Due Process Violation

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7^th Circuit Court of Appeals

Case Name: Rock River Health Care, LLC, et al., v. Theresa A. Eagleson

Case No.: 19-2750

Officials: EASTERBROOK, MANION, and ROVNER, Circuit Judges.

Focus: Due Process Violation

Plaintiffs Rock River Health Care, LLC, International Nursing & Rehab Center, LLC, and Island City Rehabilitation Center, LLC, (collectively the “Providers”) brought suit under 42 U.S.C. § 1983 and the Medicaid Act, 42 U.S.C. § 1396a et seq., alleging that the Illinois Department of Healthcare and Family Services (the “Department”) violated constitutional and statutory law in retroactively recalculating their Medicaid reimbursement rates for the three- month period of January through March 2016. The district court granted the Department’s motion to dismiss the case. The Providers now appeal that decision only as to the dismissal of the procedural due process claim. Accordingly, we do not address the other claims raised in the district court.

The Providers in this case operate long-term nursing care facilities in Illinois, and receive per diem reimbursement for Medicaid beneficiaries from the Department, which administers the state’s Medicaid program. Medicaid is a voluntary program that operates through a state and federal partnership, for the purpose of providing medical care for indigent, elderly, and disabled persons. States participating in Medicaid must administer their programs in compliance with the requirements of Title XIX of the Social Security Act, 42 U.S.C. § 1396 et seq., known as the Medicaid Act. The Department provides per diem reimbursements to state-licensed care facilities for the care provided to Medicaid recipients, at a reimbursement rate calculated based on the type and amount of services furnished to each resident. 89 Ill. Admin. Code §140.530(a). The reimbursement consists of three components: (1) support cost; (2) nursing cost; and (3) capital cost.

This case concerns only the nursing component, which covers the wages and benefits for the nursing staff and social workers, payments for direct care consultants, and payment for health care supplies used by or for residents. As the district court noted, by the time that the state reimburses nursing facilities under the program, those facilities have already provided the services to the residents and generally have also already paid the nursing staff. The calculation of the proper rate of reimbursement for nursing facilities is updated on a quarterly basis.

Once the review is concluded, under the Code the Department provides the final determination to the facility, including its conclusions as to the accuracy of the data, and as to any reclassification of residents and recalculation of the reimbursement rates. Id. The facility can request reconsideration of any reclassification within 30 days. In that appeal, the facility can include explanations as to how the submitted data supported the classification of the resident and requires reconsideration, but cannot submit documentation that was not provided to the Department during the initial review. Id. at § 147.340(u). The reconsideration is conducted by individuals that were not directly involved in the initial review, and the reconsideration decision is made within 120 days. Id. at § 147.340(v).

Reversed and remanded

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Derek A Hawkins is Corporate Counsel, at Salesforce.