Anderson v. Ghaly

          ORDER DENYING DEFENDANT'S MOTION TO DISMISS FIRST AMENDED COMPLAINT RE: DKT. NO. 37

          HAYWOOD S. GILLIAM, JR. UNITED STATES DISTRICT JUDGE.

         The Court previously held that Plaintiffs have no right of action enforceable through § 1983 under the relevant Federal Nursing Home Reform Act (“FNHRA”) subsections and dismissed the complaint with prejudice. Dkt. No. 23. On July 18, 2019, the Ninth Circuit reversed the Court's decision and found that the relevant FNHRA provisions do create a statutory right enforceable under § 1983. Anderson v. Ghaly, 930 F.3d 1066, 1070 (9th Cir. 2019). However, the Ninth Circuit also held that the “present complaint does not allege a plausible violation of the FNHRA appeals provision” and remanded the case for further proceedings. Id. at 1080.

         In light of the Ninth Circuit's opinion in Anderson, Plaintiffs filed an amended complaint. Dkt. No. 35 (“FAC”). Defendant filed a motion to dismiss, now presently before the Court. Dkt. No. 37 (“Mot.”). The Court finds this matter appropriate for disposition without oral argument and the matter is deemed submitted. See Civ. L.R. 7-1(b). For the reasons articulated below, the Court DENIES Defendant's motion.^[2]

         I. BACKGROUND

         Plaintiffs Bruce Anderson, John Wilson, and Robert Austin (collectively, the “Resident Plaintiffs”) and Plaintiff California Advocates for Nursing Home Reform (“CANHR”) filed this action under 42 U.S.C. § 1983 against Defendant Mark Ghaly, in his official capacity as Secretary of the California Department of Health and Human Services.^[3] See generally FAC. Plaintiffs allege that Defendant violated their federal rights under certain FNHRA sections establishing a “‘fair mechanism for hearing appeals' regarding transfers and discharges from skilled nursing facilities.” FAC ¶¶ 66-67.

         The Court first provides the relevant statutory framework and facts below.

         A. Applicable Statutory Framework

         i. FNHRA Provisions

         Congress enacted FNHRA as amendments to the Medicare and Medicaid Acts to improve the quality of care for Medicaid and Medicare-eligible nursing home residents. See Anderson, 930 F.3d at 1070 (citations omitted). FNHRA imposed various requirements “as a prerequisite for nursing homes to be reimbursed under Medicaid” and Medicare. Id.; see also id. at 1070 n.1. The requirements are codified in the Medicaid Act at 42 U.S.C. § 1396r and the Medicare Act at 42 U.S.C. 1395i-3.

         Under FNHRA subsection (e)(3), “[t]he State . . . must provide for a fair mechanism for hearing appeals on transfers and discharges of residents of [skilled nursing facilities]. Such mechanism must meet the guidelines established by the Secretary under subsection (f)(3) of this section.” 42 U.S.C. § 1395i-3(e)(3); see also id. § 1396r(e)(3). Subsection (f)(3) provides that “the Secretary shall establish guidelines for minimum standards which State appeals processes under subsection (e)(3) of this section must meet to provide a fair mechanism for hearing appeals on transfers and discharges of residents from skilled nursing facilities.” 42 U.S.C. § 1395i-3(f)(3); see also id. § 1396r(f)(3).

         In response to the FNHRA's directive, the Centers for Medicare and Medicaid Services (“CMS”) adopted several regulations. Most relevant to the current action, 42 C.F.R. § 431.205(b) requires that the hearing be before the state's Medicaid agency or provide for a right of appeal to that agency. 42 C.F.R. § 431.205(b). Moreover, under 42 C.F.R. § 431.246:

The agency must promptly make corrective payments, retroactive to the date an incorrect action was taken, and, if appropriate, provide for admission or readmission of an individual to a facility if-

(a) The hearing decision is favorable to the applicant or beneficiary; or

(b) The agency decides in the applicant's or beneficiary's favor before the hearing.

42 C.F.R. § 431.246.

         ii. California Law

         Readmission hearings are held before the Department of Health Care Services (“DHCS”), which is the state agency charged with oversight of the Medicaid program. See Cal. Health & Safety Code § 1599.1(h)(1); Cal. Welf. & Inst. Code § 10740. Under § 1599.1(h)(1):

If a resident of a long-term health care facility has been hospitalized in an acute care hospital and asserts his or her rights to readmission pursuant to bed hold provisions, or readmission rights of either state or federal law, and the facility refuses to readmit him or her, the resident may appeal the facility's refusal.

Cal. Health & Safety Code § 1599.1(h)(1). In addition, the facility's refusal to readmit the resident “shall be treated as if it were an involuntary transfer under federal law, ” and the rights and procedures that apply to transfers and discharges “shall apply to the ...