Recent SCOTUS Ruling Could Impact Local Government

On June 8, in a 7-2 opinion authored by Justice Jackson, the Supreme Court affirmed the Seventh Circuit’s holding that recourse is available to private parties under Section 1983 for violations of the Federal Nursing Home Reform Act (FNHRA).

The decision creates the potential for substantial Section 1983 litigation against local governments operating nursing homes. According to the National Association of Counties (NACo), counties own and operate 758 skilled nursing facilities and nursing homes nationally; in order to receive Medicaid funding, they must comply with FNHRA. The financial impact of private parties being able to sue nursing homes under Section 1983 for violations of FNHRA could be significant, and pose further challenges to local governments’ budgets.

The case arose out of an action filed on behalf of Gorgi Talevski, a dementia patient in a county-run Indiana nursing home. Talevski’s wife claimed that the facility violated her husband’s right to be free from chemical restraints by over-prescribing psychotropic drugs to restrain him and violated his rights related to resident-transfer and discharge procedures. She sued the Health and Hospital Corporation of Marion County (HHC) under Section 1983, alleging violations of FNHRA, which sets the standards of care for nursing homes to abide by to receive Medicaid funding.

Here, the question was whether FNHRA had unambiguously created individual rights sufficient to supersede the typical remedy for noncompliance.  Applying the principles in Gonzaga University v. Doe, 536 U.S. 273 (2002) the Court found that the FNHRA provisions allegedly violated by HHC did create such rights.

In an amicus brief GFOA filed jointly with seven other national organizations, the group argued that the Court should hold that the Spending Clause does not permit implied private rights of action absent very explicit Congressional intent, and that judicially created implied rights of action will expose States and localities to conditions unknown at the time they agreed to accept federal dollars. As a consequence, the brief asserts, some state and local governments may choose simply to opt out of receiving federal funds—undermining important policy goals and ultimately harming the intended beneficiaries of those programs.

Click here to read the Court’s opinion, and here to read the amicus brief.