Connecticut Department of Income Maintenance v. Heckler

Background

The dispute involves the State of Connecticut, a privately owned care home called Middletown Haven, and the federal Department of Health and Human Services. Middletown Haven is licensed as an intermediate care facility and treated many adults transferred from state mental hospitals. Connecticut billed Medicaid for services provided to patients aged 21 to 65 and received federal reimbursement. After audits, the Department concluded Middletown Haven was an "institution for mental diseases" and disallowed $1,634,655 in federal payments. Connecticut sued, and lower courts reached different results before the case reached the Supreme Court.

Reasoning

The Court addressed whether an intermediate care facility can also be an institution for mental diseases under the Medicaid statute. It found the statute’s language and the Secretary’s long-standing regulations support treating a facility as an IMD when its overall character is primarily devoted to care of the mentally ill. The Court relied on Congress’ repeated choices in the statute and its legislative history, and gave deference to the Secretary’s consistent interpretation. Because Middletown Haven met the regulatory criteria showing it was primarily engaged in care of the mentally ill, the Court affirmed the disallowance.

Real world impact

The ruling means that Medicaid will not cover services for nonelderly adults in facilities that qualify as institutions for mental diseases, even if those facilities are certified as intermediate care facilities. States that moved long-term psychiatric patients into such facilities may be denied federal reimbursement for those patients. The decision rests on statutory interpretation and administrative rules, so it upholds the Secretary’s regulatory definition rather than creating a new policy.