Wayside Farm, Inc. v. United States Department of Health & Human Services

863 F.2d 447
CourtCourt of Appeals for the Sixth Circuit
DecidedDecember 13, 1988
DocketNo. 87-3826
StatusPublished
Cited by2 cases

This text of 863 F.2d 447 (Wayside Farm, Inc. v. United States Department of Health & Human Services) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Wayside Farm, Inc. v. United States Department of Health & Human Services, 863 F.2d 447 (6th Cir. 1988).

Opinions

BOYCE F. MARTIN, Jr., Circuit Judge.

The United States Department of Health and Human Services appeals the order of the district court enjoining the department from terminating plaintiff Wayside Farms, Inc., from its Medicaid funding and provider agreement. The issue before us, one of first impression, is whether the Secretary may discontinue Medicaid benefits to an intermediate care nursing facility subsequent to a determination by an administrative law judge that the facility was not in compliance with Medicaid provider requirements but prior to a review by the Appeals Council. Upon review, we conclude that the Secretary may discontinue Medicaid benefits in certain circumstances.

The relevant facts in this case are straightforward and undisputed. Plaintiff Wayside Farm is an Ohio corporation that operates a nursing home certified as an intermediate care nursing facility. It is also licensed by the State of Ohio as a mild mental nursing home and as a regular nursing home. The State of Ohio first entered into a provider agreement with Wayside, a requirement for participation in the federal state funded Medicaid program, in 1972.

The Medicaid program is administered by states that choose to participate and that develop Medicaid plans consistent with federal statutory and regulatory requirements. 42 U.S.C. § 1396. Once a state has secured approval of its plan from the Secretary, the state is entitled to federal funds to match state expenditures in making payments for covered services provided to eligible individuals. 42 U.S.C. § 1396b(a). Pursuant to the Medicaid program, a state may fund with federal.financial assistance those services furnished in an “intermediate care facility.” 42 U.S.C. § 1396d(a)(15). Such a facility, licensed under state law, provides on a regular basis health-related care and services to those who do not need the full care and treatment typically provided by a hospital but who do require care and services amounting to more than room and board. As part of the Medicaid program’s requirements, such facilities must also meet the health and safety standards prescribed by the Secretary. 42 U.S.C. § 1396d(c).

The Secretary has promulgated detailed regulations setting forth the specific certification requirements for intermediate care facilities. Among the requirements are that the facilities employ a sufficient staff twenty-four hours a day, have adequate training programs, maintain sufficient medical records, establish an overall plan of care for patients, provide nutritionally adequate and hygienic meals, satisfy various safety codes, and follow specified practices regarding medications. See 42 C.F.R. § 442.300 et seq. Only if the facility has obtained its state agency’s certification that it has met these requirements and thus qualifies as an intermediate care facility may the facility enter into a “provider agreement” with the state entitling it to reimbursement for providing covered services to Medicaid recipients. 42 C.F.R. § 442.150.

Wayside was first certified in 1972. Since that year, Wayside’s certification to provide care to Medicaid recipients has been continually renewed annually by the state. At the time of the district court’s decision below, sixty of Wayside’s ninety-four residents received Medicaid assistance, and five of the privately-paying residents had pending applications for Medicaid assistance.

In 1980, Congress took action to allow the Secretary to make “independent and binding determinations,” based upon his own surveys, as to whether facilities that had been participating as Medicaid interme[449]*449diate care facilities actually met federal requirements. 42 U.S.C. § 1396a(a)(33)(B). Section 916(b)(2) of the Omnibus Reconciliation Act of 1980, Pub.L. 96-499, also added a new section 1910(c) to the Social Security Act, 42 U.S.C. § 1396i(c), to empower the Secretary to cancel a facility’s Medicaid agreement with the state at anytime if he finds, on the basis of his independent determination, that the facility does not meet federal standards. In effect, this provision allows the Secretary to “look behind” a state agency’s certification.

On May 28-30, 1985, a team of health professionals from the Department of Health and Human Services’ Health Care Financing Administration surveyed Wayside pursuant to this “look behind” authority. This survey was undertaken after a state agency employee complained to the Health Care Financing Administration that the state was unwilling or unable to enforce Medicaid requirements at that facility. On August 30, 1985, officials notified the State of Ohio and Wayside that, as a result of deficiencies found during the on-site federal survey, the facility’s Medicaid agreement would be cancelled effective November 1, 1985. This notification took place pursuant to 42 U.S.C. § 1396i(c)(l).

Not satisfied with the determination made by the Health Care Financing Administration, Wayside sought a hearing before the Secretary pursuant to 42 U.S.C. § 1396i(c)(2). A full evidentiary administrative hearing was then held before an administrative law judge on August 12-26, 1986. On May 14, 1987, the administrative law judge upheld the Health Care Financing Administration’s determination to cancel Wayside’s Medicaid provider agreement. The administrative law judge concluded that the cancellation determination was warranted by significant deficiencies, including the misadministration of medications, the failure to have any policy on chemical and physical restraints, the inadequate training of staff, the absence of active treatment for mentally retarded residents, and the preparation of unhygienic food. Wayside was then notified by letter that it was terminated from the Medicaid program as of the date of the administrative law judge’s decision, May 14, 1987. Federal funding, however, would continue for thirty days until June 14, 1987. This letter of notification informed Wayside that, if it was “of the opinion that [the] facility currently meets federal statutory and regulatory requirements for participation in the Medicaid program, [it] may reapply for participation in the program.” Wayside was also informed that it would not be reinstated unless the Health Care Financing Administration determined that the reasons for the termination had been removed and that there was no real likelihood that the problems would recur. Finally, Wayside was informed that “any request for appeal will not affect the effective date of termination.”

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Bluebook (online)
863 F.2d 447, Counsel Stack Legal Research, https://law.counselstack.com/opinion/wayside-farm-inc-v-united-states-department-of-health-human-services-ca6-1988.