O’bannon v. Town Court Nursing CTR., 447 U.S. 773 (1980)

O’Bannon v. Town Court Nursing Center

No. 78-1318

Argued November 6, 1979
Decided June 23, 1980
447 U.S. 773

CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

Syllabus

After the Department of Health, Education, and Welfare (HEW) and the Pennsylvania Department of Public Welfare (DPW) had revoked the authority of Town Court Nursing Center (a nursing home) to provide elderly residents of the home with nursing care at government expense under Medicare and Medicaid provider agreements, the home and several of its patients (respondents) brought suit in Federal District Court, alleging, inter alia, that the patients were entitled to an evidentiary hearing on the merits of the revocation before the Medicaid payments were discontinued. The District Court ultimately rejected this argument. On appeal, the Court of Appeals reversed, holding that the patients had a constitutionally protected property interest in continued residence at the nursing home that gave them a right to a pretermination hearing on whether the home’s Medicare and Medicaid provider agreements should be renewed. In so holding, the court relied on three Medicaid provisions: 42 U.S.C. § 1396a(a)(23) (1976 ed., Supp. II), which gives Medicaid recipients the right to obtain services from any qualified facility, a federal regulation prohibiting certified facilities from transferring or discharging a patient except for specified reasons, and a federal regulation prohibiting the reduction or termination of financial assistance without a hearing.

Held: The patients have no interest in receiving benefits for care in a particular facility that entitles them, as a matter of constitutional law, to a hearing before HEW and DPW can decertify that facility. 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. Pp. 784-790.

(a) Whether viewed singly or in combination, the Medicaid provisions relied upon by the Court of Appeals do not confer a right to continued residence in the nursing home of one’s choice. While 42 U.S.C. § 1396a(a)(23) (1976 ed., Supp. II), by implication, gives recipients the right to be free from government interference with the choice to remain in a home that continues to be qualified, it does not confer a right to continue to receive benefits for care in a home that has been decertified. Although the regulations in question protect 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. And, since decertification does not reduce or terminate a patient’s financial assistance, but merely requires him to use it for care at a different facility, regulations granting recipients the right to a hearing prior to a reduction in financial benefits are irrelevant. Pp. 785-786.

(b) This case does not involve the withdrawal of direct benefits. Rather, it involves the Government’s attempt to confer an indirect benefit on Medicaid patients by imposing and enforcing minimum standards of care on facilities like Town Court. When enforcement of those standards requires decertification of a facility, there may be an immediate, adverse impact on some residents. But that impact, which is an indirect and incidental result of the Government’s enforcement action, does not amount to a deprivation of any interest in life, liberty, or property. Pp. 781-789.

586 F.2d 280, reversed and remanded.

STEVENS, J., delivered the opinion of the Court, in which BURGER, C.J., and STEWART, WHITE, POWELL, and REHNQUIST, JJ., joined. BLACKMUN, J., filed an opinion concurring in the judgment, post, p. 790. BRENNAN, J., filed a dissenting opinion, post, p. 805. MARSHALL, J., took no part in the consideration or decision of the case.