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Medicaid patients who allege violations of their federal rights may be able to take their beef to court, according to a novel ruling by the Tennessee Court of Appeals in a nursing home case. The court said on June 28 that a Medicaid-eligible patient could maintain a breach-of-contract claim against a nursing home for failing to readmit him because he was an intended third-party beneficiary of the contract between the state and the home. Smith v. Chattanooga Medical Investors Inc., No. E2000-01352-COA-R3-CV. “This was a major victory for elderly and disabled people,” said Lynne Dechman of Southeast Tennessee Legal Services, lead counsel for the patient. “We couldn’t find any authority in the contiguous states to support our argument, so we are delighted with this decision.” She added, “Up until now, nursing home patients had Medicaid rights under federal law, but there was no way to enforce their federal rights. We could contact state agencies, like the health department, but the client never got compensated that way — he could never obtain damages, except for medical malpractice. This is a critical decision because it allows individuals to say, ‘You violated my rights.’ “ Russell W. Gray, an associate at Baker, Donelson, Bearman & Caldwell of Chattanooga, Tenn., who was co-counsel for the nursing home, declined to be interviewed, but said in a press release that “the court appears to have set the far-reaching precedent that individuals may have a private cause of action against a nursing home for alleged violations of the Medicaid laws.” Stating that the plaintiff “chose not to follows established [administrative] procedures and to instead file a civil lawsuit,” he added, “With the Tennessee Court of Appeals’ decision in [this] case, others may attempt to circumvent the state administrative procedures.” Plaintiff Darrell R. Smith, a man in his late 30s, had had his legs amputated due to injuries sustained in a mugging. According to the court decision, the Chattanooga’s Life Care Center had sent him to a hospital emergency room because of a fever and pre-existing septic bedsores. But when Smith was discharged from the hospital, the nursing home refused to readmit him, claiming that he was a dangerous patient. In the release, Gray said, “Mr. Smith had a well-documented and undisputed history of being disruptive and violent at the Life Care of Chattanooga facility.” Dechman, however, called the allegations “bogus,” saying that “there was no firsthand testimony to substantiate these allegations.” Putting aside the conflicting claims, the court rejected the nursing home’s argument that it did not have to readmit Smith on the ground that the facility had failed to follow statutory procedures for evicting a dangerous patient. Acknowledging the general rule that government contracts were made for the benefit of all its citizens, the panel ruled that the medical assistance participation agreement in this case manifested a specific intent to grant individual citizens, such as the patient in this case, enforceable rights. Judge Herschel Pickens Franks delivered the opinion, joined by Presiding Judge Houston M. Goddard and Judge Charles D. Susano Jr. According to the court, the purpose of the contract was to benefit not the public in general, but qualified recipients who receive, or would receive, nursing care at the facility. Even though the patient had failed to comply with a technicality, making him not “medically entitled” to have Medicaid pay for his care, he was still “Medicaid eligible” for all other Medicaid services, including readmission into the nursing home. The panel vacated the trial court’s grant of summary judgment to the nursing home and remanded the matter for a determination of damages. Dechman, a co-director of the Tennessee Elder Law Hotline and a Title III attorney for the Elder Law Project, called Smith a “hero” who continued the suit to help other people. Life Care expects to appeal.

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