During the 2021 term and beyond, several issues involving health care will finally make their way to the Supreme Court.
While the Supreme Court left the ACA intact in California v. Texas, other cases involving specific provisions of the ACA are still being litigated in lower courts. In many of these cases, following the change in administrations, the Department of Justice has requested additional time to consider the issues raised. Whether these considerations result in changes to the government’s positions will be a key factor in whether these issues reach the Supreme Court.
The first set of these cases concerns Section 1557 of the ACA. Section 1557 prohibits discrimination in health care for protected classes. 42 U.S.C. § 18116. In drafting the law, Congress recognized the need to ensure all individuals have access to health services and insurance, regardless of their race, color, national origin, sex, age, or disability. The law prohibits such discrimination by applying existing civil rights laws to relevant conduct covered by the ACA.
The prior regulations interpreting Section 1557 made clear that sex discrimination prohibited by the law includes discrimination based on sexual orientation and gender identity. 81 Fed. Reg. 31,376 (May 18, 2016) (codified at 45 C.F.R. pt. 92). However, in 2020 HHS finalized a rule that would strip these protections out of the regulations. The rule also eliminated important language access provisions that enable individuals with limited English proficiency to obtain health care.
At least six lawsuits were filed last year, each arguing that the rule violates the Administrative Procedure Act. The lawsuits are not identical, but each alleged that the new rule is not in accordance with the ACA and that its adoption was arbitrary and capricious. See Whitman-Walker Clinic, Inc. v. U.S. Dep’t of Health and Human Servs., No. 1:20-cv-01630 (D.D.C); Asapansa-Johnson Walker v. Azar, No. 1:20-cv-2834 (E.D. N.Y.); Bagly v. HHS, No. 1:20-cv-11297 (D. Mass.); Washington v. HHS., No. 2:20-cv-1105 (W.D. Wash.); New York v. HHS, No. 1:20-cv-5583 (S.D. N.Y.); Chinatown Serv. Ctr. v. HHS, No. 1:21-cv-331 (D.D.C.).
AARP and AARP Foundation filed an amicus brief in the Whitman-Walker case, in support of the plaintiffs’ effort to stop implementation of the rule. The brief argued that allowing the rule to take effect would harm older adults, including members of the LGBTQ community and those with limited English proficiency. The brief also argued that implementing the rule during a public health crisis when access to care is critical would have devastating consequences.
On August 17, 2020, the District Court for the Eastern District of New York issued a preliminary injunction in the Asapansa-Johnson Walker case, blocking implementation of the portions of the rule that rolled back anti-discrimination protections for LGBTQ people. On September 2, 2020, the District Court for the District of Columbia also issued a preliminary injunction in the Whitman-Walker case, similarly stopping implementation of the portions of the rule rolling back anti-discrimination protections for LGBTQ people. The injunction also blocks a provision that would have extended Title IX’s religious exemption to Section 1557. The injunction applies nationwide and will remain in effect while the case proceeds.
On May 10, 2021, HHS issued new guidance regarding enforcement of Section 1557 that makes clear that prohibited discrimination based on sex includes discrimination on the basis of sexual orientation and gender identity. The agency has also stated that it will initiate a rulemaking proceeding interpreting Section 1557 in 2022. However, the plaintiffs in the Whitman-Walker litigation recently sought to lift the stay on the case, arguing that the provisions of the rule that remain in effect continue to cause ongoing harm. Plfs’ Mot. to Lift Stay of Proceedings, Whitman-Walker Clinic Inc. v. HHS (July 26, 2021) (ECF No. 74).
A second set of cases involves rules issued by the prior administration that were designed to expand the availability of short-term, limited-duration insurance (STLDI) and association health plans (AHPs). Ass’n for Cmty. Affiliated Plans v. U.S. Dep’t of Treasury, No. 18-2133 (RJL) (D.D.C.); New York v. U.S. Dep’t of Labor, No. 18-1747 (JDB) (D.D.C.). STLDI and AHPs are two types of health insurance not subject to the requirements of the ACA. The challengers argue that the agencies that issued these rules exceeded their authority and that the rules conflict with the ACA.
The district court invalidated the rule on association health plans, describing the rule as “designed to end run the requirements of the ACA[.]” New York v. U.S. Dep't of Labor, 363 F. Supp. 3d 109, 141 (D.D.C. March 28, 2019). The government appealed, and the D.C. Circuit held oral argument in November 2019. In January 2021, the Department of Labor filed a motion to hold the case in abeyance “to allow new agency officials sufficient time to become familiar with the issues in this case and determine how they wish to proceed.…” Consent Mot. to Hold Appeal in Abeyance, New York v. Dep’t of Labor, No. 19-5125 (Jan. 28, 2021) (Doc. #1882506).
In contrast, the district court upheld the STLDI rule. 2019 U.S. Dist. LEXIS 120834 (D.D.C. July 19, 2019). The plaintiffs appealed to the D.C. Circuit. AARP and AARP Foundation filed a brief in support of the plaintiffs-appellants, highlighting how the proliferation of these plans will harm older adults. Insurers who offer these plans can deny coverage because of preexisting conditions and charge exorbitant rates based on age alone, and they need not provide the minimum essential benefits that ACA-compliant plans must offer. The D.C. Circuit affirmed the lower court’s decision, holding that the rule does not violate the Administrative Procedure Act. Ass’n for Cmty. Affiliated Plans v. U.S. Dep’t of Labor, No. 19-5212, 2020 WL 4032806 (D.C. Cir. July 17, 2020). The plaintiffs-appellants’ petition for rehearing en banc was denied. Ass’n for Cmty. Affiliated Plans v. U.S. Dep’t of Labor, 966 F.3d 782 (D.C. Cir. 2020), reh’g en banc denied (D.D.C. Jan 26, 2021). Recently, the co-plaintiffs in the case and several amici, including AARP and AARP Foundation, sent a letter to HHS Secretary Becerra, requesting that the agency reverse the 2018 STLDI rule and issue a new rule more in line with the 2016 rule prior to the 2022 ACA Open Enrollment period.
Resident Rights Under the Federal Nursing Home Reform Act
The Federal Nursing Home Reform Act (NHRA) defines and guarantees the legal rights of nursing facility residents. The law’s purpose is to ensure that nursing facility residents receive high-quality care and protection from physical, emotional, and social abuse and neglect. Nursing facilities must provide for residents “in such a manner and in such an environment as will promote maintenance or enhancement of the quality of life of each resident.” Pub. L. No. 100-203, § 4211(b)(1)(A), 101 Stat. 1330, 1330-183 (1987).
There is still an open question about whether residents of state-owned nursing facilities can sue under Section 1983 of the Civil Rights Act to enforce their NHRA rights. The Third, Ninth, and Seventh Circuits have held they can. Grammer v. John J. Kane Reg’l Ctrs., 570 F.3d 520 (3d Cir. 2009); Anderson v. Ghaly, 930 F.3d 1066 (9th Cir. 2019); Talevski v. Health and Hosp. Corp. of Marion Cnty., No. 20-1664, 2021 WL 3163061 (7th Cir. 2021). Section 1983 provides a private right of action against state actors who have violated rights guaranteed by a federal statute. 42 U.S.C. § 1983. Without Section 1983, residents cannot enforce their rights under the NHRA and hold facilities accountable for harm.
Recently, the Seventh Circuit held that the NHRA confers a private right of action to sue under Section 1983. Talevski v. Health and Hosp. Corp. of Marion Cnty., No. 20-1664, 2021 WL 3163061 (7th Cir. 2021). In that case, a nursing facility resident is suing a government-owned facility and others under the NHRA, alleging that they chemically restrained and illegally discharged him. The district court dismissed the case, holding that a resident cannot use Section 1983 to challenge a violation of the NHRA. Talevski v. Health & Hosp. Corp. of Marion Cty., No. 2:19 CV 13, 2020 WL 1472132 (N.D. Ind. Mar. 26, 2020). AARP and AARP Foundation filed an amicus brief in the Seventh Circuit in support of the resident.
These cases are important to nursing facility residents because they explore whether residents can require states and state entities to enforce the rights guaranteed to them by the NHRA. Holding nursing facilities accountable allows residents to obtain redress for injuries and deters future misconduct.
Medicaid Block Grants
Within the next two years, the Supreme Court may consider the legality of Medicaid block grant programs. These are programs that implement an aggregate or per-capita cap on Medicaid spending. In January 2020, CMS issued a letter to State Medicaid Directors announcing its intent to approve projects implementing these caps under Section 1115 of the Social Security Act, which grants the agency the authority to waive a state’s compliance with certain requirements of the Medicaid Act only for an “experimental, pilot, or demonstration project” likely to help promote the objectives of the Medicaid Act. 42 U.S.C. § 1315(a).
CMS advised that states adopting this financial model would have extensive flexibility to test alternative approaches to implementing their Medicaid program, including “the ability to make many ongoing program adjustments without the need for demonstration or state plan amendments that require prior approval.” Letter from CMS to State Medicaid Directors Re: Healthy Adult Opportunity 1 (Jan. 30, 2020).
In January 2021, Tennessee became the first state that HHS approved to receive its funding in a lump sum for its Medicaid program through a modified block grant program under Section 1115. Among other things, the project caps the amount of federal funding available for Medicaid services, allows the state to keep a share of the savings achieved by spending below the cap, and authorizes limits to prescription drug coverage. CMS approved the project for ten years.
On April 22, 2021, thirteen Medicaid beneficiaries, a physician, and the Tennessee Justice Center filed a complaint in the U.S. District Court for the District of Columbia challenging HHS’s approval of the Tennessee demonstration project. McCutchen v. Becerra. No. 1:21-cv-1112, 2021 WL 1718806 (D.D.C. April 22, 2021). The plaintiffs claim that HHS violated the Administrative Procedure Act by exceeding its statutory authority and acting in an arbitrary and capricious manner when it authorized the project under Section 1115. They also claim that HHS did not provide the required public comment period. The State of Tennessee has moved to intervene in the case. On August 10, 2021, CMS sent a letter to the Director of Tennessee’s Medicaid program, notifying the state that the agency intends to open a new federal public comment period on the program. The letter states that the plaintiffs “offered to agree to hold [the] lawsuit in abeyance” if such a period were opened, and that “[t]his solicitation of public comments will not delay or prevent implementation of the demonstration….”
Medicaid Expansion through State Ballot Initiatives
Over the next few years, it is likely there will be continued efforts to expand Medicaid through state ballot initiatives. Medicaid expansion increases access to health care for lower-income older adults. 42 U.S.C. § 1396a(a)(10)(A)(i)(VIII). Before the Affordable Care Act, in most states, adults with low income who were under age 65 without dependent children could not qualify for Medicaid unless they had a disability. Now, adults with incomes at or below 138% of the federal poverty level can qualify for Medicaid if their state elects to expand the program. 42 U.S.C. § 1396d(y); Nat’l Fed’n of Indep. Bus. v. Sebelius, 567 U.S. 519 (2012).
To date, 38 states and the District of Columbia have expanded Medicaid. Kaiser Family Found., Status of State Action on the Medicaid Expansion Decisions: Interactive Map (Jul. 23, 2021). Since 2017, six states have expanded Medicaid through ballot initiatives — Maine in 2017, Idaho, Nebraska, and Utah in 2018; and Oklahoma and Missouri in 2020.
Despite success at the ballot box, some states have been slow to implement these Medicaid expansion measures. For example, Missouri’s successful ballot measure provided for Medicaid expansion to be added to the State’s Constitution, and for expanded coverage to begin on July 1, 2021. However, the state legislature did not appropriate funding for the expansion, so the governor announced that he would not expand Medicaid and sent a letter to CMS withdrawing the State’s expansion plan. Three Missourians with chronic conditions who cannot afford coverage and treatment filed a lawsuit seeking to require the governor to comply with the ballot initiative and expand Medicaid. A lower court denied this request, finding that that the ballot initiative was unconstitutional. The plaintiffs appealed that decision to the Missouri Supreme Court. On July 22, 2021, the Missouri Supreme Court ruled unanimously that the ballot initiative was constitutional and that the State must expand Medicaid. Doyle v. Tidball, No. SC 99185, 2021 WL 3119116 (Mo. July 22, 2021).
Another case that may reach the Court is Bagnall v. Becerra, No. 20-1642 (2d Cir.). In this case, a class of hospitalized Medicare beneficiaries sued HHS, seeking to assert their constitutional rights to an expedited due process hearing to challenge the hospital’s classification of their stay. Class members were initially classified as inpatients, but later designated as outpatients “under observation.” This is significant because when a hospitalized patient is admitted as an inpatient, Medicare Part A typically covers the patient’s hospital stay as well as any skilled nursing facility care the patient needs after leaving the hospital. However, Medicare Part A does not cover the cost of the patient’s hospital stay or subsequent skilled nursing facility care when a hospital patient is classified as “under observation.”
Hospital patients’ ability to timely challenge coverage-altering hospital classifications, therefore, can prevent significant, and often surprising, medical bills and can enhance older adults’ ability to obtain post-hospital care that allows them to maximize recovery. AARP and AARP Foundation filed an amicus brief in support of the class, arguing that Medicare beneficiaries suffer real deprivations because of the agency’s policies governing hospital classifications and its prohibition on expedited due process hearings. AARP and AARP Foundation urged the court of appeals to affirm the lower court’s ruling that CMS must address these deprivations through its administrative procedures and provide a timely opportunity to challenge the classification of a patient’s hospital stay. A ruling is expected in 2022.
COVID-19 and Immunity
The pandemic has left an indelible mark on the health care landscape. As a result, new legal issues have emerged that are likely to make their way to the Supreme Court. One area of dispute is determining the circumstances that trigger the Public Readiness and Emergency Preparedness Act’s (“PREP Act”) jurisdiction and immunity. Pub. L. No. 109-148, 119 Stat. 2818 (2005).
Enacted in December 2005, the PREP Act empowers the Secretary of HHS to issue a PREP Act Declaration that a disease or other health condition constitutes a public health emergency. The PREP Act gives “covered entities,” including nursing facilities, broad immunity from claims arising from the administration or use of “covered countermeasures,” such as vaccines, personal protective equipment, and medications. This immunity encompasses claims under both federal and state law. There is an exemption for claims that involve willful misconduct, but such claims must be filed in the U.S. District Court for the District of Columbia. If successful, those claims are compensated through a federal fund.
On Jan. 31, 2020, then HHS Secretary Alex M. Azar II declared a public health emergency in response to the pandemic. HHS then published a Declaration activating the PREP Act’s protections to apply as of Feb. 4, 2020 through Oct. 1, 2024. A December 2020 fourth amendment to the Declaration states “there are substantial federal legal and policy issues, and substantial federal legal and policy interests, in having a unified, whole-of-nation response to the COVID-19 pandemic among federal, state, local, and private-sector entities.” The defendants believe that this statement paves the way to seek federal jurisdiction to remove state-court cases that they claim implicate PREP Act immunities.
For example, in Estate of Kaegi v. Alliance HC Holding, the survivors of four of the fifty residents who died of COVID-19 in two Alliance Healthcare facilities filed wrongful death lawsuits in New Jersey state court. The lawsuit alleged that Alliance’s failure to observe appropriate safety precautions, including the failure to provide employees with masks and to screen people, caused the deaths of their loved ones. Alliance then sought to remove the case to federal court under the PREP Act, but a district court rejected its arguments. Est. of Maglioli v. Andover Subacute Rehab. Ctr. I, 478 F. Supp. 3d 518, 536 (D.N.J. 2020). Alliance then appealed its case to the Third Circuit, which heard oral arguments in June 2021. A decision is expected later this year.
Similar appeals are pending in the Second, Fifth, Ninth, Eleventh, and D.C. Circuits. These cases are important because they will help determine the extent to which nursing facility residents and their survivors can hold facilities accountable for injuries suffered during the pandemic. As of June 1, 2021, more than 184,000 people who died from COVID-19 in the United States were residents and staff of nursing facilities and other long-term care facilities.
States also enacted their own immunity laws in response to the COVID-19 pandemic. These laws vary greatly in terms of both the entities and conduct they cover. Thus, the ability to hold nursing facilities and other entities accountable for conduct during the pandemic will depend greatly on state immunity law.