Linton v. Commissioner of Health and Environment, State of Tennessee Brief of Plaintiffs-Appellees

    M E M O R A N D U M

TO: 
PROM: 

RE: 
DATE:

/Charles Ralston, Ronald Ellis 
Napoleon B. Williams, Jr. 
Linton (Medicaid case in TN̂
May 30, 1991

F.Y.I.



IN THE UNITED STATES COURT OF APPEALS 
FOR THE SIXTH CIRCUIT

MILDRED LEA LINTON, by her 
next friend KATHY ARNOLD, 
on her own behalf and on 
behalf of all other persons 
similarly situated,

Plaintiff-Appellee,
BELLE CARNEY, by her next 
friend MARY KIMBLE, on her own 
behalf and on behalf of all 
other persons similarly 
situated,

Intervening Plaintiff-Appellee
v .
COMMISSIONER OF HEALTH AND 
ENVIRONMENT, STATE OF TENNESSEE

Defendant-Appellee

)
)
)
)
)
)
)
)
)
)
)
)
) Consolidated Nos.
) 91-5021, 91-5022,
) 91-5023, 91-5024,
) 91-5025, 91-5026
)
) District Court
) No. 3:87-0941
)
)
)
)ST. PETER VILLA, INC.; McKENDREE )

VILLAGE, INC.; CEDARS HEALTH CARE )
CENTER, INC.; BROOK MEADE HEALTH CARE ) 
CENTER, INC.; RHA/SULLIVAN INC.; AND )
PRESBYTERIAN HOMES OF TENNESSEE, INC., )

)Movant s - Appe Hants. )

BRIEF OF PLAINTIFFS-APPELLEES

GORDON BONNYMAN, JR.
Legal Services of Middle TN, Inc.
211 Union Street, Ste. 800 
Nashville, TN 37201 
(615) 244-6610
PAM FORD WRIGHT
West Tennessee Legal Services
P.O. Box 787 , /C
Huntingdon, TN 38344
(901) 285-8181 — \ r<(/^

NAPOLEON B. WILLIAMS, JR 
NAACP Legal Defense & Ed. Fund 
99 Hudson Street, 16th FI.
New York, NY 10013 
(800) 747-4533



STATEMENT OF THE ISSUES

1. Whether the Movants-Appellants have standing to appeal a 
District Court judgment when the Defendants against whom the 
judgment was entered have declined to do so.

2. Whether the District Court abused its discretion in 
denying as untimely Movants-Appellants' motions to intervene for 
purposes of appeal.

3. Whether.,— itssumiBg Movants-Appellants* satisfactieo-'bf'
, ths&^tandinc^aftd- timeliness requirements, they'-'-atlterwĵ se
s^is^edutiws prerequisites for intervention.

STATEMENT OF THE CASE AND FACTS

The Movants-Appellants' statement of the case and facts is 
generally accurate, but incomplete.

Contrary to the implication at page 2 of the Movants' Brief, 
the original complaint filed by Mildred Lea Linton sought relief, 
inter alia, on the ground that the challenged state policy 
violated Title VI of the Civil Rights Act of 1964, 42 U.S.C. § 
2000d and its implementing regulations. (R. 3: Complaint, at 
p. 19, 1 38.

On December 11, 1987, Belle Carney ("Carney") filed a 
Motion to Intervene and an Intervenor's Complaint. She asserted 
the same claims put forth in the original Complaint filed by 
Mildred Lea Linton (R. 3: Complaint). The intervenor's complaint 
included the following request for classwide relief:

2



Plaintiff-Intervenor requests on her own behalf and 
on behalf of the plaintiff class that the Court 
preliminarily and permanently enjoin [continued 
implementation of the state's limited bed certifica­
tion policy]. Plaintiff further requests... that the 
defendant be ordered to take affirmative action to 
remedy the discriminatory effects of said policy.

(R. 6: Intervenor's Complaint - Class Action at p. 18, 
SI 41)

From its inception, this litigation was followed closely by 
the nursing home industry and its trade organization, the 
Tennesee Health Care Association (THCA) (R. 91: Affidavit of Ron 
Taylor). In December 1988, THCA gathered affidavits from sixteen 
different nursing homes from across Tennessee and submitted them 
to the state for use in this case. Four of the six facilities 
now seeking intervention were among those submitting affidavits. 
(R. 107: Agreed Order Setting Hearing at pp. 2-3, 5 3; R. 87:
Affidavit of William L. Penny and affidavits attached thereto) 
Each of the affidavits contained statements to the following 
effect:

If I were required to both certify all my available 
beds, and take patients on a first come, first 
serve basis, I would no longer be able to maintain 
[a certain census of private pay patients] and 
there is as strong possibility that I would be 
economically forced to withdraw from the Medicaid 
program.

(R-_87: Affidavit of William L. Penny, pp. 3-4 and 
Affidavit of Michael J. Touchet, attached thereto)

Media coverage and industry scrutiny of the case 
intensified after the issuance of the Magistrate's Report and 
Recommen-dation in March of 1988. (Idem.; R. 87: Affidavit of

3



William L. Penny; R. 88: Appendix 2 - Exhibit D to Plaintiffs' 
Memorandum in Opposition to Motions to Intervene for Purpose of 
Appeal) The broad interest in the outcome of this case among 
nursing home providers and patients was reflected in dis­
cussions of the case at national seminars, by the involvement of 
national advocacy organizations through their counsel, and 
through participation of amici curiae. (R. 87: Affidavit of
William L. Penny, p. 2-3; R. 44: Notice of Appearance of.-------
Napoleon B. Williams, Jr.; R. 46: Brief Amici Curiae of the 
National Citizens for Nursing Home Reform and the Gray Panthers 
Advocacy Committee). The case also received attention in a 
published General Accounting Office Memorandum on nursing home 
access. (R. 63: Plaintiffs' Response to the Brief and "Comments" 
of Amicus Curiae THCA, attachment thereto: GAO Memorandum,
Access to Nursing Homes for Medicaid Beneficiaries. (March 13, 
1989), CCH Medicare and Medicaid Guide, SI 37,835)

Following the issuance of the Magistrate's Report and 
Recommendation, an amicus curiae brief was filed on behalf of 
the largest nursing home chain in Tennessee, objecting to the 
Magistrate's recommended relief on the grounds that its effect 
would be "to require providers to fill up with Medicaid 
patients." (R. 40: Amicus Curiae Brief to Defendant's 
Objections to Magistrate's Report and Recommendation at P. 4-5) 

THCA submitted an amicus curiae brief on June 1, 1990, 
simultaneous with the state's filing of its proposed remedial 
plan (R. 59: Brief of Amicus Curiae Tennessee Health Care

4



Association). At the June 4, 1990 hearing on the state's plan, 
the association was represented by counsel, who requested and 
received leave to submit additional comments opposing the plan.
(R. 67: John Lyell at TR ___).

Further comments were submitted on behalf of the nursing 
homes by THCA in briefs filed on June 18, 1990 and again on 
June 22, 1990. (R. 62: Comments of Amicus Curiae Tennessee
Health Care Association on Remedial Proposal of the State; R.
65: Supplemental Comments of Amicus Curiae Tennessee Health Care 
Association) Prior to ruling on the state plan, the District 
Court also permitted the filing of an amicus brief by The 
Wexford House nursing home. (R. 66: Comments of The Wexford 
House, Amicus Curiae, to Defendant's Proposed Plan) The same 
entity, proceeding under the name RHA/Sullivan, Inc., is now one 
of the movants seeking intervention as a party.

ARGUMENT

I• Movants Lack Standing To Appeal A Judgment Against 
.The Defendant Which The Defendant Himself Has Chosen 
Not To Appeal.

Since the defendant against whom the judgment was entered 
has chosen not to appeal, for the movants to do so in his stead 
requires that they first demonstrate that they have sufficient 
standing to entitle them to appellant status. Diamond v. Charles. 

476 U.S. 54, 106 S.Ct. 1697, 90 L.Ed.2d 48 (1986). They must

5



satisfy not only the "case or controversy" requirements of 
Article III of the Constitution, but also the "prudential 
standing" requirements established by Supreme Court precedent. 
Association Qf...Dsta Processing Service Organizations. Tnc. v. 
Camp, 397 U.S. 150, 153, 97 S.Ct. 827, 830, 25 L.Ed.2d 184 
(1970). These authorities require that: the movants suffer, or be 
threatened with, an actual injury; that the injury result from 
the putatively illegal conduct of one of the original parties; 
and that the claims or defenses asserted by the movants arguably 
fall within the zone of interests protected or regulated by the 
laws in question. Applying these principles, the District Court 
correctly concluded that the movants lacked sufficient standing 
to prosecute an appeal in this case. (R. 110: Memorandum Opinion 
at pp. 5-8)

The movants stake their claim to standing on their 
objections to the terms of the remedial plan adopted by the trial 
court.1 In support of their argument that they satisfy the

0nly of the movants, RHA/Sullivan, Xnc., seeks review of the
District Court's April 23, 1990 decision on the issue of liability. 
(Brief of the Movants-Appellants at pp. 12, 20, 34, 42) It was not 
clear from RHA/Sullivan's statements to the District Court that it in 
fact wished to appeal the April 23, 1990 decision, as contrasted with 
joining its fellow movants in an appeal limited solely to the July 5, 
1991 Order incorporating the remedial plan. (R. 81: Joint Memorandum In 
Support Of Motions To Intervene For Purpose Of Appeal at pp. 8-9, 13-14)

In any event, RHA/Sullivan does not meet the timeliness requirements
for intervention, discussed at pp. __—__, infra. While the suit was
still pending before the District Court, RHA/Sullivan, then proceeding 
under the name The Wexford House, chose to participate as amicus 
curiae, in spite of the fact that it was cautioned by the District 
Court that it could not, in that capacity, challenge the April 23, 1990 
ruling. (R. 66: Comments Of The Wexford House, Amicus Curiae, To 
Defendant's Proposed Plan at p. 3, n. 1)

6



"injury in fact" requirement, movants first cite the fact that 
the remedial plan deprives them of the ability to discriminate 
against Medicaid applicants. They also cite "new notices, 
procedures and risks that each participating facility must 
accept" as a result of the remedial plan. Finally, they contend 
that they will suffer economic injury as a result of court- 
imposed limits on their ability to freely move into and out of 
the Medicaid program. (Brief of the Movants-Appellants at pp. 20- 
2 1 )

___ 5  -

In each instance, it may be that the state policies approved
£

by the Court in fact have an adverse jaffect on some or all of the 
movants. Certainly, it is true that the movants don't like them. 
But that is a different matter, as the District Court pointed 
out, from establishing that "their grievance with the state 
arises from policies which are putatively illegal." (R. 110: 
Memorandum Opinion at 6)

As amicus, RHA/Sullivan argued that the federal Health Care Financing 
Administration (HCFA) should be joined as a necessary party. (Ibid, at 
pp. 18-19) Conspicuously absent was any suggestion that the nursing 
home itself had any interest in being a party, much less that it was 
entitled to such status as a matter of right.

Even movants' counsel concedes that present efforts to challenge the 
Court's April 23, 1990 ruling would be untimely:

Certainly the Complaint shows that any facility using limited bed/ 
distinct part certification might be impacted. If it used such a 
policy and was concerned with its preservation, it should have 
intervened. Although an intervenor under such circumstances would 
be faced with the "adequacy of representation" of the State's 
defense of the challenged policy, the affected facility would know 
it had an interest." (Brief of the Movants-Appellants at pp. 35- 3 6)

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With regard to the movants' first complaint, the state has 
long had the power to adopt a policy prohibiting Medicaid 
discrimination. Other states have done so, and federal law 
explicitly grants that authority to the defendant. (Ibid, at 
pp. 6-7, n. 7. See especially 42 U.S.C. § 1396r(c)(5)(B)(i).) 
While prompted by the District Court decision, Tennessee's move 
to outlaw Medicaid discrimination is consistent with long term 
state objectives outlined in March 1988 and more fully 
implementing policy established in a 1981 state regulation. 
(Stipulation of Parties to Appeal, appended to Brief of the
Movants-Appellants on May __, 1991, Exhs. A and B thereto;
R. 110: Memorandum Opinion at p. 11, n. 9.)

The movants' complaints regarding "new notices, procedures 
and risks are equally lacking in legal support. For example, 
the notices to which they object require them to inform their 
private pay patients

that they will have less rights in a non-certified 
facility and they will be forced to leave when they 
become eligible for Medicaid. The same type notice 
must be provided to_patients on the [single admissions 
list]. By these notices, the State forces the facility 
to stay in Medicaid until the death or voluntary 
discharge of the last Medicaid patient and alarms the 
private pay_patients in the facility and on the 
[single admissions list]. These private pay patients 
are the very patients that the facility will need to 
attract after opting out in order to survive.

(Brief of the Movants-Appellants at p . 6)

8



Nowhere do the movants cite a law or regulation with which this 
notice requirement would conflict, thereby rendering it 
"putatively illegal."

The reason for their omission is that, far from being 
illegal, the notice requirement simply reiterates legal 
responsibilities already imposed on the facilities by both state 
and federal law and regulation. The nursing homes have no reason 
to complain, for it is true that patients, regardless of whether 
they are themselves private pay or Medicaid beneficiaries, enjoy 
greater legal protection in Medicaid-participating facilities 
than in institutions which have opted out of the Medicaid 
program. See, e.g., 42 U.S.C. § 1396r(a)-(d) and 42 C.F.R. Part 
483/ cf. T.C.A. § 68-11-901 et seq. And the movants already have 
a duty to accurately inform their patients regarding their 
rights, including their Medicaid-related rights. See 42 U.S.C.
§ 1396r (c) (1) (B); 42 C.F.R. § 483.10(b); T.C.A. § 68-11- 
804 (c) (2) and 910; Tennessee Dept, of Health and Environment 
Rule No. 1200-8-6-.02 (10) (a) .

The "procedures" complained of (apart from those, discussed 
above, which ensure nondiscrimination in admissions) "deal 
extensively with transfer and discharge rights of patients in a 
facility. Again, these elements of the plan merely reiterate 
duties already imposed on the facilities under state and federal 
law. See 42 U.S.C. §§ 1396r(c)(2) and (e)(3); 42 C.F.R. §
483.12; T.C.A. §§ 68-11-803(b)(2) - (4); 68-11-901(18) and 68- 
11-907.

9



Of similar weight is the argument that standing is 
conferred on the movants by the legal injury they will sustain 
as a result of the "dual certification" of all of their beds.
The movants claim to be aggrieved by the fact that no longer 

some of their beds be designated as "intermediate care 
facility (ICF)" beds, while others are certified as "skilled 
nursing facility (SNF) beds. (R. 80: Affidavit of Fred William 
Beene, Sr. at pp. 2-3, SI 3, 7, attached as Exh. to Motion To 
Intervene For Purpose Of Appeal by Cedars Health Care Center, 
Inc.; R. 76: Affidavit of William R. Thomas, Jr. at p. 6, 1 
8(b)-(d), attached to the Motion To Intervene For Purpose Of 
Appeal of Presbyterian Homes of Tennessee, Inc.; R. 77:
Affidavit of Suzanne Irvin at p. 3, 9, attached as Exh. B to 
Motion To Intervene For Purpose Of Appeal of RHA/Sullivan, Inc.; 
R. 75: Affidavit of Michael J. Touchet at p. 4, SI 12, attached 
as Exh. B to Motion To Intervene For Purpose Of Appeal of St. 
Peter Villa, Inc.) But the movants' quarrel is with Congress, 
not the State. As the District Court noted, the State was merely 
anticipating an October 1, 1990 deadline for abolishing the 
ICF/SNF distinction.2
2

As for their claim that they could not have foreseen this risk to their 
interests, it is interesting to note that, back in September, 1988, 
another nursing home amicus had expressed concern that "the upholding 
of.the Magistrate's Report and Recommendation would have the effect of 
eliminating the skilled and intermediate distinct part differentiations 
m  the health care setting, a position totally contrary to the direct 
mandates of both the Medicare and Medicaid statutes as above cited."
(R. 40. Amicus Curiae Brief to Defendant's Objections to Magistrate's 
Report.and Recommendation at pp. 5-6). While that description of the 
Medicaid statutes was inaccurate (Congress having already established 
in 1987 legislation the October 1, 1990 deadline for eliminating the 
ICF/SNF distinction), it is relevant to the timeliness of the movants'

10



The movants' final, and perhaps most strident, argument in 
support of their "injury in fact" is directed at what they 
characterize as the "lock-in/lock-out" features of the remedial 
plan. The "lock-in" provision protects residents of facilities 
that choose to drop out of the Medicaid program, by permitting 
them to remain in the facility as Medicaid patients under 
certain circumstances. (R. 57: State Submission Pursuant to
Order of 4/23/90 at p. 14-15) The "lock-out" provisions protect 
program integrity by barring a facility which voluntarily leaves 
Medicaid from coming back into the program within a two year 
period.3 (Ibid, at p. 16)

To begin with, it is unclear how these patient protections 
harm any of the movants. They each wanted to receive Medicaid 
subsidies, provided that the number of Medicaid patients they 
served did not exceed a certain percentage of their total 
patient census. The "lock-in" requirement complained of does not 
obligate them to exceed the percentage of Medicaid census that 
each had determined would best serve their economic interests. 
Instead, facilities opting out of the Medicaid program will 
serve an ever-growing number of private pay patients as

objections to this aspect of the remedial plan. See discussion at 
PP. ____ - _____, infra.

*5 Without this feature, nursing homes could continue to pursue a de facto 
policy of limited bed certification. They could enroll in the program 
until the number of Medicaid patients rose to the quota that the 
facilities set for themselves, then opt out for a period until 
attrition made it advantageous to re-enter the program long enough to 
refill their quota.

11



ion reduces the ranks of those Medicaid, patients 
"grandfathered" under the remedial plan.

Likewise, the "lock-out" provisions do not inflict any 
economic injury on any of the movants. The only facilities 
affected by this provision would be those that voluntarily 
choose to withdraw. It is something of a stretch for those 
entities to argue that, although they want no part of Medicaid, 
they are injured economically by a restriction on their future 
participation in the program.4

Even if one assumes that the "lock-in/lock-out" features 
of the remedial plan result in economic harm to the movants, 
the nursing homes cannot establish that they have arguable 
legal rights that are implicated by such injury. The nursing 
homes' objections are premised on their contention that they 
have a right to contract with the State for the provision of 
services to Medicaid patients. Moreover, the nursing homes 
suggest that it is their prerogative to dictate the terms on 
which they will provide such services on behalf of the public. 
These premises are, of course, false:

Separate "lock-out" provisions apply to facilities that are found to 
have violated the nondiscrimination rules and which are involuntarily 
terminated from Medicaid as a result. (R. 57: State Submission Pursuant 
To Order Of April 23, 1990 at p. 17) The likelihood that any of the
movants would ever be the target of State enforcement activities, such 
that they would be subject to such sanctions, is too speculative to 
confer standing. O'Shea V .— Littleton. 414 U.S. 488, 94 S.Ct. 669, 38 
L. Ed. 2d 674 (1974); L.QS Angeles v . Lynns, 461 U.S. 95, 103 S.Ct/l660, 
75 L .Ed.2d 675 (1983); barker v. Turner. 626 F.2d 1 (6th Cir. 1980)

12



It cannot be deemed a part of the liberty of any 
contractor that he be allowed to do public work in 
any mode he may choose to adopt, without regard to 
the wishes of the State. On the contrary, it belongs 
to the state, as the guardian of its people, and 
having control of its affairs, to prescribe the 
conditions upon which it will permit public work to 
be done on its behalf...

&t£in v. ..Kansas, 191 u.s. 107, 222-223, 24 s.ct
124, 128, 58 L.Ed. 148 (1903) (emphasis in original)

In the absence of constitutional legislation to the contrary,

Like private individuals and businesses, the Govern­
ment enjoys the unrestricted power to produce its 
own supplies, to determine those with whom it will 
deal, and to fix the terms and conditions upon which 
it will make needed purchases.

Perkins v. Lukens Steel Co.. 310 U.S. 113, 127, 67 
S.Ct 869, 876, 84 L.Ed. 1108 (1940); See also
B£.eve$,_Inc, v. Stake. 447 U.S. 429, 439, 100 S. Ct
2271, 2278, 65 L.Ed.2d 244 (1980); Hoke Co. Inc. v. 
TVA, 854 F.2d 820 (6th Cir. 1988)

There are no statutes or regulations which would alter the 
application of these well-settled principles to the present 
case. On the contrary, Medicaid laws and regulations make it 
quite clear that health care providers may enjoy Medicaid 
subsidies only if they comply with extensive federal and state 
standards for the protection of Medicaid patients. See generally 
42 U.S.C. § 1396r and 42 C.F.R. Parts 442 and 483. It is 
Medicaid patients, not providers, who are the intended 
beneficiaries of federal Medicaid law. Green v. Cashman. 605 
F•2d 945, 946 (6th Cir. 1979) The state must administer the 
Medicaid program in the patients' best interests, rather than on 
terms dictated by providers. 42 U.S.C. § 1396a(a) (19)

13



Among the other conditions attached to provider contracts 
with the Medicaid program is an obligation under Title VI not to 
discriminate on the basis of race. Neither the nursing homes nor 
the state may execute or enforce a contract which countenances 
such discrimination:

A provider agreement is not a valid agreement for 
purposes of this part [authorizing Medicaid payments 
to providers] even though certified by the State 
survey agency, if the facility fails to meet the 
civil rights requirement set forth in 45 C.F.R.
[Part] 80 [implementing Title VI]...

42 C.F.R. § 442.12 (d) (2)

It is uncontested that provider discrimination against Medicaid 
patients has resulted in a violation of the Title VI 
regulations.5 The provisions of the remedial plan are reasonably 
calculated to protect Medicaid beneficiaries and ensure redress 
of past Title VI noncompliance. These provisions are, therefore, 
wholly consistent with federal laws governing the rights and 
responsibilities of would-be Medicaid contractors.

Nonetheless, movants argue that the so-called "lock- 
in/lock-out provisions of the remedial plan impair their 
existing contracts with the Medicaid program. However, the only 
provider agreement which the movants have put into the record 
to support that claim was executed by the facility on July 10, 
1990, effective August 1, 1990, after the District Court's

5 Neither the state nor five of the movants have appealed the April 23,
1990 ruling. The sixth movant, RHA/Sullivan, Inc., now claims to be 
appealing that ruling, but that appeal is concededly untimely. See note 
___, above.

14



ratification of the state's remedial plan.6 (R. 78: Brook Meade 
Health Care Center Medicaid Provider Agreement, attached as 
Exh. A to Affidavit of Fred William Beene, Jr. in support of 
Motion To Intervene For Purpose Of Appeal of Brook Meade Health 
Care Center, Inc.)

II • The District Court Did Not Abuse Its Discretion In Concluding
That Movants.' Attempt To Intervene Was Untimely.

Even if the movants were credited with standing sufficient 
to enable them to appeal, they would be barred from doing so 
because of their failure to intervene on a timely basis. Under 
Rule 24, F.R.C.P., an application for intervention must be 
timely. Bradley v. Milliken. 282 F.2d 1186, 1191 (6th Cir.
1987). Applying timeliness criteria adopted in Triax v. TRW.
TUC., 742 F .2d 1224, 1228 (6th Cir. 1984), the District Court
concluded that the nursing homes' intervention request was not 
timely. (R. 110: Memorandum Opinion at pp. 9-20) That ruling 
should not be disturbed unless it constituted an abuse of 
discretion. Grubbs v. Norris. 870 F.2d 343, 345 (6th Cir. 1989).

There was no abuse of discretion in this case. Indeed, the 
District Court reached the only conclusion permitted by the 
circumstances. If intervention here were found to be timely, it

6 As noted above, federal regulations have long put the nursing homes on 
notice that, to the extent that they construe their Medicaid provider 
agreements to authorize discriminatory practices that have now been 
held to violate Title VI regulations, those agreements are invalid.

15



is difficult to imagine a set of facts under which an application 
for intervention would ever be deemed unt. i me 1 v .

The District Court has already reviewed and applied in a 
systematic fashion the pertinent legal standards dealing with 
timeliness of intervention. (R. 110: Memorandum Opinion at pp. 9- 
20) There is no need to repeat that analysis here. However, 
certain of the movants' factual contentions do require 
correction.

Critical to the nursing homes' application for intervention 
is their contention that they did not know, and could not know 
until immediately before they moved for intervention, that their 
interests were implicated by this litigation.

This assertion is disingenuous. In point of fact, the 
nursing homes always knew the gun was loaded. They were aware of 
the case's potential implications for them. The whole subject of 
Medicaid discrimination, which was at issue in this case, was of 
major interest throughout the proceedings below, both to 
Tennessee nursing homes, and to nursing home interests at the 
national level.

In reality, as the District Court concluded, "the timing of 
the motions to intervene was a product of the tactical judgments 
of movants and their counsel." (R. 110: Memorandum Opinion at 
p. 5). Having weighed the hazards of intervention, the nursing 
homes intentionally avoided involvement in the lawsuit until 
after a final judgment had been rendered.

16



Interestingly, there is a parallel between the tactics 
pursued by the nursing homes and the economic relationship that 
previously existed between the nursing homes and the Medicaid 
program. Prior to the District Court's ruling, the limited bed 
certification policy (and the broader pattern of Medicaid 
discrimination of which that policy was a part) enabled nursing 
homes to "have their cake and eat it, too."

As the source of payment for 70% of their patients, the 
nursing homes could rely on Medicaid for their ongoing financial 
stability. On the other hand, state acquiescence in Medicaid 
discrimination, as evidenced in the limited bed certification 
policy, permitted facilities to "cream off" private pay patients 
thereby increasing their total revenues. Nursing homes received 
huge Medicaid subsidies— over one half billion dollars annually- 
hut could take those elderly patients who were the program's 
intended beneficiaries on such terms and conditions as they, the 
nursing homes, chose.

In responding to Linton's challenge to this comfortable 
arrangement, nursing homes developed a strategy that paralleled 
the have-their-cake-and-eat-it character of the policy they 
sought to defend: they would try to influence the outcome of the 
suit, but without assuming the burdens of party status. They 
would supply studies, affidavits, legal counsel and political 
pressure to perpetuate their right to practice Medicaid 
discrimination. But they would not subject themselves to the 
jurisdiction of the courts.

17



Even after the District Court ruled against the state 
policy, the nursing home industry still saw advantages in staying 
out of the case. They saw in the ruling what they thought to be a 
unique opening to attack the state for the alleged inadequacy of 
its Medicaid rates. By doing so through amici curiae, the nursing 
homes could avoid the discovery, cross-examination and state 
rebuttal of their factual claims that would otherwise attend such 
a legal challenge if brought by them as parties plaintiff.

Having failed in these calculations, the nursing homes now 
claim to have been innocent of any knowledge that would have put 
them on notice of a need to intervene at an earlier stage of the 
litigation. Indeed, the nursing homes go so far as to assert that 
the state actually prevented them from knowing those facts which 
would have prompted them to take earlier action.

The facts are otherwise.

A. The Nursing Homes Have Known of the Pendency of This Case, 
and Attempted To Affect Its Outcome, Since the Earliest Days 
of Its Existence.

As the District Court found, the nursing homes, through the 
American Health Care Association (AHCA) and its state affiliate, 
the Tennessee Health Care Association, were involved even before 
the formal filing of this case. Paul Willging, the head of the 
national nursing home association, provided an affidavit in the 
predecessor case of Doe v. Mid-South Nursing Homes. Tnc.. as did 
an official of THCA. (R. 110: Memorandum Opinion at p. 4, n. 4)

18



Such high-level involvement simply reflected the importance 
attached to the litigation by nursing homes throughout Tennessee, 
and at a national level.

The importance to nursing homes of the Medicaid discri­
mination issue was also evidenced by the national trade 
association's publication of a comprehensive national survey of 
state efforts to regulate such discrimination. [R. 21a: First 
Stipulation of the Parties, Exh. 33: American Health Care 
Association, "Improving Access to Long Term Care Services for 
Medicaid Beneficiaries: Update on Developments" (Nov. 1986)]
The significance of the discrimination issue, as well as the 
potential implications of this litigation, were noted as well in 
a General Accounting Office paper published in 1989. (R. 63:
Plaintiffs' Response to the Brief and "Comments" of Amicus 
Curiae Tennessee Health Care Association, attachment on GAO 
memorandum, March 13, 1989: "Access to Nursing Homes for 
Medicaid Beneficiaries," reprinted at CCH Medicare and Medicaid 
Guide SI 37, 835)

Thus, the nursing home industry at its highest levels, and 
policymakers concerned with long term care, appreciated the 
significance of this case long before the District Court entered 
its ruling. And while the nursing homes did not seek party 
status, they were far from idle. Following the Magistrate's 
issuance in March 1988 of his report in which he recommended that 
the state be required to develop a remedial plan, the Tennessee 
Health Care Association engaged in extensive discussions with

19



state officials, critiqued the state's draft plan, and went so 
far as to develop for state officials an alternative plan more to 
the nursing homes' liking. (R. 91: Affidavit of Ron Taylor at page 
6, 51 15-16, and Exh. C thereto, attached as Exh. A to Movants' 
Response to Memorandum in Opposition to Intervention)

THCA collected affidavits from sixteen of its member 
fertilities including four of the movants now before this Court —  
prior to the oral argument in January 1989. Those affidavits each 
alleged that great harm would befall the affiants, and nursing 
homes in general, were the District Court to rule in favor of the 
plaintiffs. (R. 91: Affidavit of Ron Taylor, 51 18, attached as 
Exh. A to Movants' Response to Memoranda in Opposition to 
Intervention; R. 107: Agreed Order Setting Hearing, 51 3, attached 
to Parties' Agreed Order of Stipulation for Correction of Record)

Also prior to the January hearing, the state's largest 
nursing home chain submitted an amicus brief in which it 
explicitly renounced any interest in intervention as a party, 
while arguing vigorously against the relief sought by the 
plaintiffs. (R. 40: Brief Amicus Curiae of National HealthCorp 
L . P . at p . 2)

Industry involvement continued up through the entry of the 
District Court's final order. THCA, aided by counsel for the 
national trade association, submitted an extensive amicus brief 
on June 1, 1990 (R. 59: Brief of Amicus Curiae Tennessee Health 
Care Association) THCA was represented, and was afforded an 
opportunity to be heard, at the hearing on the remedial plan

20



proposed by the state. (R. 67: John Lyell at TR. ____) This was
followed on June 18, 1990 by written comments and attached 
exhibits on behalf of the trade association's state affiliate.
(R. 62: Comments of Amicus Curiae THCA on Remedial Proposal of 
the State) Four days later, THCA filed its third brief in as 
many weeks. (R. 65: Supplemental Comments of Amicus Curiae THCA)

Industry views were also submitted June 29, 1990 by The 
Wexford House as amicus curiae. The same entity now seeks 
intervention under the name RHA/Sullivan, Inc. (R. 66: Comments 
of The Wexford House, Amicus Curiae, to Defendant's Proposed 
Plan.)

Meanwhile, the industry was active on other fronts as well. 
Following the Court's ruling in favor of the plaintiffs, the 
industry had urged the Governor to appeal, but had found him 
apparently uninterested in doing so. On June 5, 1990, THCA sent a 
memorandum to all of its members urging them to immediately apply 
political pressure on the Governor to persuade him to appeal.
(R. 75: Ron Taylor memorandum to THCA member facilities at p . 2, 
attached to Affidavit of Michael J. Touchet as Exh. B to Motion 
to Intervene for Purpose of Appeal on Behalf of St. Peter Villa, 
Inc. )

21



3. The Individual Movants, In Cooperation With The Industry Trade 
Association, Made a Calculated Decision to Delay Until After 
the Final Order Was Entered Before Seeking Intervention.

In the affidavits supporting their motions for inter­
vention, the individual movants concede that they were aware of 
the pendency of the case well before the district court's ruling 
or April 23, 1990. Thus, they knew, or should have known, that 
the original and intervenor's complaints both asserted causes of 
action under Title VI of the Civil Rights Act of 1964 and its 
implementing regulations. (R. 3: Complaint at p. 19, SI 38; R. 6: 
Intervenor's Complaint at pp. 15-16, 18, SI 31, 41) They were on 
notice that, should the state be found to have violated Title 
VI, the state would be compelled, by operation of federal 
regulations, to formulate a remedial plan to "take affirmative 
action to overcome the effects of prior discrimination."
45 C.F.R. § 80.3(b) (6) (i).

Movants were also on notice that, if a Title VI violation 
were found, the nursing homes' Medicaid provider agreements with 
the state would be invalid under federal Medicaid regulations, 
to the extent that they countenanced noncompliance with Title 
VI. 42 C.F.R. § 442.12(d)(2).

In March 1988, the movants knew, or should have known, of 
the contents of the Magistrate's Report and Recommendation. That 
report included a finding that Medicaid providers' private pay 
preferences resulted in racial discrimination, and recommended 
that a remedial plan should be developed as required by Title VI

22



regulations to redress the effects of such discrimination.
(R. 33: Report and Recommendation at pp. 62-63) The nursing 
homes knew, or should have known, in October 1988 that the 
District Court's refusal to preliminarily issue an injunction as 
recommended by the Magistrate left open the possibility of 
ultimately granting such relief as part of the final judgment 
(R. 41: Memorandum Opinion at pp. 9-11)

If, despite the plain language of the pleadings, the 
nursing homes still nurtured a hope that the trial court would 
somehow address the adequacy of Medicaid rates in its 
disposition of this case, such hopes should have been dispelled 
by the Court's April 23, 1990 ruling. (R. 55: Memorandum Opinion 
at p. 12, n. 2) The nursing homes also knew then that the 
remedy to be established by the Court would be designed to 
mitigate or prevent provider attrition, as well as remove the 
effects of past Title VI noncompliance. (Ibid, at pp. 19, 22)

The movants knew, too, from the beginning, that as they 
themselves now put it:

The Commissioner cannot adequately represent movants' 
interests in this proceeding because the issues of 
certification and reimbursement are inextricably 
intertwined and because the Commissioner, as a 
purchaser of services, has an economic interest 
directly opposed to movants' interests as suppliers.

(R. 81: Joint Memorandum in Support of Motions to 
Intervene for Purpose of Appeal at p. 16)

In the face of these difficult realities, the nursing homes 
doggedly continue to insist that they applied for intervention at

23



the earliest point at which they could reasonably have known of a 
need to do so. Their argument in this regard turns on several 
critical contentions, none of which is supported by the record.

First, the movants argue that they were caught unawares by 
the state's sudden decision not to appeal the trial court's 
ruling:

...the State of Tennessee agreed to vigorously 
defend the case. In fact, until June 1, 1990, when 
the state submitted the Linton Plan, it indicated to 
the Tennessee Health Care Association that it was 
considering an appeal while conducting lengthy 
negotiation with the plaintiff.

Then, betraying the identity of interests between movants and
THCA, which they elsewhere are at pains to deny, movants
continue:

Since THCA did not know of the state's decision not 
to appeal until that time, movants certainly would 
not know. (Brief of the Movants-Appellants at p. 35)

Second, movants attempt to distance themselves from the 
trade associations of which they are members, complaining that 
the trial court abused its discretion when it sought "to impute 
knowledge and delay to the movants from the actions and 
knowledge of separate entities and persons." (Brief of the 
Movants-Appellants at p. 27) Movants claim that they chose to 
be represented by counsel for THCA because of his previous 
involvement in the litigation, thereby implying that they had 
themselves been uninvolved in THCA's earlier efforts through 
counsel to influence the outcome of the case. (Ibid, at p. 40)

24



This line of argument leads the movants to an even bolder 
contention. Since they claim that their grievances arise from 
the terms of the state's remedial plan, and since they are stuck 
with the fact that a draft of that plan was submitted to THCA 
nearly two years before they filed their motions to appeal, the 
movants argue that the state actively prevented THCA from 
sharing with them vital information regarding the terms or even 
existence of the draft plan:

After the Magistrate's decision, the State worked on 
a draft remedial plan which contained the possibility 
of elimination of private pay preference as a long 
term goal. Since the uncontroverted proof is that 
this plan was confidential and that THCA was 
instructed not to disclose it because it might alarm 
the industry, it is clear that the state prevented 
the movants from knowing that a plan was under 
consideration which might affect some of their 
interests. It should be noted that the basic right to 
opt out of Medicaid was not one which was discussed 
at that time.

One of the parties (the State), in 1988 worked on a 
draft plan which, if filed, would have affected all 
six movants' interests in private pay admission 
preference but only in the "long term." This draft 
plan was not filed and the State intentionally kept 
it confidential so as to not alarm the industry.

[Brief of Movants-AppeHants at pp. 38, 42-43 
(emphasis in original)]

As for the first of these arguments, it is technically 
correct that the nursing homes did not know until June 1, 1990 
that the state had decided not to appeal.7 But THCA had known

As a matter of fact, the State, which had forthrightly informed the 
nursing home industry that it was negotiating with the plaintiffs but 
might yet exercise its right to appeal, continued to reserve the right 
to appeal in the proposed remedial plan that it submitted to the Court

25



enough about the state's intentions that, within days of the 
April 23, 1990 ruling, the trade association's Board of 
Directors had voted to attempt to intervene in the case.
(Stipulation of Parties to Appeal and Exh. __ thereto, appended
May __, 1991 to the Brief of the Movants-Appellants)

Prior to June 1, the nursing homes had also known enough to 
put their attorneys and the national trade association's counsel 
to work on preparation of an amicus brief to be submitted under 
THCA's name. THCA declared in the brief filed that day that the 
nursing homes which it represented "are entities directly 
affected by the Court's remedy" and justified its request for 
amicus curiae status on the grounds that nursing homes were "a 
group unrepresented in this suit yet potentially greatly 
affected by its remedy." (R. 58: Motion of Tennessee Health Care 
Association For Leave to File Amicus Curiae Brief at p. 1; R.
59: Brief of Amicus Curiae Tennessee Health Care Association at 
p. 2)

The movants are equally disingenuous in their indignation 
that the trial court sought to impute to them knowledge and 
delay based upon "the actions and knowledge of separate entities 
and persons." The distance that the movants try to put between 
themselves and the national and state trade associations of 
which they are members simply does not exist in fact. Evidence

on June 1. (R. 57: State Submission Pursuant to Order of April 23, 1990
at p . 3, n. 1)

26



abounds that the movants are mere instrumentalities of the 
larger trade associations to which they belong:

• Four of the six movants participated in THCA's efforts in 
December 1988 to collect affidavits, which were subsequently 
submitted to the State, decrying the prospect of the very 
relief which they now claim to have been unable to foresee.8

(See pp. 10-11, supra)

• In a moment of candor, the movants conceded that they
sought intervention as representatives of "an entire class
of health care providers," in order to "protect [their]
right and those of other facilities" and to uphold "the
economic interests of the [nursing home] industry." They
admitted that the had been waiting to intervene to see
whether the trial court would first consider the arguments
of THCA and other nursing home amici.

(R. 81: Joint Memorandum In Support Of Motions To 
Intervene For Purposes of Appeal at pp. 9-10, 20)

8 See, e.g., Affidavit of Michael J. Touchet, dated July 27, 1990, in 
support of Motion to Intervene (R. 75) ("The Linton case came to my 
attention shortly after it was initiated... The case did not appear to 
involve our facility. On or about June 8, 1990, I received the [letter 
from THCA]. For the first time I learned the state was proposing 
complete dual certification and that it would be recommending first- 
come, first-served without a private pay preference.")

Compare Affidavit of Michael J. Touchet, dated December 12, 1988 (R. 87 
attachment) ("If I were required to both certify all my available beds, 
and take patients on a first come, first serve basis, I would no longer 
be able to maintain that census balance [of private pay patients] and 
there is a strong possibility that I would be economically forced to 
withdraw from the Medicaid program.")

27



• The national and state trade associations are financing and 
coordinating the movants' attempted intervention, and are 
providing them with counsel.

(R. 88: THCA Association Press, July 27, 1990, filed 
as Exh. C to Plaintiffs' Memorandum In Opposition To 
Motions To Intervene For Purpose Of Appeal; R. 91: 
Affidavit of Ron Taylor at page 10, SI 22, attached as 
Exh. A to Movants' Response To Memoranda In Opposition 
To Intervention)

It now emerges that THCA has in turn been an instrumen­
tality of the movants themselves. Each of the six nursing homes 
seeking intervention were represented on THCA's Board of 
Directors or Government Relations Committee while the trade 
association was developing and implementing its strategy for 
dealing with this litigation on the nursing homes' behalf.
(Stipulation of Parties to Appeal, appended May __, 1991 to the
Brief of the Movants-Appe11ants, at p. ____)

And, finally, what of the movants' striking assertion 
that the state had intentionally kept them from knowing of the 
existence or terms of the remedial plan drafted in 1988 and 
shared with THCA? The "uncontroverted proof" relied upon by the 
nursing homes has evaporated. Called upon by the appellees to 
support assertions of fact outside the record, the nursing 
homes now concede that, as members of THCA's Board of Directors 
and Government Relations Committee, they were briefed in 1988, 
both orally and in writing, on the terms of the draft plan. The 
memorandum received by the movants from THCA's counsel tracks 
almost verbatim the list of the state's objectives as set forth

28



in the draft plan. (Stipulation of Parties to Appeal, appended
May __, 1991 to the Brief of the Movants-Appellants at p. 2)9
Thus, by October 1988 at the latest— a full year and a half 
before the Court's ruling— each of the movants actually knew 
that the State not only might not appeal, but was seriously 
considering committing itself to elimination of Medicaid 
discrimination as an objective of state policy.

The timing and character of the nursing homes' involvements 
in the case, as well as their selection of which entities' names 
should be attached to which actions, were all matters that the 
movants calculatingly chose in collaboration with their trade 
association alter ego. To grant them party status now would be 
to reward a deliberate strategy aimed at circumvention of the 
many trial and appellate rules so vital to ensuring that 
litigants are treated evenhandedly. The nursing homes have made 
their beds. If they must now sleep in them, it is a result of 
their own choices freely made.

9 In their brief, movants made a special point of noting that "the basic 
right to opt out of Medicaid was not one which was discussed [in 1988, 
when the state supplied THCA with a copy of the draft plan]." (Brief 
of the Movants-Appellants at p. 38) At the time they made that 
statement, the movants had filed only the first two pages of the draft 
plan, neither of which referred to the "opt out" issue. (R. 91: 
Affidavit of Ron Taylor at pp. 5-6, SI 12-15 and Exh. A and B thereto, 
attached as Exh. A to Movants' Response to Memorandum in Opposition to 
Intervention). Now that the entire document is available to the Court, 
it is evident that the State fully disclosed to THCA the fact that it 
was considering imposition of patient protections which would limit 
the ability of facilities which "opt out" of the Medicaid program to 
displace patients already in the facility. (Stipulation of Parties to
Appeal, appended May __, 1991 to the Brief of the Movants-Appellants
at p. 2 and Exh. A thereto, pp. 6 - 7 )

29



m • Apart From The Untimeliness Of Their Application,
Movants-Appellants Failed to Satisfy Other Prerequisites 
For Intervention.

A. The Nursing Homes Lack "A Significantly Protectable 
Interest" In The Litigation.

Rule 24(a)(2) of the Federal Rules of Civil Procedure 
requires a would-be intervenor to demonstrate that it has a 
"significantly protectable interest" in the pending litigation. 
Donaldson v. United States. 400 U.S. 517, 531, 91 S.Ct 534, 542 
(1971). As the District Court correctly found, mere satisfaction 
of the standing requirements is insufficient to satisfy this 
provision of Rule 24. (R. 110: Memorandum Opinion at pp. 20-23)

The nursing homes have a problem. On the one hand, their 
several grievances against the remedial plan are not supported 
by the law, and therefore cannot afford them the "protectable" 
interest necessary to support intervention.10

On the other hand, the one right which, as Medicaid 
providers, they do clearly enjoy is a right to be paid rates 
which are "reasonable and adequate." Wilder v. Virginia Hospital
As S Q C • /   U.S.  , 110 S.Ct 2510 (1990) . However, Medicaid
reimbursement is extraneous to this case, and the nursing homes 
have firmly disavowed any intention of litigating its adequacy. 
(Brief of the Movants-Appellants at pp. 23-24, 46, n. 32) Thus, 
the fact that they possess such a "protectable interest" cannot 
confer a right to intervene, if that particular interest is not

10 See discussion of standing at pp. ___ - ___, supra.

30



going to be asserted in these proceedings. If movants do not 
intend to use this case as a forum for litigating the 
reimbursement issue, then it is of no more relevance to the 
matter of intervention than the movants' First Amendment rights, 
rights under corporate tax laws, etc.

In point of fact, if permitted to intervene, the nursing 
homes would inevitably attempt to litigate the adequacy of 
Tennessee's Medicaid payments. The movants themselves argue that 
the alleged economic injuries resulting from the remedial plan 
"are inextricably intertwined with reimbursement." (Brief of the 
Movants-Appellants at p. 23) But since there is no legal basis 
upon which they can obtain relief from the remedial plan, the 
nursing homes will necessarily focus on reimbursement. That much 
is already evident from the purported financial analyses 
contained in the affidavits supporting each of the motions to 
intervene.11 (R. 75-80) Yet the nursing homes would litigate 
this complex, fact-intensive issue, not in the trial court, but 
for the first time as appellants. This would turn the whole

That is also the reason why the nursing home industry, in its first 
attacks on the remedial plan, concentrated almost entirely, not on the 
terms of the plan itself, but on the adequacy of the state's Medicaid 
rates. [R. 62: Comments of Amicus Curiae Tennessee Health Care 
Association on Remedial Proposal of the State and attachments thereto; 
see also R. 65: Proposed "Final Order" attached to Supplemental 
Comments of Amicus Curiae Tennessee Health Care Association, p.  2, «[
(a)» ...continuing for as long as the other remedial provisions shall
remain in effect, the state shall submit quarterly reports to the Court 
containing an economic and legal analysis as to the sufficiency of its 
Medicaid reimbursement system. Industry representatives and counsel may 
submit comments on the state's reports within three weeks. If the 
court, based on its review of the reports and comments, determines that 
Medicaid reimbursement is inadequate, the state shall be required to 
modify its reimbursement system."]

31



judicial process on its head and work a grave injustice upon the 
original parties.

B. Any Legally Protected Interests Which The Nursing Homes 
Might Have Will Remain Unimpaired By The Disposition Of 
This Lawsuit.

Under Rule 24, not only must an intervenor possess a 
legally protected interest which is the subject matter of the 
lawsuit, but he must demonstrate that that interest is one which 
is likely to be impaired by the outcome of the case. Bradley v, 
Milliken, 828 F.2d 1186, 1191 (6th Cir. 1987). As the District 
Court properly found, the movants' WiIder-protec.ted rights to 
test the adequacy of Tennessee's Medicaid reimbursement are 
unimpaired by these proceedings. Refusal of intervention on 
appeal prevents the nursing homes from short-circuiting the 
judicial process. But they remain free to proceed afresh with a 
new case which they themselves can bring as plaintiffs.

32



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V  *

INTERVENTION AFTER JUDGMENT IS UNUSUAL AND SHOULD BE 
GRANTED ONLY IN SPECIAL CIRCUMSTANCES JUSTIFYING THE INTERVENTION.

In applying the timeliness requirements of Rule 24, the 
federal courts have generally held that intervention after judgment 
is unusual and should be granted only where there are special 
circumstances justifying the late intervention. Chase Manhattan 
Bank (Nat. Asso.) v. Corporacion Hotelera de Puerto Rico. 516 F.2d 
1047, (1st Cir. 1975); Alleghany Corp. v. Kirby, 344 F.2d 571, 
(2nd Cir. 1965) cert, dismissed, 384 U.S. 28; Crown Financial 
Corp. v. Winthrop Lawrence Corp.. 531 F.2d 76 (2nd Cir. 1976); 
United States v. Associated Milk Producers. Inc.. 534 F.2d 113 (8th 
Cir. 1976), cert, denied. 429 U.S. 940; Nevilles v. EEOC. 511 F.2d 
303 (8th Cir. 1975); Alaniz v. Tillie Lewis Foods. 572 F.2d 657 
(9th Cir. 1978, cert, denied 439 U.S. 837.

For example, in Chase Manhattan Bank (Nat. Asso.) v. 
Corporacion Hotelera de Puerto Rico, supra. the district court 
denied a municipality's motion to intervene after judgment in a 
mortgage foreclosure proceeding. In affirming the judgment below, 
the Court of Appeals stated that "Intervention after judgment is 
unusual; it is granted only in very special circumstances." Id. 
516 F .2d at 1050. The Court of Appeals noted that the applicant 
for intervention had been well aware of the proceeding and its 
effect on their interests.

II.

The proposed intervenor defended it late motion to intervene



on the ground that it "could not have known that the (defendant) 
Secretary (of the Treasury) would also consent to release tax 
claims for non- exempt property..." Id. 516 F.2d at 1050. The 
Court of Appeals rejected the contention and stated that:

"we think the burden was on the Municipality, 
if it wished to participate in whatever final 
disposition was made, to make known its desire 
prior to the entry of the final decree. It 
could not rely without murmur on the 
Secretary's representation throughout the 
proceeding and, after a final decree was 
entered not to its liking, intervene and 
reopen. Id., 516 F. 2d at 1050.

Similarly, in Alleghany Corp. v. Kirby, 344 F.2d 571 (2nd Cir. 
1965), cert, denied. 384 U.S. 28, the Court of Appeals held that 
the district court had not abused its discretion in denying 
intervention after judgment where "among other considerations ... 
the applicants had watched closely the course of the litigation 
from the outset but sought to intervent only on the eve of the 
deadline for filing a certiorari petition". Id., 344 F.2d at 573.

In United States v. Alleghenv-Ludlum Industries. Inc., 553 
F.2d 451 (5th Cir. 1977), cert, denied. 435 U.S. 914, the Fifth 
Circuit affirmed a judgment of the district court denying a motion 
to intervene by a group of workers in a Title VII action where the 
motion was filed nine months after the parties had reached a 
consent agreement and seven and one- half months after judgment on 
the legality of the consent agreement. The Court of Appeals stated 
that "Post- judgment intervention is rare". Id. 553 F.2d at 453. 
The Court said that the "applicants knew of the consent agreement 
three days after the suit was filed; numerous other individuals and 
groups moved to intervent before the district court entered a



judgment ..." Id.
Moreover, the Court said, "To allow the applicants to 

intervene now would disrupt carefully considered proceedings" Id. 
553 F .2d at 453. Specifically, the Court noted, "Intervention now 
for the purpose of challenging the consent agreement will prejudice 
the appellees by jeopardizing months of negotiations, causing 
substantial litigation expenses, and even more substantial expenses 
of implementation. Id.

In Alaniz v. Tillie Lewis Foods, 572 F.2d 657 (9th Cir. 1978), 
cert, denied, 439 U.S. 837, a group of cannery employees sought to 
intervene in an employment discrimination class action by women and 
minority cannery employees against unions and employers in the 
food- processing and canning industry after the district court's 
approval of a settlement agreement. The motion to intervene was 
filed 17 days after the effective date of the consent decree. The 
motion was denied.

In affirming the district court, the Ninth Circuit stated
that:

"Appellants sought intervention two and one- 
half years after suit was filed; they either 

knew or should have known of the continuing 
negotiations. The crux of appellants'
argument is that they did not know the 
settlement decree would be to their detriment. 
But surely they knew the risks. To protect 
their interests, appellants should have joined 
the negotiations before the suit was settled. 
Appellants have not proved fraudulent 
concealment. It is too late to reopen this 
action." Id. 572 F.2d at 659.

Special circumstances in which the courts have allowed 
intervention after judgment are instances where there has been



fraudulent concealment, see Alaniz v. Tillie Levis Foods, surpra; 
bad faith or malfeasance, see United States v. Associated Milk 
Producers, Inc., 534 F.2d 113 (8th Cir. 1976), cert, denied, 429 
U.S. 940; a necessity to preserve a right which could not otherwise 
be protected.see, Cuthill v. Ortman- Miller Machine Co., 216 F.2d 
(7th Cir. 1954; where substantial problems in formulating relief 
remain to be resolved, see Hodgson v. United Mine Workers. 473 F.2d 
118 (App. DC 1972) .

An applicant for intervention after the entry of final 
judgment must show an adequate justification for the intervention 
and for failure to request intervention at an earlier stage of the 
proceedings. Where, however, the applicant has been aware of the 
possibility that the decree might contain provisions to which they 
object and the applicant has filed an amicus curiae brief in 
opposition to the entry of the decree, the motion to intervene is 
untimely since the applicant had time to file the application to 
intervene earlier. United States v. Associated Milk Producers. 
Inc. . 534 F. 2d 113, 116 (8th Cir. 1976), cert, denied 429 U.S.
940.



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D e p t . P h o n e  'k

F a x  it

IN THE UNITED STATES COURT OF APPEALS 
FOR THE SIXTH CIRCUIT

MILDRED LEA LINTON, by her 
next friend KATHY ARNOLD, 
on her own behalf and on 
behalf of all other persons 
similarly situated,

Plaintiffs - Appellees
BELLE CARNEY, by her next 
friend MARY KIMBLE, on her own 
behalf and on behalf of all 
other persons similarly situated,

Intervening Plaintiffs - Appellees
v.
COMMISSIONER OF HEALTH AND ENVIRONMENT, STATE OF TENNESSEE

Defendant - Appellee
ST. PETER VILLA, INC.;
MCKENDREE VILLAGE, INC.;
CEDARS HEALTH CARE CENTER, INC.;
BROOK MEADE HEALTH CARE CENTER, INC.; RHA/SULLIVAN, INC.; AND 
PRESBYTERIAN HOMES OF TENNESSEE, INC.,

Movants - Appellants.

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)
)

NO. _______
(Consolidated Nos. 
91-5021, 91-5022, 
91-5023, 91-5024, 
91-5025, 91-5026)

STIPULATION OF PARTIES TO APPEAL

Appellees have informed Appellants that certain 
statements in Appellants' Brief are in need of clarification 
in order to prevent possible misinterpretation by the Court.

1



Appellants agree with this concern and have prepared an 
errata page 33 to the Brief which is attached hereto.

In order to properly clarify the matters, the parties 
to this appeal agree that certain facts not in the record 
should be provided to the Court by agreement. For that 
purpose the following stipulation is made:

Stipulation
If Mr. Ron Taylor were called to testify, he would 

state the following:
1. That the Tennessee Health Care Association (THCA)

received a draft remedial plan from the Tennessee Department 
of Health and Environment on approximately June 29, 1983. 
Copies of portions of this draft plan marked confidential and 
outlining short term and long term goals are attached to Mr. 
Taylor's affidavit as Exhibits A and B (R. 91: Response).
The entire draft plan is attached hereto as Exhibit A.

2. That THCA did not provide the draft plan to its 
members or describe its content except that its Board of 
Directors in a meeting on September 11, 1988 and its 
Government Relations Committee in a meeting on October 6, 1988 
received a written and oral summary of the plan from THCA's 
counsel. A copy of this summary, in redacted form, is 
attached as Exhibit B. THCA asserts attorney—client privilege 
with respect to the remainder. The opt-out provisions of the 
plan were not discussed with the Board or Committee.

2



r

3. That representatives of each of the Movants except 
RHA/sullivan were on either THCA's 1988 Board of Directors or 
Government Relations Committee. The administration of Wexford 
House was on the Board in 1988 but RHA/Sullivan did not purchase 
Wexford House until October 1989. In 1989 all of the Movants 
except Cedars and Brook Meade had representatives on the Board 
or Committee. Again, RHA/Sullivan had a representative 
beginning in October 1989. In 1990 all of the Movants had 
representatives on THCA's Board or Government Relations 
Committee.

Respectfully submitted this _____ day of ___________
1991.

William M. Barrick, bpr #4962 
P.0. Box 100129 
Nashville, TN 37224 
(615) 834-6520

John Lyell, BPR #3776 
LYELL, SEAMAN & SHELTON 
The Tower, Suite 2704 
611 Commerce 
Nashville, TN 37203 
(615) 255-0033

Approved for submission:

Jennifer Helton Small 
Deputy Attorney General

Gordon Bonnyman 
Legal services of Middle 

Tennessee, Inc.

3



Ashley T. Wiltshire, Jr.
Executive Director 

Judy L. Bond*McKissacK 
G. Gordon Bonnyman 
Kathryn F. Calhoon 
Nan Shelby Calloway 
Wayne Christeson 
Jean N. Crowe 
David A. Ettinger

LEGAL SERVICES OF MIDDLE TENNESSEE, INC.
800 Stahlman Building, 211 Union Street 

Nashville, Tennessee 37201-1586 
(615) 244-6610 

Fax (615) 244-4920

BY FACSIMILE

May 24, 1991

Beverly D. Fisher 
Erika Geetter 
Patricia R. George 
Drake Holliday 
Alex J. Hurder 
Patricia Mock 
Linda L. Narrow 
Russell J. Overby 
David J. Tarpley

Mr. William Barrick 
Tennessee Health Care Association 
P.0. Box 100129 
Nashville, TN 37224
Mr. John C. Lyell, II 
Lyell, Seaman and Shelton 
The Tower, Ste. 2704 
611 Commerce Street 
Nashville, TN 37203

Re: Linton v. Commissioner (6th Circuit) 
(No. 91-5021 et seq.)

Dear Counsel:
I am following up on my earlier letter and subsequent telephone 
conversations regarding correction of misleading statements in 
the movants-appe11ants' brief before the Sixth Circuit. I 
appreciate your willingness to correct the record via a 
stipulation, in order to address several of the concerns that 
we have previously discussed.
However, as you know, Jennifer and I remain quite concerned 
that, without the inclusion of the THCA Assoc iat ion Press 
article from early May of 1990, referring to the Board of 
Directors' vote to intervene, the stipulation will be 
inadequate.
Specifically, the item at issue bears on a recurrent theme that 
is sounded throughout your brief. Without pretending to be 
totally inclusive, the following excerpts illustrate the need 
for inclusion of the material that we have requested:

"Even when the District Court issued its order of 
April 20, 1990, it was not clear that movants' 
interests (other than Wexford House) would be 
impacted." (p. 39)
"In fact, only after the actual filing of the 
proposed plan and its ultimate approval on July 5,
1990 could the movants know that their stated 
interests were to be affected." (p. 40)



Mr. William Barrick
Tennessee Health Care Association
Mr. John C. Lyell, II
Lyell, Seaman and Shelton
May 24, 1991
page 2

If the movants first knew or should have known of 
their interests on June 1, 1990, the question is—
How have the parties been prejudiced by a delay of 
two months?" (p. 42)
"Third, until the filing of the Linton Plan on June 
1, 1990, the movants had no reason to believe that 
the State was not adequately representing their 
interests." (p. 43)
"Likewise, movants had no need to intervene on lock- 
in/lock-out until the Court ruled on July 5, 1990."
(p. 43)

To assert that the movants had no reason to intervene before 
June 1 (or July 5), when in fact they voted to do so in late

is materially misleading. You may take a different view 
of the subject, and will certainly have an opportunity in your 
reply brief to so argue, but the Court of Appeals is entitled 
to have the facts before it so that it can draw its own 
conclusions.

Given the timing of the motions to intervene, the record has 
largely been of the nursing homes' making. Because your clients 
waited to intervene until after the final order was down and 
the opportunity for discovery no longer existed, this is a 
situation where the original parties and the appellate court 
are exceptionally dependent on movants' counsel to ensure the 
integrity of the record.
I would have raised this matter in my original letter, but only 
learned to my surprise of these new facts when Jennifer lately 
received a copy of the THCA newsletter.
As you know, we will not be granted another extension, and we 
are getting down to the wire on resolving this matter so that 
the appellees can go ahead and finalize their briefs. Please 
let me hear from you this afternoon.
Sincerely yours,

Gordon Bonnyman

xc: Ms. Jennifer Helton Small 
Deputy Attorney General

nr-q . ̂