## Facts

- Medicaid-eligible nursing-facility applicants and residents in Tennessee brought a class action against the state official administering Tennessee’s Medicaid program for nursing facilities.
- Tennessee permitted participating nursing facilities to certify only some licensed beds as Medicaid-certified, including “spot certification” of individual beds within otherwise certified areas; this practice was called the “limited bed policy.”
- Plaintiffs alleged the policy artificially restricted access to nursing-facility services for Medicaid recipients and enabled discrimination by allowing facilities to treat Medicaid residents as occupying a limited subset of beds.
- Mildred Lea Linton’s facility certified only 40 of 87 intermediate-care beds for Medicaid; after her care-status change, the facility indicated it could decertify her Medicaid bed and might not have another Medicaid bed available.
- The district court held the limited bed policy violated the Medicaid Act and enjoined its use, directing Tennessee to implement a remedial plan.
- Tennessee submitted a plan negotiated with plaintiffs; the district court approved it.
- Several nursing-home operators intervened and appealed, challenging the remedial plan’s scope and asserting a Contracts Clause violation; Tennessee did not appeal the underlying Medicaid Act liability finding.

## Issues

1. Whether the district court exceeded its equitable remedial authority or abused its discretion by approving a remedial plan requiring (a) certification of all available licensed beds, (b) first-come, first-served admissions, (c) continued service to current Medicaid residents after withdrawal (as an interim measure), and (d) a two-year exclusion from Medicaid reentry after withdrawal.
2. Whether the remedial plan unconstitutionally impaired the intervening nursing homes’ contractual relationship with the state under the Contracts Clause.

## Decision

- The Sixth Circuit affirmed the district court’s approval of the remedial plan.
- The court held the remedial measures were adequately tied to, and justified by, the established Medicaid Act violation.
- The court upheld:
  - A requirement that participating providers certify all available, licensed nursing-home beds.
  - A first-come, first-served admissions requirement to prevent indirect restrictions on Medicaid access.
  - Transitional protections addressing effects of provider withdrawal on current Medicaid residents (as modified from mandatory to optional).
  - A two-year “lock-out” from Medicaid reentry after withdrawal (as modified to allow waiver when consistent with the plan).
- The court rejected the Contracts Clause challenge, concluding the intervenors did not show substantial impairment of any contractual relationship with the state.

## Legal Principles

- After a statutory violation is found, a federal court may order broad equitable relief so long as the remedy is adequately predicated on the violation and reasonably designed to prevent recurrence and mitigate harmful effects.
- In Medicaid program litigation, courts may approve remedial conditions on provider participation aimed at ensuring meaningful access to covered services and preventing functional equivalents of unlawful restrictions.
- Measures that deter “workarounds” (e.g., admissions rules and restrictions on withdrawal-and-reentry practices) may be permissible when necessary to enforce compliance with Medicaid requirements.
- A Contracts Clause claim fails absent a showing that the challenged remedial conditions substantially impair an existing contractual relationship; participation in a regulated public benefits program may be subject to compliance-oriented conditions.

## Conclusion

The Sixth Circuit upheld a district court-approved remedial plan eliminating Tennessee’s limited Medicaid bed practices in nursing facilities, concluding the plan’s access-protective measures were properly grounded in the Medicaid Act violation and did not substantially impair intervening providers’ contractual rights.


Linton v. Comm'r of Health & Env't, 65 F.3d 508 (6th Cir. 1995)