Blum v. Yaretsky,
457 U.S. 991 (1982)

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U.S. Supreme Court

Blum v. Yaretsky, 457 U.S. 991 (1982)

Blum v. Yaretsky

No. 80-1952

Argued March 24, 1982

Decided June 25, 1982

457 U.S. 991


As a participating State in the Medicaid program established by the Social Security Act, New York provides Medicaid assistance to eligible persons who receive care in private nursing homes, which are designated as either "skilled nursing facilities" (SNF's) or "health related facilities" (HRF's), the latter providing less extensive, and generally less expensive, medical care than the former. The nursing homes are directly reimbursed by the State for the reasonable cost of health care services. To obtain Medicaid assistance, an individual must satisfy eligibility standards in terms of income or resources and must seek medically necessary services. As to the latter requirement, federal regulations require each nursing home to establish a utilization review committee (URC) of physicians whose functions include periodically assessing whether each patient is receiving the appropriate level of care, and thus whether the patient's continued stay in the facility is justified. Respondents, who were Medicaid patients in an SNF, instituted a class action in Federal District Court after the nursing home's URC decided that they should be transferred to a lower level of care in an HRF and so notified local officials, and after administrative hearings resulting in affirmance by state officials of the local officials' decision to discontinue benefits unless respondents accepted transfer to an HRF. Respondents alleged, inter alia, that they had not been afforded adequate notice either of the URC decisions and the reasons supporting them or of their right to an administrative hearing to challenge those decisions, as required by the Due Process Clause of the Fourteenth Amendment. Respondents later added claims as to procedural safeguards that should also apply to URC decisions transferring a patient to a higher level of care and to transfers of any kind initiated by the nursing homes themselves or by the patients' attending physicians. Ultimately, the court approved a consent judgment establishing procedural rights applicable to URC-initiated transfers to lower levels of care, and ruled in respondents' favor as to transfers to higher levels of care and all transfers initiated by the facility or its agent. The court permanently enjoined petitioner state officials and all SNF's and HRF's in the State from permitting

Page 457 U. S. 992

or ordering discharges of class members, or their transfers to a different level of care, without prior written notice and an evidentiary hearing. The Court of Appeals affirmed, holding that URC-initiated transfers to a higher level of care, and all discharges and transfers by nursing homes or attending physicians, involved "state action" for purposes of the Fourteenth Amendment.


1. Respondents have standing to challenge the procedural adequacy of facility-initiated discharges and transfers to lower levels of care. Although respondents were threatened only with URC-initiated transfers to lower levels of care, and although the consent judgment in the District Court halted implementation of such URC decisions, the threat that the nursing homes might determine, independently of the URC decisions, that respondents' continued stay at current levels of care was not medically necessary is not imaginary or speculative but is quite realistic. However, the threat of transfers to higher levels of care is not of sufficient immediacy and reality that respondents presently have standing to seek an adjudication of the procedures attending such transfers. Thus, the District Court exceeded its authority under Art. III in adjudicating the procedures governing transfers to higher levels of care. Pp. 457 U. S. 999-1002.

2. Respondents failed to establish "state action" in the nursing homes' decisions to discharge or transfer Medicaid patients to lower levels of care, and thus failed to prove that petitioners have violated rights secured by the Fourteenth Amendment. Pp. 457 U. S. 1002-1012.

(a) The mere fact that a private business is subject to state regulation does not, by itself, convert its action into that of the State for purposes of the Fourteenth Amendment. A State normally can be held responsible for a private decision only when it has exercised coercive power or has provided such significant encouragement that the choice must in law be deemed to be that of the State. Pp. 457 U. S. 1003-1005.

(b) The fact that the State responds to the nursing homes' discharge or transfer decisions by adjusting the patients' Medicaid benefits does not render it responsible for those decisions. Moreover, the pertinent statutes and regulations do not constitute affirmative commands by the State for summary discharge or transfer of Medicaid patients who are thought to be inappropriately placed in nursing facilities. The State, by requiring completion by physicians or nursing homes of forms relating to a patient's condition and discharge or transfer decisions, is not responsible for the decisions of the physicians or nursing homes. Those decisions ultimately turn on medical judgments made by private parties according to professional standards that are not established by the State. Similarly, regulations imposing penalties on nursing homes that fail to discharge or transfer patients whose continued stay is inappropriate do

Page 457 U. S. 993

not themselves dictate the decision to discharge or transfer in a particular case. And even though the State subsidizes the cost of the facilities, pays the expenses of the patients, and licenses the facilities, the action of the nursing homes is not thereby converted into "state action." Nor do the nursing homes perform a function that has been "traditionally the exclusive prerogative of the State," Jackson v. Metropolitan Edison Co., 419 U. S. 345, 419 U. S. 353, so as to establish the required nexus between the State and the challenged action. Pp. 457 U. S. 1005-1012.

629 F.2d 817, reversed.

REHNQUIST, J., delivered the opinion of the Court, in which BURGER, C.J., and BLACKMUN, POWELL, STEVENS, and O'CONNOR, JJ., joined. WHITE, J., filed an opinion concurring in the judgment, ante p. 457 U. S. 843. BRENNAN, J., filed a dissenting opinion, in which MARSHALL, J., joined, post, p. 010121012.

Primary Holding

Due process does not require a hearing when a private nursing home chooses to transfer or discharge Medicaid-eligible patients.


Private nursing home facilities that received Medicaid funding were required under state law to decide the appropriate level of care by using utilization review committees. The state could terminate Medicaid payments for patients after a decision by a URC without a hearing unless the patient was transferred from a skilled facility to a cheaper facility that provided less equipment and a lower level of care. The decision on a transfer was left to the private nursing home, even though the state paid 90 percent of the patient's medical expenses. Patients argued that due process was violated because they had not received a hearing regarding their transfer or discharge. They prevailed in the lower court.



  • William Hubbs Rehnquist (Author)
  • Warren Earl Burger
  • Harry Andrew Blackmun
  • Lewis Franklin Powell, Jr.
  • John Paul Stevens
  • Sandra Day O'Connor

The nursing homes are private parties, so the state action doctrine means that they are not covered by the Fourteenth Amendment. The presence of substantial state regulations in the area does not transform the facilities into government agencies. Physicians and nursing home administrators, rather than state officials, hold the responsibility for making transfer or discharge decisions. The state action doctrine applies only if a state has significantly encouraged a private party to make a certain decision. The only state interaction here consisted of adjusting Medicaid payments, which is not a response sufficient to hold the state accountable because it did not appear to have any influence on the decisions.


  • William Joseph Brennan, Jr. (Author)
  • Thurgood Marshall

The majority erred in assuming that a physician's professional judgment is the sole basis for transfer or discharge decisions. These may in fact be based on the state's efforts to save money, and financial concerns likely play a role in decisions regarding an individual's level of care. The facilities are highly dependent on the state because it provides the vast majority of their financial support, and therefore the state has placed its power behind the nursing homes.


  • Byron Raymond White (Author)

Case Commentary

State action by a private entity can happen when the state has forced or strongly encouraged the private entity to take the action, or when the private entity has taken control of powers that traditionally belong exclusively to the state. The mere presence of state regulation in the area does not mean that private action can be attributed to the state.

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