New Cause of Action under FINRA Found

A decision issued on June 30, 2009, by a three-judge panel of the U.S. Third Circuit Court of Appeals, in Sarah Grammer v. John J. Kane Regional Centers-Glen Hazel (PDF, 23 pages), likely will impact nursing home and rehabilitation facilities that provide care subject to the Federal Nursing Home Reform Amendments (FNHRA).

The decision reversed a ruling by the United States District Court for the Western District of Pennsylvania, and, by its fresh interpretation of FNHRA, recognized new causes of action under those amendments to federal law.

The decision was noted by Professor Katherine C. Pearson, who is the Director of the Elder and Consumer Protection Clinic, of Penn State - Dickinson School of Law, and who now is Chair of the Elder Law Section of the Pennsylvania Bar Association. She sent me an email message with a link to her web article about the decision, and granted me permission to repost it. I do so now (reparagraphing & links applied), with thanks to her.

Should Federal Standards for Care by Nursing Homes be Enforceable
by Private Suits for Damages under Federal Civil Rights Laws?
The Third Circuit Says Yes.

by Katherine C. Pearson

Advocates for elders and disabled persons in nursing homes have long been frustrated by the absence of an express cause of action in federally imposed “Nursing Home Residents Rights,” a key feature of the Nursing Home Reform Act (NHRA) at 42 U.S.C. § 1396r.

On June 30, 2009, however, the Third Circuit Court of Appeals ruled in the case of Sarah Grammer v. John J. Kane Regional Centers-Glen Hazel that a private cause of action does exist under federal civil rights laws, at 42 U.S.C. § 1983, for violation of the resident’s rights under the NHRA. State action, necessary for a civil rights suit, existed because the defendant facility was a county-operated home.

In 1987, Congress enacted key nursing home reform laws in an effort to respond to widespread complaints about quality of care in facilities that were accepting Medicare and Medicaid dollars. Until that legislation, it was not uncommon to hear complaints about aged residents routinely being restrained in beds or chairs to prevent wandering, or being heavily medicated solely to make the residents easier to “manage.”

The Nursing Home Reform Act for the first time mandated that with the exception of emergencies, a doctor’s detailed, written order would be required before physical or chemical restraints could be imposed, and then only when necessary for the physical safety of the residents. The federal law mandated that facilities must care for residents “in such a manner and in such an environment as will promote maintenance or enhancement of [their] quality of life. . . .”

The legislation was widely hailed as ushering in a new era of accountability for institutional caretakers. But individual residents and their families have frequently questioned whether administrative sanctions for violations of the law, such as civil fines or threats of defunding, are sufficient to protect residents.

In the Grammer case, the complaint alleged breach of the duty to ensure quality care under NHRA standards, citing the death of Melviteen Daniels from poor care that resulted in malnourishment, decubitus ulcers and sepsis, and alleging the cause of action under 42 U.S.C. § 1983.

The District Court in the Western District of Pennsylvania dismissed the complaint for damages, finding no cause of action existed at law.

The Third Circuit reversed in a 2 to 1 ruling. In the majority opinion, Circuit Judge Nygard gives a detailed explanation of how the NHRA should be recognized as unambiguously conferring federal, substantive rights on residents to quality care, rights that are enforceable under federal civil rights statutes.

The dissent notes that the NHRA was enacted as part of an Omnibus Budget bill, pointing to Supreme Court decisions that have rejected attempts to infer substantive rights from “Spending Clause” cases.

The Third Circuit's decision in Grammer opens new doors for recovery on behalf of older adults and disabled persons in public facilities, including the potential for attorneys' fees for successful civil rights claimants.

The outcome also suggests a new question, whether privately-owned nursing homes are also subject to a civil rights suit for violations of NHRA-mandated standards of care. Are private owners operating under color of state law when they are certified as Medicare and Medicaid qualified facilities and accept public dollars for their services? At a minimum, does the existence of a federal cause of action against public facilities strengthen the argument by resident-advocates that violation of federal standards constitutes "negligence per se" for common law tort claims?

Another open question is whether mandatory arbitration provisions in nursing home admission agreements will be treated as limiting or barring courtroom litigation of federal civil rights claims.