Heritage House of Salem, Inc. v. Bailey

652 N.E.2d 69, 1995 Ind. App. LEXIS 649, 1995 WL 348219
CourtIndiana Court of Appeals
DecidedJune 12, 1995
Docket88A01-9410-CV-348
StatusPublished
Cited by17 cases

This text of 652 N.E.2d 69 (Heritage House of Salem, Inc. v. Bailey) is published on Counsel Stack Legal Research, covering Indiana Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Heritage House of Salem, Inc. v. Bailey, 652 N.E.2d 69, 1995 Ind. App. LEXIS 649, 1995 WL 348219 (Ind. Ct. App. 1995).

Opinion

OPINION

BAKER, Judge.

The primary issue for resolution in this case is whether the State of Indiana has the authority to control the number of beds in a nursing institution that are certified under Title XIX of the Social Security Act (Medicaid Act). Appellants-plaintiffs Heritage House of Salem, Inc., (Salem) and appellants-intervening plaintiffs Heritage House of Clinton, Inc., (Clinton) and Heritage House of Connersville, Inc., (Connersville) (collectively Heritage House) claim that Indiana's Certificate of Need (CON) Program, which is the process by which the state certifies only a certain number of beds in a nursing institution for Medicaid participation based on the needs of the county in which the institution is located, violates federal law. Specifically, Heritage House argues that federal law prohibits certifying less than all of the nursing beds in an institution for participation in the Medicaid Program. Appellees-defendants John C. Bailey, the commissioner of the Indiana Department of Health, et al. 1 (collectively IDH) and appellees-intervening defendants United Health, Inc., et al. 2 (collectively United Health), counter that the Medicaid Act specifically contemplates partial certification of a nursing institution.

Medicaid was established in 1965 as a part of the same legislative package that included Medicare, the federal health insurance program for the elderly. Medicaid, established under Title XIX of the Social Security Act, is the principle payor of nursing home care in the United States. Dep't of Pub. Welfare v. Lifelines of Ind. (1994), Ind.App., 637 N.E.2d 1349, 1351, trans. denied. Congress created the Medicaid program to enable participating states to obtain federal financial assistance in caring for the medical needs of the states' needy. Id. The program is regulated by the states, although funded jointly by the states and the federal government. Id. While participation in the program is voluntary, a state must present a state Medicaid plan for the Department of Health and Human Services' approval in order to obtain federal funding.

FACTS

Salem, Clinton, and Connersville are nursing homes that are certified, pursuant to *72 IND.CODE § 16-10-4-9.1 3 , by IDH to provide nursing care for patients who are eligible for Medicaid. Through the Medicaid Act, pursuant to 42 U.S.C. § 13962, these institutions are reimbursed when they provide nursing care to Medicaid eligible patients. However, a nursing institution can only receive Medicaid reimbursement from the State when a Medicaid eligible patient receives care while residing in a Medicaid certified bed. In other words, the institutions do not receive any aid from the State for Medicaid eligible patients who occupy non-certified beds.

In each of these nursing homes, only a certain number of beds have been certified for Medicaid participation. For example, Salem initially requested and obtained Medicaid certification for 64 of its 100 beds. Thereafter, Salem observed that several of its patients who were occupying non-certified beds were spending down their assets and, thus, becoming eligible for Medicaid assistance. However, Salem did not have any vacant Medicaid certified beds into which those patients could be moved. Thus, Salem realized that it would soon be in a situation in which it would either have to continue caring for the Medicaid eligible patients without receiving Medicaid reimbursement because the patients resided in non-certified beds, or discharge those patients and relocate them to facilities that had Medicaid certified beds available. Rather than discharging the patients, on March 24, 1992, Salem filed an application for certification requesting that IDH certify all 100 of its beds for Medicaid participation. IDH did not take any action on Salem's application because, although the CON Program existed under I.C. § 16-10-4-9.1, no rules had been enacted for implementing the program. 4 As a result, on January 13, 1993, Salem filed a complaint against IDH alleging that Indiana's CON Program was inconsistent with federal law and seeking declaratory and injunctive relief to allow Medicaid eligible patients to remain at Salem and to prohibit IDH from denying Salem Medicaid reimbursement. On March 10, 1993, Salem filed a motion to certify a class action in which it sought to represent all licensed and certified long term care health facilities in the State of Indiana seeking participation in the Medicaid program.

On June 1, 1993, Salem filed an amended complaint adding Henry and Gretna Elliott as plaintiffs. The Elliotts are residents of Salem who had depleted their assets to a level at which they became eligible for Medicaid assistance. However, Salem, which had empty non-certified beds, had no Medicaid certified beds that were available. Thus, because Salem had no additional certified beds, the Elliotts were facing discharge from Salem and relocation to another nursing institution. Since their relatives visited almost daily, the Elliotts did not want to be relocated.

In response to the impending situation facing the Elliotts, on June 1, 1993, along with its amended complaint, Salem filed a motion for a temporary restraining order and preliminary injunction to ensure that the Elliotts would not be discharged from Salem and relocated to another nursing institution. On that same day, the trial court issued a temporary restraining order and scheduled a hearing on the preliminary injunction. On July 19, 1993, the trial court denied Salem's motion for class certification but entered a preliminary injunction enjoining IDH from relocating any Medicaid eligible patients or denying reimbursement to Salem for treating Medicaid eligible patients. 5 Record at 172, 724-25.

*73 On June 11, 19983, United Health, which operates several nursing institutions in Indiana, filed a motion to intervene as plaintiffs. Subsequently, the trial court permitted United Health to intervene as defendants, rather than as plaintiffs, because it found United Health's interests to be adverse to those of Heritage House. R. at 708.

On August 9, 1993, Heritage House filed a motion for summary judgment alleging that Indiana's CON Program was violative of federal law because it allowed for partial certification of nursing institutions eligible for Medicaid participation. A hearing was held on the motion on December 9, 1998. Thereafter, on March 7, 1994, the trial court entered findings of fact and conclusions of law in which it held that federal law allows for the partial certification of a nursing institution for Medicaid participation and, thus, Indiana's CON Program is not invalid. Further, the court ordered IDH and IHFC to adopt rules implementing the CON program. Finally, the court concluded that federal law does not prohibit a nursing institution from discharging a patient that becomes Medicaid eligible when the institution does not have a Medicaid certified bed available.

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Cite This Page — Counsel Stack

Bluebook (online)
652 N.E.2d 69, 1995 Ind. App. LEXIS 649, 1995 WL 348219, Counsel Stack Legal Research, https://law.counselstack.com/opinion/heritage-house-of-salem-inc-v-bailey-indctapp-1995.