Take it from the top.

Supreme Court to hear survey dispute

THE U.S. SUPREME COURT HAS AGREED TO HEAR a case this fall that could allow nursing homes to challenge the survey and enforcement system in federal court. The high court will decide whether providers can challenge certain Medicare regulations in federal court before exhausting administrative appeals required by Medicare law.

In 1995, the Illinois Council on Long Term Care filed a federal lawsuit claiming the new survey and enforcement rules violated their due process rights. The complaint charged that HCFA should have enacted the new survey guidelines as regulations subject to the the public rulemaking process and that guidelines governing penalties and other crucial aspects of the survey process were unconstitutional, on the basis that they were too vague.

The district court dismissed the lawsuit, but the Council appealed the decision and, in May 1998, the Seventh U.S. Circuit Court of Appeals vacated the ruling and remanded the case to the lower court, directing parties to "flesh out" contentions that the survey system violated providers' due process rights.

If the high court reverses the Seventh Circuit, providers will be in a bind. "If the Supreme Court holds that providers can't ever bring challenges to regulations on their face, then HCFA can do what it wants, which means providers will have to seek relief from Congress or live with the decision," says Joe Bianculli, an Arlington, Virginia, attorney.

If the Supreme Court affirms the Seventh Circuit decision, Illinois providers will get their day in court to challenge the constitutionality of the survey and enforcement process. Such a ruling would also open the door for similar lawsuits nationwide.

Nursing home providers could win the battle but lose the war if the Supreme Court rules in their favor, but the lower courts later affirm the validity of the interpretive guidelines.