CT Ohio Portsmouth, L.L.C. v. Ohio Dept. of Medicaid
2020 Ohio 5091
Ohio Ct. App.2020Background
- Portsmouth Health and Rehab (Portsmouth) took over Pristine Senior Living on May 1, 2018; Pristine had been placed on CMS’s Special Focus Facility (SFF) list and first appeared in CMS’s SFF tables on April 19, 2018 (Table A).
- R.C. 5165.771 requires ODM to terminate a nursing facility’s Medicaid participation if a facility placed in Table A is not moved into Table C within 12 months (or Table D within 24 months). CMS/ODH determine SFF placement and table status; nursing homes have no direct appeal from SFF table placement.
- Portsmouth underwent surveys in Aug. 2018 (G deficiencies) and Jan. 2019 (F and G deficiencies); Portsmouth pursued IDR review and filed a plan of correction; ODH subsequently found Portsmouth in substantial compliance as of Feb. 15, 2019.
- On Feb. 15, 2019 ODM notified Portsmouth it intended to terminate Portsmouth’s Medicaid provider agreement effective March 9, 2019 under R.C. 5165.771(B)(3). Portsmouth sued on March 7, 2019 alleging, inter alia, facial due-process and non-delegation defects and seeking injunctive relief.
- The magistrate and Franklin County trial court held R.C. 5165.771 facially violated federal and Ohio procedural due process (and permanently enjoined enforcement); the trial court rejected Portsmouth’s non-delegation claim and found certain timing disputes in favor of Portsmouth.
- This appeal: the appellate court (10th Dist.) denied mootness, affirmed that Ohio law creates a property interest in continued Medicaid participation and that R.C. 5165.771 lacks adequate procedural safeguards (thus facially violates due process), reversed only as to the Section 1983 claim against the ODM agency itself, and remanded for entry of judgment dismissing the §1983 claim against ODM.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether R.C. 5165.771 is facially unconstitutional under federal and Ohio procedural due process | R.C. 5165.771 provides no pre- or post-termination hearing (expressly bars Ch. 119 appeals) and thus deprives providers of a property interest without due process | Providers can challenge survey findings via IDR and other statutory processes; those procedures satisfy due process | The statute is facially unconstitutional for lack of adequate procedural protections; permanent injunction against enforcement affirmed (but §1983 claim cannot be brought against the agency itself) |
| Whether nursing facilities have a protected property interest in continued Medicaid participation under Ohio law | Portsmouth: R.C. Ch. 5165 and related statutes constrain ODM’s discretion (mandatory entry into agreements, limited termination grounds), creating a legitimate entitlement | ODM: participation is conditional and discretionary; federal cases deny providers a program-property interest | Held: Ohio law creates a constitutionally protected property interest in continued Medicaid participation for nursing facilities (state law—not federal program law—controls) |
| Whether IDR and the timing of SFF listings (and Mathews factors) supply meaningful process before termination | Portsmouth: IDR is delayed, SFF tables lag, and there is no mechanism to appeal SFF placement; Mathews factors favor additional safeguards | ODM: survey/IDR process and federal/state oversight constitute sufficient process; practical burdens weigh against added procedures | Held: IDR and related procedures do not provide a meaningful, timely opportunity to be heard before termination under R.C. 5165.771; Mathews factors favor more procedural protections |
| Whether R.C. 5165.771 violates the non-delegation doctrine | Portsmouth: statute improperly delegates selection/termination power to CMS/ODH without standards | ODM: statute sets conditions and mandatory consequences, so no unconstitutional delegation | Held: Appellate court did not reach this question as it was rendered moot by the due-process holding (trial-court ruling on non-delegation dismissed as moot) |
Key Cases Cited
- Ohio Academy of Nursing Homes, Inc. v. Barry, 56 Ohio St.3d 120 (Ohio 1990) (discusses providers’ procedural due-process interests in Medicaid reimbursement regulations)
- Mathews v. Eldridge, 424 U.S. 319 (U.S. 1976) (establishes three-factor test for required procedural protections)
- Town of Castle Rock v. Gonzales, 545 U.S. 748 (U.S. 2005) (governmental discretion defeats creation of a property interest absent limiting law)
- Bd. of Regents v. Roth, 408 U.S. 564 (U.S. 1972) (property interests are created by existing rules or understandings from independent sources such as state law)
- Parrino v. Price, 869 F.3d 392 (6th Cir. 2017) (federal decisions discussing whether providers have property interests under federal program law)
- Med Corp., Inc. v. Lima, 296 F.3d 404 (6th Cir. 2002) (no protected interest where government’s grant of benefit was wholly discretionary absent law/policy limiting discretion)
- Brookpark Entertainment, Inc. v. Taft, 951 F.2d 710 (6th Cir. 1991) (statutory notice/hearing provisions can create protected property interests)
- Bowens v. N. Carolina Dept. of Human Resources, 710 F.2d 1015 (4th Cir. 1983) (state Medicaid regulations created a property interest where termination was limited to cause and procedural guarantees were provided)
- Ahlborn v. Arkansas Dept. of Health & Human Services, 547 U.S. 268 (U.S. 2006) (background on federal Medicaid administration and state responsibilities)