High Court Limits Nursing Homes

The U.S. Supreme Court has ruled nursing homes must go through an administrative hearing before they can challenge Medicare regulations in federal court.

The 5-4 decision in an Illinois case said federal Medicare law does not allow such challenges to be filed directly to federal court.

"Congress may well have concluded that a universal obligation to present a legal claim first to (the Department of Health and Human Services), though postponing review in some cases, would produce speedier, as well as better, review overall," Justice Stephen G. Breyer wrote for the court.

"Proceeding through the agency in this way provides the agency the opportunity to reconsider its policies, interpretations and regulations in light of those challenges," Breyer said. "At a minimum ... the matter must be presented to the agency prior to review in a federal court."

Tuesday's ruling reverses a federal appeals court decision that let the Illinois Council on Long Term Care get into federal court to challenge new Medicare rules for nursing homes.

The Illinois group, an organization of more than 180 nursing homes, said a 1987 law passed by Congress provided stricter guidelines and more severe penalties for facilities that did not meet them.

Before new regulations to enforce the law took effect in July 1995, only 6 percent of Illinois nursing homes were found out of compliance. The nursing home group said that number went up to nearly 70 percent under the new regulations.

The lawsuit challenged the 1995 regulations, saying they were vague and had not been properly adopted by federal officials.

A federal judge dismissed the lawsuit, saying the Medicare law required the Illinois council to present its arguments first to HHS during an enforcement proceeding.

The 7th U.S. Circuit Court of Appeals disagreed and reinstated most of the lawsuit. The appeals court said the Medicare law requires nursing homes to take disputes over reimbursements to administrative hearings first, but does not set the same requirement for challenges to the Medicare rules themselves.

The Clinton administration appealed that ruling to the Supreme Court. On Tuesday, the justices ruled for the government.

Breyer's opinion was joined by Chief Justice William H. Rehnquist and Justices Sandra Day O'Connor, Davd H. Souter and Ruth Bader Ginsburg.

Dissenting were Justices John Paul Stevens, Antonin Scalia, Anthony M. Kennedy and Clarence Thomas.

Thomas, writing for himself, Stevens and Kennedy, said, "Delayed review ... may mean no review at all. For when the costs of presenting a claim via the delayed review route exceed the costs of simply complying with the regulation, the regulated entity will buckle under and comply, even when the regulation is plainly invalid."

The case is Shalala vs. Illinois Council on Long Term Care, 98-1109.

Also on Tuesday, the Supreme Court refused to hear an appeal of the 9th U.S. Circuit Court of Appeals ruling in the case of Brian Keith Lord, a man whose conviction and death sentence for the 1986 slaying of a teen-age girl were overturned by federal courts.

Prosecutors in Washington state say Lord could be on trial again by the end of the year.

Last July the appellate court granted a new trial to Lord, a carpenter who was convicted of aggravated first-degree murder in the death of Tracy Parker, 16, of Poulsbo. Her body was found in September 1986, two weeks after she was last seen alive. Authorities said she had been knocked unconscious, raped and beaten to death with a hammer.

The appeals decision was based on the failure of defense lawyers to call three witnesses, classmates of Parker's, who said they saw her alive a day after investigators said she was killed.

U.S. District Judge Barbara Rothstein initially overturned only the death sentence, ruling that the trial judge improperly allowed the prosecutor to cross-examine Lord after he exercised his right to make a statement.

Review of Monday's Supreme Court Decisionscolor>