Facts
- New York participated in Medicaid and paid for eligible patients’ care in private nursing homes classified as skilled nursing facilities (SNFs) or health related facilities (HRFs), with HRFs providing less extensive care.
- Federal Medicaid regulations required each nursing home to maintain a physician utilization review committee (URC) to periodically assess whether each patient was receiving an appropriate level of care.
- Medicaid patients in SNFs were recommended for transfer by URCs, including transfers from higher to lower levels of care; additional challenged actions included transfers to higher levels of care and transfers or discharges initiated by nursing homes or attending physicians.
- After URC recommendations, local Medicaid officials acted, and state administrative processes could affirm discontinuance of SNF benefits unless a patient accepted transfer to a lower-care facility.
- A class of Medicaid recipients claimed inadequate notice of URC decisions and reasons, and inadequate notice of the right to an administrative hearing, asserting Fourteenth Amendment due process violations.
- The district court entered injunctive relief requiring prior written notice and an evidentiary hearing before discharges or transfers to a different level of care.
- The court of appeals affirmed, concluding the challenged transfer and discharge decisions involved state action.
- The Supreme Court granted review.
Issues
- Whether transfer and discharge decisions made by private nursing homes, their URCs, or attending physicians constituted “state action” attributable to the State under the Fourteenth Amendment.
- Whether the State’s adjustment of Medicaid benefits in response to private medical placement decisions transformed those private decisions into state action.
- Whether, if state action existed, the Due Process Clause required prior written notice and an evidentiary hearing before transfers or discharges affecting Medicaid patients.
Decision
- The Supreme Court reversed the judgment requiring due process protections for the challenged privately made transfer and discharge decisions.
- The Court held that the nursing homes’ transfer and discharge decisions were not state action and therefore did not trigger Fourteenth Amendment due process requirements.
- Extensive state regulation and public funding of nursing homes did not, by themselves, convert private medical decisions into state action.
- The State was not responsible for the private decisions absent coercive power or significant encouragement that effectively made the choice the State’s.
- The State’s benefit adjustments were treated as responses to private decisions, not as delegation or direction of the underlying medical judgment.
- Providing nursing-home care was not a function traditionally and exclusively reserved to the State.
Legal Principles
- Private conduct is not attributable to the State merely because it occurs in a heavily regulated, publicly funded setting.
- State action may be found when the State exercises coercive power or provides significant encouragement such that the private choice is, in law, the State’s choice.
- State action may be found when a private actor performs a function that is traditionally the exclusive prerogative of the State.
- Governmental payment decisions or benefit adjustments that follow private choices do not, without more, transform the private choices into constitutional state action.
Conclusion
The Court held that private nursing homes’ medical decisions to transfer or discharge Medicaid patients were not attributable to the State, so the Due Process Clause did not constitutionally require prior notice and evidentiary hearings for those decisions even when Medicaid benefits were adjusted in response.