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42 U.S.C.S. § 1396a (a)(23) gives nursing home benefit recipients the right to choose among a range of qualified providers without government interference. By implication, it also confers an absolute right to be free from government interference with the choice to remain in a nursing home that continues to be qualified. It clearly does not confer a right on a recipient to enter an unqualified home and demand a hearing to certify it, nor does it confer a right on a recipient to continue to receive benefits for care in a home that has been decertified. Although 42 C.F.R. §§ 405.1121(k)(4), 205.10(a)(5) protect nursing home patients by limiting the circumstances under which a home may transfer or discharge a Medicaid recipient, they do not purport to limit the government's right to make a transfer necessary by decertifying a facility.
Following the action of federal and state agencies (the Department of Health, Education, and Welfare and the Pennsylvania Department of Public Welfare) in revoking the authority of a nursing home in Pennsylvania to provide government-paid medical care to its patients under provider agreements for the Medicare and Medicaid programs of the Social Security Act (42 USCS 1395 et seq. and 1396 et seq.), the home and several of its patients who received Medicaid brought an action in the United States District Court for the Eastern District of Pennsylvania, alleging, among other things, that the patients were entitled to an evidentiary hearing on the merits of the decertification decision before revocation of the home's authority to provide medical care at government expense. Eventually, the District Court rejected the contention that the patients were entitled to an evidentiary hearing, but the United States Court of Appeals for the Third Circuit disagreed, ruling that the provisions of the statute and regulations governing the Medicaid program--specifically, a statute giving the recipients of Medicaid benefits the right to choose among a range of qualified providers (42 USCS 1396a(a)(23)), a regulation prohibiting certified facilities from transferring or discharging a patient except for certain specified reasons (42 CFR 405.1121(k)(4) (1979)), and a regulation prohibiting the reduction or termination of a recipient's financial assistance without a hearing ( 45 CFR 205.10(a)(5) (1979))--created a legitimate entitlement to continued residency at the home, and that such was a constitutionally protected property interest which patients at the home could not be deprived of without due process under the Federal Constitution.
Were the patients entitled to evidentiary hearing on the merits of the decertification decision before revocation of the nursing home's authority to provide medical care at government expense?
The Court held that the patients were not entitled, as a matter of due process under the Fifth Amendment, to a hearing prior to the revocation by federal and state agencies of the nursing home's authority to provide care at government expense under provider agreements for the Medicare and Medicaid programs, the patients having no right to continued residence in the home of their choice, such as to entitle them to a hearing, under the statutory and regulatory provisions relied upon by the Court of Appeals, and the patients not being entitled to a hearing on the theory that a transfer was tantamount to a deprivation of life or liberty in view of the possible severe physical or emotional side-effects of such a transfer, since any such deprivation which the patients might suffer as the result of a nursing home's decertification was the result of indirect and incidental governmental action, which did not bring into play the due process provision of the Fifth Amendment. The Court averred that whatever legal rights the patients may have against the nursing home for failing to maintain its status as a qualified nursing home, the enforcement by HEW and DPW of their valid regulations did not directly affect the patients' legal rights or deprive them of any constitutionally protected interest in life, liberty, or property.