O‘BANNON, SECRETARY OF PUBLIC WELFARE OF PENNSYLVANIA v. TOWN COURT NURSING CENTER ET AL.
No. 78-1318
SUPREME COURT OF THE UNITED STATES
Argued November 6, 1979-Decided June 23, 1980
447 U.S. 773
Norman J. Watkins, Special Deputy Attorney General of Pennsylvania, argued the cause for petitioner. With him on the briefs was Edward G. Biester, Jr. Richard A. Allen argued the cause for the Secretary of Health, Education, and Welfare, respondent under this Court‘s Rule 21 (4), in support of petitioner. With him on the briefs were Solicitor General McCree, Assistant Attorney General Babcock, Deputy Solicitor General Easterbrook, and William Kanter.
Nathan L. Posner argued the cause for respondents. With him on the brief were William F. Coyle, Jeffrey B. Albert, and Abraham C. Reich.*
*Briefs of amici curiae urging affirmance were filed by Michael H. Mar-
MR. JUSTICE STEVENS delivered the opinion of the Court.
The question presented is whether approximately 180 elderly residents of a nursing home operated by Town Court Nursing Center, Inc., have a constitutional right to a hearing before a state or federal agency may revoke the home‘s authority to provide them with nursing care at government expense. Although we recognize that such a revocation may be harmful to some patients, we hold that they have no constitutional right to participate in the revocation proceedings.
Town Court Nursing Center, Inc. (Town Court), operates a 198-bed nursing home in Philadelphia, Pa. In April 1976 it was certified by the Department of Health, Education, and Welfare (HEW) as a “skilled nursing facility,” thereby becoming eligible to receive payments from HEW and from the Pennsylvania Department of Public Welfare (DPW), for providing nursing care services to aged, disabled, and poor persons in need of medical care. After receiving its certification,1 Town Court entered into formal “provider agreements” with both HEW and DPW. In those agreements HEW and DPW agreed to reimburse Town Court for a period of one year for care provided to persons eligible for Medicare or Medicaid benefits under the Social Security Act,2 on the condition that Town Court continue to qualify as a skilled nursing facility.
On May 17, 1977, HEW notified Town Court that it
Town Court requested HEW to reconsider its termination decision. While the request was pending, Town Court and six of its Medicaid patients5 filed a complaint in the United States District Court for the Eastern District of Pennsylvania alleging that both the nursing home and the patients were entitled to an evidentiary hearing on the merits of the decertification decision before the Medicaid payments were discontinued. The complaint alleged that termination of the payments would require Town Court to close and would cause the individual plaintiffs to suffer both a loss of benefits and “immediate and irreparable psychological and physical harm.” App. 11a.
Town Court and the six patients filed separate appeals from the denial of the preliminary injunction, as well as a motion, which was subsequently granted, for reinstatement of the injunction pending appeal. The Secretary of HEW cross-appealed from the portion of the District Court‘s order requiring payment for services rendered after the effective date of the termination. The Secretary of DPW took no appeal and, though named as an appellee, took no position on the merits.
The United States Court of Appeals for the Third Circuit, sitting en banc, unanimously held that there was no constitutional defect in the HEW procedures that denied Town Court an evidentiary hearing until after the termination had become effective and the agency had ceased paying benefits.6 The
Court of Appeals came to a different conclusion, however, with respect to the patients’ claim to a constitutional right to a pretermination hearing. Town Court Nursing Center, Inc. v. Beal, 586 F. 2d 280 (1978).7
Relying on the reasoning of Klein v. Califano, 586 F. 2d 250 (CA3 1978) (en banc), decided the same day, a majority of the court concluded that the patients had a constitutionally protected property interest in continued residence at Town Court that gave them a right to a pretermination hearing. In Klein the court identified three Medicaid provisions—a statute giving Medicaid recipients the right to obtain services from any qualified facility,8 a regulation prohibiting certified
facilities from transferring or discharging a patient except for certain specified reasons,9 and a regulation prohibiting the reduction or termination of financial assistаnce without a hearing10—which, in its view, created a “legitimate entitlement to continued residency at the home of one‘s choice absent specific cause for transfer.” Id., at 258. It then cited the general due process maxim that, whenever a governmental benefit may be withdrawn only for cause, the recipient is entitled to a hearing as to the existence of such cause. See Memphis Light, Gas & Water Division v. Craft, 436 U. S. 1, 11 (1978). Finally, it held that, since the inevitable consequence of decertifying a facility is the transfer of all its residents receiving Medicaid benefits, a decision to decertify should be treated as a decision to transfer, thus triggering the patients’ right to a hearing on the issue of whether there is adequate cause for the transfer.11
In holding that these provisions create a substantive right to remain in the home of one‘s choice absent specific cause for transfer, the Court of Appeals failed to give proper weight to the contours of the right conferred by the statutes and regulations. As indicated above, while a patient has a right to continued benefits to pay for care in the qualified institution of his choice, he has no enforceable expectation of continued benefits to pay for care in an institution that has been determined to be unqualified.
The Court of Appeals also erred in treating the Government‘s decision to decertify Town Court as if it were equivalent in every respect to a decision to transfer an individual patient. Although decertification will inevitably necessitate the transfer of all those patients who remain dependent on Medicaid benefits, it is not the same for purposes of due process analysis as a decision to transfer a particular patient or to deny him financial benefits, based on his individual needs or financial situation.
In the Medicare and the Medicaid Programs the Government has provided needy patients with both direct benefits and indirect benefits. The direct benefits are essentially financial in character; the Government pays for certain medical services and provides procedures to determine whether and how much money should be paid for patient care. The net effect of these direct benefits is to give the pаtients an opportunity to obtain medical services from providers of their choice that is comparable, if not exactly equal, to the opportunity available to persons who are financially independent. The Government cannot withdraw these direct benefits with-
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 surely 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.
Medicaid patients who are forced to move because their nursing home has been decertified are in no different position for purposes of due process analysis than financially independent residents of a nursing home who are forced to move because the home‘s state license has been revoked. Both groups of patients are indirect beneficiaries of government programs designed to guarantee a minimum standard of care for patients as a class. Both may be injured by the closing of a home due to revocation of its state license or its decertification as a Medicaid provider. Thus, whether they are private patients or Medicaid patients, some may have difficulty locating other homes they consider suitable or may suffer both emotional and physical harm as a result of the disruption associated with their move. Yet none of these patients would lose the ability to finance his or her continued care in a properly licensed or certified institution: And, while they might have a claim against the nursing home for damages,20 none would have any claim against the responsible governmental authorities for the deprivation of an interest in life, liberty, or prop-
The simple distinction between government action that directly affects a citizen‘s legal rights, or imposes a direct restraint on his liberty, and action thаt is directed against a third party and affects the citizen only indirectly or incidentally, provides a sufficient answer to all of the cases on which the patients rely in this Court. Thus, Memphis Light, Gas & Water Division v. Craft, 436 U. S. 1, involved the direct relationship between a publicly owned utility and its customers; the utility had provided its customers with a legal right to receive continued service as long as they paid their bills. We held that under these circumstances the utility‘s customers had a constitutional right to a hearing on a disputed bill before their service could be discontinued. But nothing in that case implies that if a public utility found it necessary to cut off service to a nursing home because of delinquent payments, it would be required to offer patients in the home an opportunity to be heard on the merits of the credit dispute. This would be true even if the termination of utility service required the nursing home to close and caused serious inconvenience or harm to patients who would therefore have to move. As in this case, such patients might have rights against the home, and might also have direct relationships with the utility concerning their own domestic service, but they would have no constitutional right to interject themselves into the dispute between the public utility and the home.21
“That provision has always been understood as referring only to a direct appropriation, and not to consequential injuries resulting from the exercise of lawful power. It has never been supposed to have any bearing upon, or to inhibit laws that indirectly work harm and loss to individuals.”
More recently, in Martinez v. California, 444 U. S. 277 (1980), we rejected the argument made by the parents of a girl murdered by a parolee that a California statute granting absolute immunity to the parole board for its release decisions deprived their daughter of her life without due process of law:
“A legislative decision that has an incremental impact on the probability that death will result in any given situation—such as setting the speed limit at 55-miles-per-hour instead of 45—cannot be characterized as state action depriving a person of life just because it may set in motion a chain of events that ultimately leads to the random death of an innocent bystander.” Id., at 281.
Similarly, the fact that the decertification of a home may lead to severe hardship for some of its elderly residents does not turn the decertification into a governmental decision to impose that harm.22
The judgment of the Court of Appeals is reversed, and the case is remanded for further proceedings consistent with this opinion.
It is so ordered.
MR. JUSTICE MARSHALL took no part in the consideration or decision of this case.
MR. JUSTICE BLACKMUN, concurring in the judgment.
Although the Court reaches the result I reach, I find its analysis simplistic and unsatisfactory. I write separately to explain why and to set forth the approach I feel should be followed.
The patients rest their due process claim on two distinct foundations. First, they assert a property interest in continued residence at their home. Second, they claim life and liberty interests tied to their physical and psychological wellbeing. According to the patients, because each of these interests is threatened directly by decertification, they are constitutionally entitled to a hearing on the propriety of that action. Unlike the Court, I find it necessary to treat these distinct arguments separately.
In my view, the Court deals far too casually with § 1902 (a) (23) of the Social Security Act,
I agree with Judge Adams of the Court of Appeals that it “begs the question,” Town Court Nursing Center, Inc. v. Beal, 586 F. 2d 280, 287 (1978) (concurring opinion), to counter this argument with the observation that
Perhaps aware that its treatment of
I have no quarrel with the Court‘s observation that the Due Process Clause generally is unconcerned with “indirect” losses. I fear, however, that such platitudes often submerge analytical complexities in particular cases. Cf. Sherbert v. Verner, 374 U.S. 398, 404 (1963); Braunfeld v. Brown, 366 U.S. 599, 607 (1961) (plurality opinion); NAACP v. Alabama ex rel. Patterson, 357 U.S. 449, 461 (1958); American Communications Assn. v. Douds, 339 U.S. 382, 402 (1950). I also question whether that generalization has relevance here. Even assuming it does, the Court‘s treatment of it3
I
The determinative question is whether the litigant holds such a legitimate “claim of entitlement” that the Constitution, rather than the political branches, must define the procedures attending its removal. Id., at 578. Claims of entitlement spring from expectations that are “justifiable,” Vitek v. Jones, 445 U.S., at 489; “protectible,” Greenholtz v. Nebraska Penal Inmates, 442 U.S. 1, 7 (1979); “sufficient,” Bishop v. Wood, 426 U.S. 341, 344 (1976); or “proper,” id., at 362 (dissenting opinion). In contrast, the Constitution does not recognize expectancies that are “unilateral,” Board of Regents v. Roth, 408 U.S., at 577, or “too ephemeral and insubstantial.” Meachum v. Fano, 427 U.S. 215, 228 (1976).
To mouth these labels does not advance analysis far. We must look further to determine which set of labels applies to particular constellations of fact. Whether protected entitlements exist and how far they extend, although dependent on subconstitutional rules, see, e. g., Bishop v. Wood, supra, are ultimately questions of constitutional law. See Memphis Light, Gas & Water Div. v. Craft, 436 U.S., at 9; Monaghan, Of “Liberty” and “Property,” 62 Cornell L. Rev. 405, 435-436 (1977). Application of that law will seldom pose difficulties
In applying this analysis to this case, four distinct considerations convince me that—even though the statutes place a significant substantive restriction on transferring patients—their expectancy in remaining in their home is conditioned upon its status as a qualified provider.
(1) The lengthy process of deciding the disqualification question has intimately involved Town Court. The home has been afforded substantial procedural protections, and, throughout the process, has shared with the patients who wish to stay there an intense interest in keeping the facility certified. These facts are functionally important. Procedural due process seeks to ensure the accurate dеtermination of decisional facts, and informed, unbiased exercises of official discretion. See, e. g., Fuentes v. Shevin, 407 U.S. 67, 81 (1972); Morrissey v. Brewer, 408 U.S. 471, 480 (1972). To the extent procedural safeguards achieve these ends, they reduce the likelihood that persons will forfeit important interests without sufficient justification. In this case, since the home had the opportunity and incentive to make the very arguments the patients might make, their due process interest in accurate and informed decisionmaking already, in large measure, was satisfied. This point embodies more than
(2) Town Court is more than a de facto representative of the patients’ interests; it is the underlying source of the benefit they seek to retain. Again, this fact is important, for the property of a recipient of public benefits must be limited, as a general rule, by the governmental power to remove, through prescribed procedures, the underlying source of those benefits. The Constitution would not have entitled John Kelly to a fair hearing if New York had chosen to disband its public assistance programs rather than to cut off his particular award. See Goldberg v. Kelly, 397 U.S. 254 (1970). Nor would Texas have had to afford process to Professor Sindermann had it decided for budgetary reasons to close Odessa Junior College. See Perry v. Sindermann, 408 U.S. 593 (1972). And we would be surprised to learn that Dwight Lopez had a constitutional right to procedures before the Ohio Department of Education suspended classes at Columbus High School for 10 days due to the discovery of faulty electrical wiring requiring that much time for repair work. See Goss v. Lopez, 419 U.S. 565 (1975). These observations comport with common understanding and shared expectations. A farmer may sue for conversion if his upstream neighbor improperly diverts his water. But both can
(3) That the asserted deprivation of property extends in a nondiscriminatory fashion to some 180 patients also figures in my calculus. See Dent v. West Virginia, 129 U.S. 114, 124 (1889) (legislation comports with due process if, among other things, “it be general in its operation upon the subjects to which it relates“). “Where a rule of conduct applies to more than a few people it is impracticable that every one should have a direct voice in its adoption. The Constitution does not require all public acts to be done in town meet-
(4) Finally, I find it important that the patients’ interest has been jeopardized not at all because of alleged shortcomings on their part. Frequently, significant interests are subjected to adverse action upon a contested finding of fault, impropriety, or incompetence. In these contexts the Court has seldom hesitated to require that a hearing be afforded the “accused.” See, e. g., Dixon v. Love, 431 U.S. 105, 112-113 (1977); Goss v. Lopez, 419 U.S. 565 (1975); Wolff v. McDonnell, 418 U.S. 539 (1974); Arnett v. Kennedy, 416 U.S. 134 (1974). This tendency reflects due process values extending beyond the need for accurate determinations. Affording procedural protections also aims at “‘generating the feeling, so important to a popular government, that justice has been done.‘” Marshall v. Jerrico, Inc., 446 U.S. 238, 242 (1980), quoting Joint Anti-Fascist Refugee Committee v. McGrath, 341 U.S. 123, 172 (1951) (concurring opinion). It may be that patients’ participation in the decertification decision would vaguely heighten their and others’ sense of the decision‘s legitimacy, even though the decision follows infirmity and social neglect. Moreover, concerned friends and relatives or organized interest groups may, and often do, step forward to protect the interests of nursing home patients.
For these reasons, I am willing to recognize in this case that “the very legislation which ‘defines’ the ‘dimension’ of the [pаtient‘s] entitlement, while providing a right to [remain in a home] generally, does not establish this right free of [disqualification of the home] in accord with [federal statutory] law.” Goss v. Lopez, 419 U.S., at 586-587 (dissenting opinion).9
II
Citing articles and empirical studies, the patients argue that the trauma of transfer so substantially exacerbates mortality rates, disease, and psychological decline that decertification deprives them of life and liberty.10 Although the
Court assumes that “transfer trauma” exists, see ante, at 784, and n. 16, it goes on to reject this argument. By focusing solely on the “indirectness” of resulting physical and psychological trauma, the Court implies that regardless of the degree of the demonstrated risk that widespread illness or even death attends decertification-induced transfers, it is of no moment. I cannot join such a heartless holding. Earlier this Term, the Court recognized that a liberty interest emanates even from the likelihood that added stigma or harmful treatment might attend transfer from a prison to a mental hospital. Vitek v. Jones, supra; see also Parham v. J. R., 442 U.S., at 601. For me it follows easily that a governmental decision that imposes a high risk of death or serious illness on identifiable patients must be deemed to have an impact on their liberty.11 Nor am I soothed by the palliative that this harm is “indirect“; in my view, where such drastic consequences attend governmental action, their foreseeability, at least generally, must suffice to require input by those who must endure them. See Brede v. Director for Dept. of Health for Hawаii, 616 F.2d 407, 412 (CA9 1980).12
The fact of the matter, however, is that the patients cannot establish that transfer trauma is so substantial a danger as to justify the conclusion that transfers deprive them of life or liberty. Substantial evidence suggests that “transfer trauma” does not exist, and many informed researchers have concluded at least that this danger is unproved.13 Recognition of a constitutional right plainly cannot rest on such an inconclusive body of research and opinion. It is for this reason, and not for that stated by the Court, that I would reject the patients’ claim of a deprivation of life and liberty.
III
Few statements are more familiar to judges than Holmes’ pithy observation that “hard cases make bad law.” I fear that the Court‘s approach to this case may manifest the perhaps equally valid proposition that easy cases make bad law. Sometimes, I suspect, the intuitively sensed obviousness of a case induces a rush to judgment, in which a convenient rationale is too readily embraced without full consideration of its internal coherence or future ramifications. With re-
I concur in the judgment.
MR. JUSTICE BRENNAN, dissenting.
Respondents have a constitutionally protected property interest in their “legitimate entitlement to continued residency at the home of [their] choice absent specific cause for trаnsfer.‘” Town Court Nursing Center, Inc. v. Beal, 586 F.2d 280, 286 (CA3 1978) (Adams, J., concurring), quoting Klein v. Califano, 586 F.2d 250, 258 (CA3 1978). The statutory and regulatory scheme gives a patient the right to choose any qualified nursing home.
Respondent patients chose a home which was, at the time, qualified. They moved into the home reasonably expecting that they would not be forced to move unless, for some sufficient reason, the home became unsuitable for them. The Government‘s disqualification of the home is, of course, one such reason. Respondents have no right to receive benefits if they choose to live in an unqualified home. That does not mean, however, that they have no right to be heard on the question whether the home is qualified—the answer to which will determine whether they must move to another home and suffer the allegedly great ills encompassed by the term “transfer trauma.” See ante, at 784-785, n. 16. The Government‘s
The requirements of due process, to be sure, are flexible and are meant to be practical. See Mathews v. Eldridge, 424 U.S. 319 (1976); Morrissey v. Brewer, 408 U.S. 471 (1972). Here, the provider is entitled to formal proceedings in connection with the disqualification of the home. To the extent that patients want to remain in a home, their interests very nearly coincide with the home‘s own interests. The patients can count on the home to argue that it should not be disqualified. Nevertheless, the patients have some interests which are separate from the interests of the provider, and they could contribute some information relevant to the decertification decision if they were given an opportunity. See ante, at 784, n. 15. There is no indication that the patients have been accorded any opportunity to present their views on decertification. Because they were accorded no procedural protection, I dissent.
Notes
“In order to participate in the Medicare Program, a skilled nursing facility must meet the statutory requirements contained in section 1861 (j) of the Act,
“On May 8-11, 1977, the Pennsylvania Department of Health performed a survey of your facility. That survey found that your facility does not comply with seven of the eighteen conditions of participation. The seven conditions not being complied with are:
“II. Governing Body and Management (405.1121)
“III. Medical Direction (405.1122)
“IV. Physical Services (405.1123)
“V. Nursing Services (405.1124)
“VIII. Pharmaceutical Services (405.1127)
“XIII. Medical Records (405.1132)
“XV. Physical Environment (405.1134)
“Your facility‘s failure to comply with these conditions of participation precludes renewal of your agreement. Renewal is also precluded by the fact that your facility has failed to maintain compliance with numerous standards which had previously been determinеd to be met. Please refer to 20 CFR 405.1908 (d).” App. 295a-296a.
It seems to me that the indirect character of a harm at least normally has to do with whether state action has “deprived” a person of a protected interest, not with whether a protected interest exists. Thus, in Martinez v. California, 444 U.S. 277 (1980), a case relied on by the Court, there was no question that the interest destroyed, a woman‘s life, was constitutionally protected. The Court concluded, however, that the loss of that life was “too remote a consequence” of government conduct to be deemed a deprivation attributable to state action. Id., at 285. I would similarly distinguish the Court‘s “errant father” and “unpaid utility” hypotheticals as instances where no governmental deprivation occurred. Since the deprivation issue was neither briefed in this Court nor addressed below, I think there is a serious question whether the Court‘s inquiry into the indirect character of the patient‘s loss has any place in this case.“Because the Medicare Program has terminated your participation, the Department of Public Welfare has no alternative but to likewise ter-
“‘Provide that in the case of skilled nursing facilities certified under the provisions of title XVIII of the Social Security Act, the term of a provider agreement shall be subject to the same terms and conditions and coterminous with the period of approval of eligibility specified by the Secretary pursuant to that title, and upon notification that an agreement with a facility under title XVIII of the Act has been terminated or cancelled, the single State agency will take appropriate action to terminate the facility‘s participation under the plan. A facility whose agreement has been cancelled or otherwise terminated may not be issued another agreement until the reasons which cause the cancellation or termination have been removed and reasonable assurance provided the survey agency that they will not recur.’ (emphasis supplied)
“Because of the requirements of HEW, your facility must be terminated from participation in the Mediсal Assistance Program effective June 18, 1977.” Id., at 291a-292a.
Because the “indirectness” of a result inevitably is a question of degree, and because countervailing considerations are likely to appear, I would prefer to treat “indirectness” as, at most, but one factor in the “property interest” calculus, which carries greater or lesser significance depending on the particular case. If I were to agree that the sole question here is whether the patients’ loss must be rigidly characterized as either “indirect” or “direct,” I doubt that I would reach the result the Court does. And if I did, I would undoubtedly rely on the policy-informed factors identified hereinafter, rather than on an essentially ipse dixit judgment informed by strained analogies. This would be so whether the relevant inquiry was whether a property interest exists or whether a deprivation had occurred. Cf. Monaghan, 62 Cornell L. Rev., at 428 (existence of “deprivation . . . depends . . . on such matters as the nature of the invasion, its magnitude, and the character of the justification asserted“).Although the plaintiffs filed their action on behalf of a class of all Medicaid recipients in the home, the District Court never certified the class. Thus, the action has proceeded throughout the Court of Appeals and in this Court as an individual action on behalf of the six named plaintiffs.
See Memphis Light, Gas & Water Div. v. Craft, 436 U.S. 1, 11 (1978) (receipt of services from public utility not terminable except for “good and sufficient cause“); Bishop v. Wood, 426 U.S. 341, 345, n. 8 (1976) (finding determinative that public employment was terminable “at will,” rather than for cause); Goss v. Lopez, 419 U.S. 565, 573-574 (1975) (public education must be continued absent “misconduct“); Board of Regents v. Roth, 408 U.S. 564, 578 (1972) (distinguishing situation where nonrenewal of state college professor‘s employment authorizеd only for “sufficient cause“); Goldberg v. Kelly, 397 U.S. 254, 262 (1970) (public support payments to be continued unless recipient not qualified). See also Vitek v. Jones, 445 U.S. 480, 488-491 (1980); Greenholtz v. Nebraska Penal Inmates, 442 U.S. 1, 9-11 (1979); Montanye v. Haymes, 427 U.S. 236, 242 (1976); Meachum v. Fano, 427 U.S. 215, 226-227 (1976); Wolff v. McDonnell, 418 U.S. 539, 558 (1974); Gagnon v. Scarpelli, 411 U.S. 778 (1973); Morrissey v. Brewer, 408 U.S. 471 (1972). See generally Murray‘s Lessee v. Hoboken Land & Improvement Co., 18 How. 272, 276 (1856) (Fifth Amendment “cannot be so construed as to leave congress free to make any process ‘due process of law,’ by its mere will“).“As was true in Eldridge, the decision not to renew a provider agreement is an easily documented, sharply focused decision in which issues of credibility and veracity play little role. It is based in most cases upon routine, standard, unbiased reports by health care professionals. Those professionals evaluate the provider in light of well-defined criteria that were developed in the administrative rule-making process. Written submissions are adequate to allow the provider to present his case. Given the extensive documentation that the provider is able to submit in response to the findings of the survey teams, the provider is unlikely to need an eviden-
“As stated in Eldridge, the public interest in preserving scarce financial and administrative resources is strong. Given the large number of providers participating in Medicare and the frequent surveys that are required, we believe that the costs of providing pre-termination hearings would be substantial. Further, the public has a strong interest in insuring that elderly and infirm nursing home patients are not required to stay in non-complying homes longer than is necessary to assure that the рrovider had adequate notice and opportunity to respond to charges of deficiencies.” Town Court Nursing Center, Inc. v. Beal, 586 F. 2d 266, 277-278 (1978). Town Court did not seek further review of this determination.
This common-sense notion is supported by the Court‘s holding nearly a century ago in Fox v. Cincinnati, 104 U.S. 783 (1882). Ohio had dredged the Miami and Erie Canal which had one of its termini at the Ohio River in Cincinnati. Pursuant to statutory authority, the State entered into contracts with owners of land bordering the canal. Under these contracts, the State provided the landowners with water to generate hydraulic power in return for rents. Fox leased water from the State in 1855. In 1863, the State granted Cincinnati a portion of the canal so that a street might be laid. The city built the street, and Fox, alleging that the project ruined his lease, sued the city. The city responded that the State had implicitly rescinded Fox‘s lease by abandoning the canal. Fox replied that, if this were so, the grant was void because it deprived him of property without due process of law and without just compensation. Id., at 785.The Court perceived the issue to be “whether there is anything in the lease . . . which prevents the State from making such an abandonment.” Ibid. It answered the question in the negative. The State could abandon the canal whenever the “public necessities” justified abandonment. Ibid. No specific provision in the lease was required “because the right to abandon followed necessarily from the right to build. . . . Every lessee of power took his lease and put up his improvements with full notice of the reserved right of the State to discontinue its canal and stop his supply of water.” Id., at 786. See Kirk v. Providence Mill Co., 279 U.S. 807 (1929); Kirk v. Maumee Valley Co., 279 U.S. 797 (1929). If a State may abandon a canal without invading the “property” of a lessee of its waters, it also generally may “abandon” a college, Perry v. Sindermann, 408 U.S. 593 (1972), or a high school, Goss v. Lopez, 419 U.S. 565 (1975), or a nursing home Medicaid provider.
“[A]ny individual eligible for medical assistance (including drugs) may
The same “free choice of providers” is also guaranteed by
“. . . paint three distinct points in the landscape of a ‘legitimate claim of entitlement’ that Medicaid beneficiaries can assert. Taken alone, the interest created by each of these clauses might be dismissed as not rising to the level of a cognizable property interest. However, when viewed together, they compel the conclusion that they identify three aspects of an ‘underlying substantive interest’ that еnjoys the stature of ‘property.‘” (Footnote omitted.) 586 F. 2d, at 287.
Judge Adams also relied, to some extent, on the hardship that nursing home residents might suffer if forced to transfer to another home, stating that the “health” and “home” interests the residents possess in remaining in a particular nursing home are “among those that most persons would regard as being encompassed by the protections of the due process clause.” Id., at 289. Finally, unlike Judge Aldisert, Judge Adams went on to suggest what types of procedures would be necessary before Medicaid patients could be transferred.
The Court observes that “the fact that the decertification of a home may lead to severe hardship for some of its elderly residents does not“The majority finds that continued residency in the nursing home of one‘s choice absent specific cause for transfer is an underlying substantive interest created by three Medicaid provisions. Under the first,
“Finally, the majority relies upon 45 C. F. R. § 249.12 (a) (1) (ii) (B) (4), which establishes as one requirement for an institution‘s certification that each resident admitted to that institution be ‘transferred or discharged only for medical reasons or for his welfare or that of other patients, or for nonpayment for his stay.’ The majority reads this provision as a limitation on the Secretary‘s power to interrupt a recipient‘s residence at a particular institution. Clearly, however, this provision is a standard of conduct imposed by the Secretary upon the provider. Violation of this standard is one of many grounds for decertifying the offending institution. See 45 C. F. R. §§ 249.33 (a) (2), 249.10 (b) (15). The provision creates no ‘substantive interest’ in the residents vis-a-vis the Secretary.
“Moving to its minor premise, the majority postulates that a decision to decertify is tantamount to a decision to transfer individual residents. Practically, of course, this may be a consequence in most cases, at least where an institution fails to remedy its insufficiencies. Analytically, however, the two decisions are different. Decertification focuses on the institution‘s noncompliance with HEW‘s standards. The majority does not and cannot contend that recipients have a right to remain in an institution thаt the Secretary has found, by appropriate procedures, to be in substantial noncompliance with the standards. ‘Transfer trauma,’ although a legitimate concern for some residents, is necessarily subordinate to the threat posed to all residents by substandard conditions.” Id., at 295-296.
When the District Court ruled against the patients and Town Court on their right to a pretermination hearing, it nevertheless ordered HEW and DPW to continue making payments for services actually rendered, no doubt to ensure that there would be no break in care or benefits while the patients were being transferred. The patients appealed on the hearing issue, but the HEW Secretary alone cross-appealed on the issue of whether HEW should continue paying benefits assuming that there was no right to a pretermination hearing. The DPW Secretary did not file a cross-appeal, thus accepting the District Court‘s order that DPW continue paying its share of benefits. Under these circumstances, the DPW Secretary‘s petition for certiorari could not revive the issue of the propriety of that order. And, since the HEW Secretary did not file a petition for certiorari, we have no occasion to review it now.
However, the patients’ jurisdictional argument fails insofar as the hearing issue is concerned. Because it contributes funds to the Medicaid program and has joint supervisory responsibilities with the Federal Government over Medicaid providers, DPW clearly has a sufficient interest in this question to give it standing to argue the merits. And, since it was victorious in the District Court on this issue, there was no need for it to file an appeal in order to keep it alive. Finally, although we would not normally allow a party to make an argument it had not raised below, the fact that the same argument was vigorously asserted by HEW and fully addressed by the Court of Appeals removes any prudential barrier to review that might otherwise exist.
Because he was a party to the proceeding below, the HEW Secretary was automatically joined as a respondent when the DPW Secretary filed his petition in this Court. See this Court‘s Rule 21 (4). In that capacity, he
may seek reversal of the judgment of the Court of Appeals on any ground urged in that court.