## Facts

- Trenton Psychiatric Hospital (TPH), a New Jersey state psychiatric facility, treated both voluntarily and involuntarily committed patients.
- Federal benefit eligibility for certain patients depended on receiving treatment in a “qualified” psychiatric hospital, which could be shown through accreditation.
- The Joint Commission on Accreditation of Hospitals (JCAH), a private nonprofit accreditor, conducted on-site surveys and withdrew TPH’s accreditation after evaluations.
- Following the loss of accreditation, the Secretary of Health and Human Services decertified TPH for various federal programs, resulting in termination or denial of certain Medicare, Medicaid, and related benefits for patients at TPH.
- Patients sued the Secretary and JCAH, alleging (i) unconstitutional delegation of federal power to a private entity, (ii) deprivation of property (benefits) without due process, and (iii) inadequate notice and hearing in connection with deaccreditation and decertification.
- The district court granted summary judgment for defendants and dismissed all claims; the patients appealed, and JCAH filed a cross-appeal.

## Issues

1. Whether termination of benefits conditioned on treatment in an accredited/qualified facility constituted a deprivation of a protected property interest without due process.
2. Whether Congress and the Secretary unconstitutionally delegated governmental authority to JCAH by allowing accreditation to affect federal certification and benefits.
3. Whether JCAH’s deaccreditation decision constituted state action subjecting it to constitutional due-process constraints.
4. Whether the procedures surrounding deaccreditation and subsequent federal decertification were constitutionally adequate.

## Decision

- The Third Circuit affirmed dismissal of all claims.
- The court held that the statutory scheme permitting the Secretary to use JCAH findings did not violate the nondelegation doctrine because the Secretary retained ultimate authority over standards and certification decisions.
- The court rejected the due-process claim, concluding the benefit consequences flowed from statutory eligibility conditions tied to facility qualification and were implemented within the governing regulatory framework.
- The court held JCAH was not a state actor on these facts; its private accreditation decisions were not attributable to the government merely because statutes attached consequences to accreditation status.

## Legal Principles

- A procedural due-process claim requires: (1) deprivation of a protectable interest, (2) attributable government action, and (3) constitutionally inadequate process.
- Statutory entitlements may be “property,” but the scope of any protected interest is defined by the statute’s conditions of eligibility.
- Congress may permit an agency to rely on private accreditation findings without unconstitutional delegation where statutory standards govern and the agency retains final, reviewable authority to set standards and decide certification.
- A private accrediting body does not become a state actor solely because government programs give legal consequences to accreditation decisions; state action generally requires stronger governmental attribution (e.g., coercion, control, or performance of an exclusive public function).

## Conclusion

The Third Circuit upheld the use of private hospital accreditation within federal benefits administration, concluding that the Secretary’s reliance on JCAH did not amount to unconstitutional delegation, JCAH’s deaccreditation was not state action, and the resulting benefit terminations did not violate procedural due process given the statutes conditioning eligibility on treatment in a qualified facility.


Cospito v. Heckler, 742 F.2d 72 (3d Cir. 1984)