with the federal Nursing Home Reform Law of 1987. *fn1" Because the Court concludes that federal law pre-empts local regulations of facilities eligible for Medicare and/or Medicaid benefits based on level of care distinctions, and that the District of Columbia's regulations in this field violate federal law, the Court shall grant the Plaintiff's motion for summary judgement. However, the Court will give the Defendants thirty (30) to bring its regulations into compliance with 42 U.S.C. §§ 1395i-3, 1396r, after which those regulations not in compliance shall be null and void.

 The Plaintiffs contend that the District of Columbia ("District" or "D.C.") unlawfully maintains a two-tiered system for regulating nursing facilities which are eligible for reimbursement under Medicare and/or Medicaid. They argue that the District's system distinguishes between "intermediate" and "skilled" care in contravention of the Nursing Home Reform Law, which abolished that distinction. The Plaintiffs further argue that because of the District's two-tiered system they have been subjected to various injuries particularly related to the District's scheme, including damaging transfers between and discharges from different facilities; harmful separations from loved ones; and burdensome denials of the right to live where they choose.

 The Defendants contend that the Court should defer to the reasonable exercise of administrative expertise by the D.C. agencies which regulate nursing homes eligible for Medicare and/or Medicaid benefits, because (1) these Defendants do not engage in activities that result in illegal involuntary transfers of residents between and discharges from nursing facilities, and (2) Congress did not intend to pre-empt state action in the field of nursing facility licensure and regulation by enacting amendments to 42 U.S.C. §§ 1395i-3, 1396r.

 After giving careful consideration to the parties' pleadings, the applicable law, and the entire record herein, the Court concludes (1) that the District's system causes transfers and discharges of nursing home residents which violate federal law, and (2) that federal law pre-empts the District's regulatory scheme for nursing facilities eligible for reimbursement under Medicare and/or Medicaid to the extent that the scheme enforces level of care distinctions.

 II. FACTS

 The individual Plaintiffs in this case are nursing home residents in the District of Columbia who have been affected by specific application of the District's regulatory scheme for nursing facilities eligible for federal reimbursement under Medicare and/or Medicaid. The individual Plaintiffs represent a class of upwards of 3,000 residents in D.C. nursing homes and the unlimited number of future residents who are or will be governed by the Defendants' nursing home regulatory scheme. Briefly, the following are facts surrounding the application of the District's regulatory scheme to the individual Plaintiffs.

 Plaintiff Russell Newman resided at Rock Creek Manor when medical problems caused him to be adinitted to the Georgetown University Hospital. His medical difficulties required the insertion of a feeding tube. After his medical condition stabilized, he requested through a representative to return to Rock Creek Manor. However, because feeding tube maintenance qualified as a level of care under the D.C. scheme for which Rock Creek Manor was not licensed, that institution could not and would not readmit him.

 Plaintiff Ailene Ewell was also a resident of Rock Creek Manor along with her husband of over 50 years, James Ewell. Like Plaintiff Newman, Ms. Ewell was transferred to Georgetown University Hospital where she too had a feeding tube inserted. After this procedure, she was reclassified as needing "skilled" rather than "intermediate" care, as the District's scheme defines those terms. Based on the new level of care she required, Rock Creek Manor attempted to discharge her. Upon petition from Ms. Ewell, a District of Columbia Administrative Law Judge held that, under federal law, Rock Creek Manor was obligated to readmit her.

 In March, 1992, Ms. Ewell was again hospitalized for injuries she received at Rock Creek Manor. After her latest medical problems, Ms. Ewell did not want to return to Rock Creek Manor and sought to be admitted to a new facility. Because of the D.C. scheme, however, she was reclassified as requiring skilled care, while her husband remained classified as needing intermediate care. Because of the difference in the levels of care each spouse required, Ms. Ewell must find a facility that is licensed for both levels of care before she and her husband can move.

 Plaintiff John Studevant and his wife resided at J.B. Johnson nursing facility. Because of medical problems, Mr. Studevant was transferred to a local hospital for treatment. When his medical situation stabilized, he was reclassified as needing skilled care. Because of the D.C. scheme, however, J.B. Johnson is licensed solely for intermediate care beds. As a result, Mr. Studevant has not been able to return to his previous home and continue living with his wife.

 Plaintiff Mattie Brown was admitted to the Wisconsin Avenue Nursing Home as an intermediate care resident living on the fifth floor. Following an illness, Ms. Brown was reclassified as requiring skilled care and was transferred to a Medicare (skilled care) licensed floor. After a short time, Ms. Brown was reclassified as requiring intermediate care, and facility administrators wanted to return her to the fifth floor. Because she believed her health on the Medicare floor was flourishing, Ms. Brown did not want to return to the fifth floor and challenged the transfer. A District of Columbia Administrative Law Judge refused to authorize her transfer, citing the proposed transfer's noncompliance with federal law, but the administrative hearing in which this ruling was made has not been approved by the agency.

 In an affidavit supporting the Plaintiffs' Motion, the D.C. Long Term Care Ombudsman, *fn2" M. Anne Hart, related that she had been told in 1991 by relevant District agencies that the District was in the process of changing its licensure regulations for nursing facilities to comply with federal law. Plaintiffs' Motion for Preliminary Injunction, Declaration of M. Anne Hart, P 22. Ms. Hart also states that, when she had a conversation in 1992 with an official at a D.C. agency charged with regulating nursing facilities, she was told that the District had given low priority to changing its regulatory system. Id., at P 25.

 The Defendants are responsible for the licensing of nursing facilities within the District of Columbia. D.C. Code § 32-1401, et seq. Under the District's licensing scheme, each facility eligible for Medicare or Medicaid reimbursement is licensed accordingly. When the level of care required by a resident changes, the resident's nursing facility must transfer or discharge that resident if that facility is not licensed to provide the appropriate level of care. *fn3" Under D.C. law, when a facility discharges or transfers a resident, the resident must receive notice of and be given an opportunity to challenge that decision. It is the view of the District agencies which license and regulate nursing facilities that transfers based upon distinctions between levels of care are permissible in light of federal policy.

 On July 20, 1992, the Health Care Financing Administration (HCFA) issued an advisory letter to the Defendants on the subject of nursing facility transfer policy. The pertinent sections of the letter state:

 
42 CFR 483.12(a) defines the instances under which [a resident of a nursing facility] may be transferred. Specifically, the resident has the right to remain in the facility unless: (1) a transfer is necessary for his/her welfare and the facility cannot meet the resident's needs; (2) the resident's health has improved to the extent that he/she no longer needs the services provided by the facility . . .
 
Patients may not be moved between distinct parts of a facility solely for the purpose of manipulating Medicaid or Medicare payment. Such moves are only appropriate if the resident requests to be moved. The resident has the right to refuse such moves and if a transfer is made against the resident's wishes, he/she may grieve the action . . .
 
. . . . Where facilities are concerned about not being able to transfer residents out of Medicare-certified, distinct-part beds once they no longer require skilled care, we offer the following alternatives. First, the facility could certify the entire facility for Medicare and Medicaid participation. The requirements are essentially the same for both programs. Then, intra-facility of a resident may be accomplished as long as the resident and, if known, the resident's legal representative or interested family member is notified promptly about the change of room or roommate. Second, the facility could . . . certify a Medicaid-only distinct part to provide health related care above the level of room and board. In this case, the facility's Medicare-only distinct part would be required to provide skilled care only, and once the resident no longer required skilled care, a transfer or discharge could be effected to the Medicaid-only distinct part as permitted under 483.12(a)(1).

 Defendants' Opposition to Motion for Preliminary Injunction, Attachment 1, at 1-2. Largely based on this letter, Defendants take the position that they may transfer a patient from one facility to another on the grounds that one facility is not licensed to handle the needs of that particular patient.

 The Plaintiffs filed this class action in May, 1993, seeking a Declaratory Judgement, Injunctive relief, and Costs and Attorney's fees. The Court subsequently certified the Plaintiffs' class and held a Motions hearing taking both the Plaintiffs' and the Defendants' Motions for Summary Judgment under advisement. Both parties have submitted Local Rule 108(h) Statement of Material Facts to which there is no dispute, and there are no disputed material facts.

 III. DISCUSSION

 Summary judgment shall be rendered upon a showing that there is no genuine issue as to any material fact that the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). The Court has jurisdiction of this case pursuant to 42 U.S.C. § 1983, because the Plaintiffs have alleged that their federal rights under the Medicare and Medicaid statutes have been violated by the application of the District's nursing home regulatory scheme. Wilder v. Virginia Hospital Association, 496 U.S. 498, 110 S. Ct. 2510, 110 L. Ed. 2d 455 (1990).

 Based on the parties' pleadings, the record herein, the facts to which there is no material dispute, and all relevant evidence pertaining to this case, the Court concludes that (1) the federal statutory scheme establishing a single standard of nursing care for all nursing facilities which are eligible for Medicare and Medicaid reimbursement is so pervasive that it pre-empts any local regulation of such facilities based on level of care distinctions; (2) Congress specifically prohibited with clear statutory language the types of transfers and discharges now occurring under the Defendants' scheme of regulation; (3) the federal agency principally charged with the regulation of nursing facilities has determined that there is a single standard of nursing care for Medicare and Medicaid beneficiaries mandated by federal law; and (4) because the Defendants' agencies have not adopted the findings of their own Administrative Law Judges, the Court will not defer to their interpretation that their scheme does not violate federal law.

 
A. THE DISTRICT OF COLUMBIA CONTINUES TO MAINTAIN A TWO-TIERED REGULATORY SYSTEM FOR NURSING HOMES MODELED AFTER THE OLD MEDICAID LAW WHICH MADE DISTINCTIONS BETWEEN "INTERMEDIATE" AND "SKILLED" LEVELS OF CARE.

 Since the federal law has taken effect in the District of Columbia, the District has continued to maintain a two-tiered system for licensing and regulating those nursing home facilities eligible to be reimbursed under Medicare and/or Medicaid. The District's system is modeled after the old Medicare/Medicaid statutory scheme, which provided for a lower standard of care under the old Medicaid program than under the more expensive Medicare program. See Blum v. Yaretsky, 457 U.S. 991, 102 S. Ct. 2777, 73 L. Ed. 2d 534 (1982). The District law regulating nursing homes is the Nursing Homes and Community Residence Facilities Protection Act. D.C. Code § 32-1401 et seq. The District's nursing home law is enforced by the Department for Consumer and Regulatory Affairs (DCRA), and the U.S. Department of Health and Human Services (HHS) is obligated to certify all federal payments made on behalf of District nursing home residents, including Medicare and Medicaid payments. Within HHS, the certification of these federal payments is performed by the Health Care Financing Administration (HCFA).

 At the heart of the District's scheme, its regulations have split nursing home facilities eligible for Medicare or Medicaid reimbursement into skilled care and intermediate care facilities. 22 D.C.M.R. Chs. 32, 33. A "skilled" or "intermediate" facility is defined as either an entire facility or a distinct part of a facility separately operated from the rest of the facility. 22 D.C.M.R. § 3099.1. A skilled nursing facility may be certified under the ...


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