W.D.Mich.: Medicare "swing-bed" reg does not preempt

A Michigan federal district court held that a Medicare regulation, which sets limits on hospitals’ transfers of patients to nursing facilities, does not preempt a state law that requires such transfers take place within a five-day period.

  The court held that there was no clear conflict between federal requirements and the five-day rule, particularly since the federal regulation required only “substantial compliance” by hospitals. Schoolcraft Memorial Hosp. v. Mich. Dept. of Community Health, --- F.Supp.2d ---, 2008 WL 3360083 (W.D. Mich. Aug. 12, 2008) (No. 1:07-CV-1278).

          This case concerns programs for the provision of acute-care hospital beds for seniors in areas with a scarcity of long-term nursing facility beds; these are known as “swing-beds.” The plaintiff hospital was warned by the state that it was not in compliance with Michigan’s requirement that patients from a hospital’s swing-beds be transferred to an appropriate nursing facility within five days. Mich. Comp. L. § 333.22210(3)(f). The hospital contended that the rule was preempted by 42 C.F.R. § 483.12(a)(2), which states that nursing facilities can’t make a patient leave except under certain conditions, e.g., non-payment or for the patient’s safety or medical needs. While the federal requirement by its terms applies to nursing facilities themselves, 42 C.F.R § 482.66(b)(2) states that hospitals must “substantially” comply with it as well. The court did not discuss the source of the cause of action for the hospital’s preemption claim.

          Defendants invoked abstention under Burford v. Sun Oil, 319 U.S. 315 (1943) (difficult questions of state law presented), but the court disagreed, stating that Burford abstention does not apply to claims of federal preemption. The court noted that federal regulations may preempt state law, but that “unless the underlying statute expressly preempts state law, there is, as a practical matter, a strong presumption against preemption by regulation.”

          The court stated that the Medicare regulation and the five-day rule present “no direct conflict,” and that hospitals other than the plaintiff “represent that they are able to comply with both.” The federal regulation’s purpose was avoiding substandard care, while the five-day rule’s purpose was to conserve resources: “Absent an explicit statement from Congress, the Court is unwilling to hold that Congress intended to preempt a state law that results in patients being provided with essentially the same services at one-sixth the cost. A federal regulation requiring only ‘substantial compliance’ … does not express the necessary, unequivocal intent to preempt a state law that effectuates a federal purpose and simultaneously saves millions of federal dollars.”

There was no indication that the five-day rule was being applied in a way detrimental to patients’ welfare. In the court’s view, the hospital appeared to be trying to evade state law simply to maintain an income stream, when similar care could be provided at far lower cost to taxpayers.  Additionally, the court noted that U.S. Department of Health and Services had explicitly rejected the idea of preempting “higher or more restrictive standards” by states “in the absence of a specific statutory prohibition.” Swing-Bed Program Changes, 56 Fed. Reg. 54,539 (Oct. 22, 1991).