A Right to No Meaningful Review: The Aftermath of Shalala v. Illinois Council On Long Term Care, Inc.



The Due Process Clause of the Fifth Amendment has been perverted in the federal administrative system. Federal agencies, such as the U.S. Department of Health and Human Services (HHS), regularly deprive individuals of liberty and property with little to no review. In its regulation of the health care industry through the Medicare program, HHS often turns a blind eye to procedural Due Process protections, such as providing individuals an opportunity to challenge the deprivation of property at a hearing, even though law grants these protections. This is evidenced by the case Shalala v. Illinois Council on Long Term Care, Inc..

In Ill. Council, the Illinois Council of Long Term Care, a trade association of nursing homes, asserted that there was no meaningful review before they were deprived of their property, i.e. Medicare payments, because HHS would not grant a hearing. Without an agency hearing, nursing homes cannot seek federal review because under the Medicare statute they are barred from obtaining federal review until a final agency action has been issued. HHS responded by submitting an interpretation of the Medicare regulations that allowed all constitutional and procedural challenges to be heard by the agency at a full evidentiary hearing and thus move to federal court. Due to HHS’ statements, the Supreme Court ruled in favor of HHS and upheld the statutory bar to federal review until after a final agency action.

Unfortunately, HHS’ interpretation of the Medicare regulations that the Court relied upon in making its decision was never adopted by the agency. As a result, HHS regularly dismisses cases brought by nursing homes to prevent the deprivation of their property. Additionally, HHS has whittled away even more of the procedural Due Process rights granted under the Medicare regulations such as a right to a full evidentiary hearing. In fact, some Administrative Law Judges of HHS are now forgoing a full evidentiary hearing to determine a case based on written submissions. The failure of HHS to provide the Due Process rights guaranteed by the agency’s governing statute, regulations, and policy statements made in court contravenes the protections guaranteed by the Due Process Clause of the U.S. Constitution: the fundamental right of Americans regulated by the federal government to receive due process of law when deprived of life, liberty, or property.

The hearing process of nursing homes presents an excellent opportunity to study the Due Process rights granted individuals challenging the actions of Federal Administrative Agencies. These issues are particularly compelling now because the federal government and insurance industry are using the findings of nursing home compliance hearings as the basis for fraud and abuse actions and for determining if a nursing home will receive liability insurance. This recent occurrence has made the amount of process provided during compliance hearings even more important. Furthermore, although the Supreme Court seemingly addressed this issue of process required in compliance hearings in the Shalala case, the regulatory system has substantially changed since their ruling. Thus, what the Supreme Court deemed as sufficient process in 2000, is no longer what HHS provides under the Medicare regulations calling into question whether the process given nursing homes is Constitutional.


Administrative Law | Constitutional Law | Health Law and Policy | Law and Society | Legal History

Date of this Version

March 2005