Bryn Mawr Care, Incorporated v. Kathleen Sebelius
2014 U.S. App. LEXIS 6451
| 7th Cir. | 2014Background
- Bryn Mawr Care, a Medicaid-only nursing facility in Chicago, was cited by Illinois Dept. of Public Health (IDPH) for two “G” (actual harm, not immediate jeopardy) and one “E” deficiencies after surveys prompted by an alleged resident sexual assault.
- Bryn Mawr used the informal dispute resolution process and submitted a plan of correction; an internal IDPH review found some findings unsupported but an outside reviewer (MPRO) upheld them. IDPH maintained the deficiencies under federal regs but accepted Bryn Mawr’s plan of correction after re-survey.
- The deficiency findings remained in state and federal records and were published on CMS’s Nursing Home Compare / Five-Star Rating System, temporarily lowering Bryn Mawr’s star rating (an error later partly corrected).
- Bryn Mawr sought hearings before state and federal ALJs to challenge the deficiency findings; both hearing requests were denied (federal right limited for Medicaid-only providers; state ALJ found no remedies imposed).
- Bryn Mawr sued to compel a hearing, arguing entitlement under Medicaid regulations and, alternatively, procedural due process (Fifth and Fourteenth Amendments). District court granted summary judgment for defendants; Seventh Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Regulatory right to a state ALJ hearing under 42 C.F.R. §§ 431.151/431.153 | Publication/recording of deficiencies and inclusion in Rating System are “other alternative remedies” triggering a hearing | Secretary’s interpretation: “other alternative remedy” refers to remedies listed or approved under § 488.406; publication/record-keeping are not § 488.406 remedies | Court accepted Secretary’s interpretation under Auer and held no regulatory right to a state ALJ hearing |
| Procedural due process — stigma plus: does publication + consequences create protected interest? | Deficiency record stigmatizes and alters legal status by (1) exposing facility to enhanced future penalties, (2) depriving chance to correct before remedies, (3) affecting future Ratings | Defendants: stigma alone is insufficient; any legal alteration is speculative and agencies retain discretion; if remedy later imposed Bryn Mawr would get a hearing then | Court held stigma alone insufficient; Bryn Mawr failed to show alteration/extinguishment of a protected property/liberty interest |
| Loss of opportunity to correct as protected interest | Loss (or risk of loss) of pre-remedy correction opportunity after a prior G deficiency is a change in legal status requiring process | Defendants: opportunity to correct is discretionary, not a secured right under state or federal law | Court: no protected property interest because opportunity to correct is discretionary, not guaranteed |
| Use of prior deficiencies to enhance future remedies (risk of harsher penalties) | Presence of deficiency on record makes harsher future remedies likely and thus alters legal status now | Defendants: speculative; agencies merely may consider history and Bryn Mawr would get to challenge historic findings at any later hearing addressing new remedies | Court: speculative enhanced-penalty theory insufficient; any burden is contingent and challenge is available when remedies are actually imposed |
Key Cases Cited
- Auer v. Robbins, 519 U.S. 452 (1997) (agency’s interpretation of its own regulation entitled to deference unless plainly erroneous)
- Paul v. Davis, 424 U.S. 693 (1976) (governmental defamation alone does not create liberty or property interest for due process purposes)
- Bd. of Regents of State Colls. v. Roth, 408 U.S. 564 (1972) (property interests are defined by existing rules or understandings from independent sources)
- Humphries v. County of Los Angeles, 554 F.3d 1170 (9th Cir. 2009) (erroneous listing on a registry that agencies must consult can create a "stigma plus" deprivation)
- Somerset House, Inc. v. Turnock, 900 F.2d 1012 (7th Cir. 1990) (stigma plus requires stigma plus alteration of legal status such as loss of funding eligibility)
- Brown v. City of Michigan City, 462 F.3d 720 (7th Cir. 2006) (to establish property interest, state discretion must be clearly limited)
- Siegert v. Gilley, 500 U.S. 226 (1991) (reputational harm alone is not actionable under Bivens; supports Paul v. Davis principle)
- Abcarian v. McDonald, 617 F.3d 931 (7th Cir. 2010) (applying stigma-plus and Paul v. Davis in due process context)