Mid-Atlantic Health Law TOPICS

The Seventh Amendment to the U.S. Constitution states that “in Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved.”

In Sligo Creek Center v. U.S. Department of Health and Human Services (HHS), the federal appellate court with jurisdiction over Maryland, Virginia, West Virginia, North Carolina and South Carolina, upheld an HHS Appeals Board decision finding that when HHS commences administrative proceedings against a Medicare participant seeking monetary penalties, the Seventh Amendment guarantee of the right to a jury trial does not apply. 

In so holding, the court affirmed the government’s authority to adjudicate Medicare enforcement actions administratively. This decision has important implications for the thousands of nursing homes participating in Medicare and generally for the scope of administrative enforcement power in health care regulation. 

A. The Case

Sligo Creek Center operated a Medicare-participating nursing home in Montgomery County, Maryland. In 2015, after county health officials confirmed that two facility employees and a former resident had been diagnosed with active tuberculosis, the facility was informed that it was at high risk for TB transmission and that its staff were responsible for testing residents and providing follow-up treatment. Although the facility had internal protocols requiring evaluation for latent TB treatment consistent with federal, state, and county guidance, it failed to follow through after initial testing.

Under standard protocol and regulatory requirements, the facility should have proceeded with evaluating those residents for latent TB treatment unless contraindicated or refused. However, HHS concluded—and the facility admitted—that it neither ordered nor administered latent TB treatment for residents with positive skin tests and negative x-rays, nor did it document any explanation for the omission. The facility conceded it never formally noted any latent TB diagnosis in any resident’s records.

Following this failure, the Secretary of HHS initiated administrative proceedings seeking civil monetary penalties against Sligo Creek Center. The facility challenged the proceedings, arguing that the Seventh Amendment entitled it to a jury trial before monetary penalties could be imposed.

The federal appellate court answered the central question in the negative: the Seventh Amendment does not guarantee Medicare providers the right to a jury trial when the Secretary seeks civil monetary penalties through administrative proceedings. The court’s analysis turned on the interplay between Medicare’s comprehensive regulatory scheme and constitutional jury trial rights.

When a health care facility chooses to participate in Medicare it is also choosing to comply with numerous statutory and regulatory requirements as a condition of receiving Medicare reimbursements.

In this case, Sligo Creek was required to establish and maintain an adequate infection control policy, and to follow such policy which it failed to do. When participating facilities fail to meet these statutory and regulatory obligations, the court finds that HHS’s ability to enforce them is a “public right that Congress may assign to the executive branch for adjudication without offense to the Seventh Amendment.”

The court distinguished this situation from the one presented to the U.S. Supreme Court in SEC v. Jarkesy. In Jarkesy, the Supreme Court decided that a jury trial was in order because the SEC’s action was similar to an allegation of common law fraud. Here, Congress has created a new “public right”, and all HHS is doing is trying to get Sligo Creek to follow HHS’ rules.

B. Broader Implications

This case has several important implications for health care regulation and administrative law more broadly. First, it confirms that HHS may continue to enforce Medicare compliance requirements through administrative proceed-ings without providing jury trials, even when substantial monetary penalties are at stake. 

Second, it underscores the importance of robust compliance programs and documentation standards to prevent regulatory violations. Nursing homes and other Medicare participants remain subject to administrative penalty proceedings without the procedural protections of a jury trial. Facilities facing enforcement actions must present their defenses before administrative law judges and through agency review processes, with judicial review limited to the administrative record. 

By holding that the Seventh Amendment does not apply to Medicare civil monetary penalty proceedings, the court reinforced the principle that constitutional jury trial rights do not automatically extend to enforcement actions arising from comprehensive federal regulatory programs. The decision reflects judicial deference to Congress’s choice of enforcement mechanisms where statutory rights and remedies are creatures of modern regulation rather than common law.

Further, the decision may influence how courts analyze jury trial claims in other health care regulatory contexts, including enforcement actions involving Medicaid, the Affordable Care Act, and other federal health programs. It signals that administrative enforcement mechanisms are likely to withstand Seventh Amendment challenges where penalties arise from participation in voluntary federal benefit programs. 

As the health care regulatory landscape continues to evolve, this precedent reinforces the government’s ability to enforce compliance standards through specialized administrative proceedings rather than traditional civil litigation and jury deliberations.  The onus is ever more on facilities to implement the proverbial ounce of prevention through rigorous internal compliance oversight and avoid HHS’s administration of its cure of choice.

Michael J. Brown
410-576-4030 • mbrown@gfrlaw.com