Opinion ID: 457907
Heading Depth: 2
Heading Rank: 2

Heading: The Minnesota Litigation.

Text: 14 The State of Minnesota filed an action contesting HHS's disallowance of Medicaid participation for three long-term mental health care facilities (which had been certified as ICFs) which the Secretary had determined were IMDs. HHS made this decision based on unpublished interpretive guidelines used to determine the overall character of a facility which focused on the diagnoses of the facility's residents. The State argued that the term IMD refers only to mental hospitals, not to long-term care facilities, and that the treatment provided, not the diagnoses of patients, controls the determination of whether a facility is an IMD. 15 The district court affirmed HHS's position that facilities other than mental hospitals can be IMDs, 4 but reversed HHS's disallowance of Medicaid participation for the facilities in question. The Court held that the term IMD refers only to institutions which provide long-term care for the mentally ill through on-site psychiatric treatment. It held that HHS must consider the nature of the treatment provided, not merely the diagnoses of the patients, in determining whether a facility is an IMD. Concluding that the ICFs at issue were not IMDs, the district court ordered the disallowed Medicaid funds returned by HHS. 16 HHS appealed to this Court, and we affirmed that HHS had erroneously employed criteria which focused on diagnoses of patients, and that HHS must consider the nature of treatment provided in determining IMD status. 718 F.2d at 866. We thus held that the Grant Appeals Board's decision upholding the disallowance of Medicaid participation to the facilities at issue was based on insufficient factfinding and consequently not supported by substantial evidence. Id. at 863. We also held, however, that the district court was limited to prospective relief, lacking jurisdiction to order HHS to return the disallowed funds to the State. Id. at 857. We remanded to HHS for further proceedings. 17 After remand, the Grant Appeals Board ordered the disallowed funds to be returned to the State. HCFA decided to conduct a new audit of the facilities under revised criteria which it maintains utilize the treatment standard of our decision in Minnesota. The Grant Appeals Board noted in its decision that the State will have a full opportunity to contest any new adverse findings before the Board. The matter is still pending before HHS. 18