CASE PREVIEW

In family’s lawsuit against public nursing home, court revisits private rights of action and the spending clause

Health & Hospital Corporation of Marion County v. Talevski, to be argued Tuesday, returns the court to the question of when federal law is subject to private enforcement. The court will consider whether to overrule a line of precedent and to hold that private individuals cannot use 42 U.S.C. § 1983 — which allows private suits for state and local deprivations of rights secured by federal law—to enforce federal statutes enacted under Congress’ spending clause power.

Background

The Constitution’s spending clause gives Congress the power to collect taxes and spend money for “the general welfare of the United States.” Through this power, Congress establishes programs and gives money to state, local, and private entities to manage those programs, with federal law establishing program rules that fund recipients must follow. Medicare and Medicaid represent two such spending clause programs. The Federal Nursing Home Reform Act of 1987 requires nursing facilities in those programs to “protect and promote the rights of each resident” as a condition of receiving funds. Facilities cannot impose physical or chemical restraints as disciplinary or convenience methods not required to treat medical symptoms and must allow a resident to remain at a facility, not transferring or discharging except for specified reasons.

In 2016, Gorgi Talevski’s family placed him in Valparaiso Care and Rehabilitation when they no longer could care for his worsening dementia. VCR is a government nursing facility in Indiana owned by petitioner Health and Hospital Corp., a municipal entity. The family and VCR disagreed over the facility medicating Talevski and multiple transfers to other facilities; VCR said Talevski acted in a violent and aggressive manner and it could not otherwise control him, while the family alleged the facility abused him. A state administrative law judge found one late-2016 transfer to have violated FNHRA and ordered Talevski returned to VCR; the family chose to move him to a different facility.

Talevski’s wife and legal guardian brought a Section 1983 action on his behalf against VCR, HHC, and other entities, alleging violations of his FNHRA rights. The district court dismissed the action, but the U.S. Court of Appeals for the 7th Circuit reversed.

Section 1983, enacted as Section 1 of the Ku Klux Klan Act of 1871, authorizes private suits against any person acting under color of state law who deprives the plaintiff of rights “secured by the Constitution and laws.” “Laws” means federal statutes, including spending clause enactments that “unambiguously” create individual rights. A statute creating clear and unambiguous individual rights, as indicated by rights-creating statutory language, is presumptively enforceable under Section 1983, unless Congress rebutted the presumption by indicating an intent to preclude private enforcement.

Arguments of HHC

HHC urges the court to overrule precedent, including Wright v. Roanoke Redevelopment and Housing Authority (1987) and Wilder v. Virginia Hospital Association (1990), and hold that spending clause enactments are not enforceable through Section 1983. These statutes operate as contracts between the United States and those receiving funds—the United States offers money in exchange for recipients providing services to private individuals, who function as third-party beneficiaries of that contract. HHC argues that courts must read Section 1983 against the background of 1871 common law (when Congress enacted the KKK Act); common law at that time did not allow third-party beneficiaries to enforce contracts, particularly government contracts. It follows that a third-party beneficiary of a spending clause “contract” — such as the residents of a facility receiving federal funds and charged with protecting those residents — cannot enforce that contract through a Section 1983 action.

Separation of powers and federalism principles strengthen that conclusion. HHC frames this case within the court’s broader rejection of judicially implied rights of action. Congress decides how spending clause enactments should be enforced; courts lack the power to create private judicial enforcement mechanisms, whether by implying the cause of action from the statute or interpreting a separate statutory right of action to reach all federal statutes. HHC argues that because Congress wanted FNHRA enforced through administrative procedures, courts cannot create additional enforcement procedures. Federalism enhances this argument, as allowing Section 1983 actions “scrambles a state’s expectations”; the state accepts federal funds based on the text of FNHRA, unaware of how courts might interpret a distinct statute to subject states to unexpected private liability and damages. States cannot knowingly and voluntarily accept federal money if they are unaware of the conditions on those funds.

Stare decisis does not compel continued adherence to Section 1983 precedent, according to HHC. Precedent “seems to have emerged from a time capsule,” the “highwater mark” of the “heady days” when the court adopted a “muscular view of judicial power” to allow private suits absent express congressional authorization. Recent cases abandon this view in favor of the enforced statute’s text and structure. While stare decisis has greater force in statutory cases (because Congress’ failure to override judicial precedent suggests agreement with that interpretation), HHC argues that should not apply to Section 1983, a “common law statute” subject to greater judicial, and less legislative, control.

If the court declines to overrule precedent and eliminate Section 1983 enforcement of spending clause laws, HHC argues that FNHRA is not privately enforceable under the current framework. Congress overcame the presumptive availability of a Section 1983 action by establishing a comprehensive statutory enforcement scheme allowing residents to appeal transfer decisions and requiring facilities to establish individualized grievance procedures for chemical restraints; Talevski successfully invoked both procedures.

Arguments of Talevski

Talevski begins with Section 1983’s text and the court’s consistent understanding of that text. Section 1983 permits suits against “any person” acting under color of state law who deprives another of “any rights, privileges or immunities secured by the Constitution and laws.” Because it uses “Constitution” and “laws,” the latter means something distinct — federal statutes. And the absence of any modifier before “laws” captures all federal laws, regardless of the nature or basis for their enactment; the text offers no basis for treating spending clause legislation differently than legislation enacted under another power.

Congress can authorize private enforcement of spending clause rights in new spending clause legislation. Such enactments therefore can be privately enforced, despite the contractual nature of such laws and despite principles of separation of powers and federalism. Section 1983 constitutes an existing congressionally created cause of action for enforcing all other federal laws, regardless of power source. That has been the court’s consistent understanding for more than 50 years.

Talevski offers three arguments for why stare decisis carries greater force in this case. HHC challenges not one case but a “long line of precedents” reaffirming one another and involving numerous spending clause statutes, with lower courts issuing more decisions involving more statutes; Section 1983, Talevski argues, is “integrated into the enforcement scheme of nearly every cooperative federalism program in the United States.” Overruling would introduce instability in many areas, warranting greater caution. Congress has not overridden this line of precedent, despite time and recent criticism from members of the court; in fact, Congress has enacted news laws over the issues grounded in acceptance of Section 1983 enforceability.

The existing “exacting framework,” Talevski argues, permits FNHRA enforcement under Section 1983 because the law unambiguously creates enforceable rights and Congress did not overcome the presumption of Section 1983 enforcement.

As to the first, the law repeats the word “right” or “legal right” to describe residents’ entitlements that nursing homes must protect. The statute places these entitlements in a “bill of rights” and requires facilities to post them on the walls. FNHRA made these rights express conditions of Medicaid participation, showing a congressional attempt to establish rights. These also are the basic, fundamental, highly personalized rights — bodily autonomy and the integrity of having a place to live — similar to those enshrined in the Constitution’s Bill of Rights and the lifeblood of Section 1983 enforcement.

As to the second, Talevski insists that “implied preclusion” of Section 1983 through a comprehensive statutory scheme requires that the statutory scheme be “incompatible” with private Section 1983 enforcement. FNHRA creates no incompatibility. State and federal enforcement of FNHRA, through penalties and exclusion from Medicaid, has never been deemed sufficient to preclude federal lawsuits. FNHRA’s grievance and appeal process are state, rather than federal, remedies — and states often fail to provide required remedial mechanisms. And those statutory and administrative remedies restore the status quo by stopping chemical restraint and returning the resident to the facility; they do not redress past wrongdoing through monetary damages or restrain future misconduct through injunctive relief, both of which are available under Section 1983.

Arguments of the United States

The United States appears as amicus curiae, with argument time, although in support of neither party. The U.S. agrees with Talevski that the court should not overrule precedent allowing Section 1983 enforcement of spending clause enactments and that FNHRA creates enforceable individual rights through the necessary rights-creating language. The U.S. agrees with HHC that Congress rebutted the presumption of Section 1983 enforcement as inconsistent with the congressionally created FNHRA scheme.

The U.S. emphasizes the distinctive context in which FNHRA creates rights compared with other spending clause enactments enforced through Section 1983, such as the Social Security Act. The “vast majority” of nursing facilities participating in Medicare and Medicaid are private facilities — more than 90% when Congress enacted FNHRA. FNHRA creates a remedial scheme — with specific and detailed administrative enforcement and oversight mechanisms — to protect rights against private infringement, with little application to state and local entities. Congress did not authorize suits for damages against private nursing homes. And private nursing homes cannot be sued under Section 1983 because they do not act under color of state law.

The U.S. argues that it follows that Congress precluded Section 1983 suits against the small percentage of government-owned facilities. That Congress rejected private judicial enforcement for most rights holders in most nursing facilities (all residents of more than 90% of regulated homes) shows the comprehensiveness of the statutory scheme in protecting residents’ rights generally. Congress, the U.S. continues, intended to preclude special private enforcement — through Section 1983 — for the small number of residents in the small number of government facilities. If the statutory administrative and oversight schemes are sufficient to protect the overwhelming majority of FNHRA rights holders, they are sufficient to protect all FNHRA rights holders.