O'Bannon v. Town Court Nursing Center

RESPONDENT: Town Court Nursing Center
LOCATION: Congress

DOCKET NO.: 78-1318
DECIDED BY: Burger Court (1975-1981)
LOWER COURT: United States Court of Appeals for the Third Circuit

CITATION: 447 US 773 (1980)
ARGUED: Nov 06, 1979
DECIDED: Jun 23, 1980

Nathan L. Posner - on behalf of the Respondents
Norman J. Watkins - on behalf of the Petitioner
Richard A. Allen - on behalf of the Respondent Secretary of HEW, supporting Petitioner

Facts of the case


Media for O'Bannon v. Town Court Nursing Center

Audio Transcription for Oral Argument - November 06, 1979 in O'Bannon v. Town Court Nursing Center

Warren E. Burger:

We will hear arguments first this morning in O'Bannon v. Town Court Nursing Center.

Mr. Watkins, you may proceed whenever you are ready.

Norman J. Watkins:

Mr. Chief Justice, and may it please the Court.

Skilled nursing home services are publicly funded under both Title 18 and Title 19 of the Social Security Act.

Title 18, commonly referred to as Medicare, sets forth the standards and conditions which skilled nursing homes must meet whether or not they participate in Title 18 or Title 19.

The standards are set forth in Title 18.

Title 18, Medicare, is primarily administered by the Federal Government, Department of Health, Education, and Welfare.

Title 19, on the other hand, is primarily administered by the states that participate in Medicaid.

In this case, Pennsylvania's Department of Health is the responsible agency for determining whether or not Title 18 and Title 19 providers of skilled nursing care meet the conditions and standards which the statute and regulations require of nursing homes.

The federal role in this process is basically one of oversight; however, with respect to Title 18 providers in particular, the Federal Government retains and often exercises the independent authority to survey the facilities and make an independent judgment as to whether or not they meet the requirements established by Congress.

The survey function is performed annually and generally involves a survey by professionals in the field to determine whether or not the facility meets all of the very specific conditions of participation in the program.

Town Court, the respondent facility in this case, is a dual provider; that is, a participant in both Title 18 and Title 19.

As such, the facility had dual responsibilities to both the Federal Government and the State of Pennsylvania.

Since 1967 Town Court has participated in this role and has had a checkered history with respect to compliance with the statutory requirements.

From 1967 to '73, the lower court acknowledged that Town Court's participation in the program was basically conditioned upon a number of plans of corrections that have been accepted by the governments to allow them to participate.

In 1974 the State of Pennsylvania determined that Town Court was so substantially out of compliance that it recommended that the facility be terminated, and it was.

It was readmitted after successive applications in 1976; however, later that year a grand jury was impaneled and returned indictments against the facility and its management with respect to care.

That prompted the Federal Government to conduct an independent survey of the facility, whereupon HEW found substantial non-compliance with the statutory requirements and requested Pennsylvania to conduct its own survey of the facility, which was performed.

After successive conferences and negotiations and, indeed, surveys of the facility, Pennsylvania ultimately recommended to the Secretary of HEW that the facility be terminated.

Effective June 20, 1977, the facility was terminated, having been given 30 days prior notice by both the United States and the State of Pennsylvania.

Indeed, seven major conditions prompted the action by the governments.

These conditions are set forth in the appendix at page 295A, and the statutory references are included there.

But they run the gamut from medical services to administrative responsibility being taken by the facility.

Town Court is provided with a series of administrative reviews post-termination, which it began to exercise after the action by the governments.

However, before those procedures could be exhausted, this action was instituted.

Town Court joined by six individual residents of the facility sued both the Secretary of HEW and the Secretary of the Pennsylvania Department of Public Welfare, charging that it was a violation of its, the facility's, due process rights and its patients' due process rights for the facility to be terminated without prior notice and hearing; indeed without a prior evidentiary hearing be provided to the facility and independently to the patients.

After several hearings the District Court ruled against Town Court and against the patients, finding that the statutory procedures were sufficient for the facility and that the patients were entitled to no pre-termination hearings.

The patients and the facility appealed.

The Secretary of HEW cross-appealed because the District Court also ordered that the governments continue to make Medicare and Medicaid payments to Town Court.

Potter Stewart:

And your client's predecessor did not appeal?