Nursing Home Law: Resident Rights, Medicaid, and Lawsuits

Nursing home law is the set of federal and state rules that decide who can run a long-term care facility, how residents must be treated, and what happens when a facility fails. The core of it is federal: the Nursing Home Reform Act of 1987, codified at 42 CFR Part 483, applies to every facility that takes Medicare or Medicaid, which covers the vast majority of the roughly 15,000 nursing homes in the country.¹ On top of that, the Elder Justice Act of 2010 governs abuse reporting, Medicaid rules control how most residents pay for care, and each state adds its own layer of definitions, penalties, and enforcement.

Resident Rights Under Federal Law

Federal law guarantees nursing home residents a defined set of rights that facilities must honor as a condition of taking Medicare and Medicaid money. These are sometimes called the Residents’ Bill of Rights.

Dignity and self-determination. Residents choose their own schedules, activities, and daily routines, including when to sleep, rise, and eat.²
Privacy. Private visits, phone calls, and correspondence are protected. Residents may keep personal belongings, and the facility has to safeguard them from theft.²
Freedom from abuse and restraint. Residents must be free from verbal, sexual, physical, and mental abuse. Physical and chemical restraints may not be used for discipline or staff convenience, and injuries of unknown origin must be reported to authorities within five working days.¹²
Medical and care rights. Residents may choose their own doctor, participate in their care plan, access their medical records, refuse experimental treatment, and create advance directives.²
Information. Residents must be told, in a language they understand, about services and charges, facility rules, their rights, and how to reach the State Ombudsman and state survey agency.³
Grievances. Residents may file complaints without fear of retaliation and may form resident councils, which the facility must respond to.²
Non-discrimination. Facilities must follow civil rights laws barring discrimination based on race, color, national origin, disability, age, or religion.²

The 1987 law also requires an individualized care plan for every resident. Facilities must assess each resident on admission and periodically after that using a standardized tool called the Minimum Data Set, and the plan must be developed and reviewed by a team including the attending physician and a registered nurse.⁴

When a Nursing Home Can Discharge or Transfer a Resident

Federal law sharply limits involuntary discharge. A facility may transfer or discharge a resident only for one of five reasons: it cannot meet the resident’s needs; the resident’s health has improved so nursing facility care is no longer necessary; the resident endangers the health or safety of others; the resident has failed to pay; or the facility is closing.⁵

Outside of emergencies, the facility must give at least 30 days’ written notice. The notice has to state the reason, the effective date, the specific destination, and how to appeal. Miss any of those pieces and the notice is invalid; the facility has to start over.⁵

Residents may appeal, and if the appeal is filed before the discharge date, they can stay in the facility while it is pending. A physician has to document the clinical justification in the medical record. A facility cannot discharge someone for non-payment while a Medicaid application or appeal is pending. Residents also have the right to return after a hospital stay or therapeutic leave, and the facility must give them its bed-hold policy in advance.⁵

How Nursing Homes Are Inspected and Penalized

CMS enforces the federal standards through a survey and certification system run by state agencies under federal contract. Inspections are unannounced and must happen at least every 15 months, with a statewide average not exceeding 12 months.⁴ A survey team, usually including registered nurses, social workers, and dieticians, evaluates roughly 200 standards across 15 categories, talking to residents and families, watching care, and reading medical records. CMS itself independently reinspects at least 5% of Medicare and Medicaid nursing homes in each state annually to check whether state findings are accurate.⁶

When a facility fails a standard, surveyors issue a deficiency. Each one is scored on a grid combining severity (four levels, from no actual harm up to immediate jeopardy) and scope (isolated, pattern, widespread), producing letter grades from A through L. Grades J, K, and L are immediate jeopardy, meaning residents face a risk of serious injury or death.⁷

A facility with deficiencies has to submit a plan of correction and is subject to a revisit. Sanctions escalate through directed staff training, civil monetary penalties, denial of payment for new admissions, temporary management, and finally termination from Medicare and Medicaid.⁴ Denial of payment becomes mandatory if the facility doesn’t return to substantial compliance within three months, and termination becomes mandatory at six months.⁸

The worst performers may be flagged as Special Focus Facilities, which brings more frequent inspections and tougher enforcement. A 2025 HHS Office of Inspector General report found that nearly two-thirds of facilities graduating from the program between 2013 and 2022 slid back to their prior problems; CMS agreed with only one of the OIG’s three recommendations for fixing that.⁹

For families comparing facilities, CMS publishes a Five-Star Quality Rating for every nursing home on the Care Compare website, scoring each facility from one to five stars using health inspections, quality measures, and staffing. Health inspections carry the most weight, and Special Focus Facilities are capped at three stars.¹⁰¹¹ Two of the three components rely on self-reported data, and research has suggested that some rating gains reflect better self-reporting rather than better care.¹² CMS itself advises families to supplement the ratings with in-person visits and calls to local advocacy groups or the State Ombudsman.

Reporting Abuse and Neglect

The Elder Justice Act, enacted in 2010 as part of the Affordable Care Act, was the first comprehensive federal law aimed specifically at elder abuse, neglect, and exploitation.¹³ It imposes mandatory reporting on employees, contractors, owners, and operators of long-term care facilities that receive at least $10,000 in federal funding a year. Anyone covered who develops a reasonable suspicion of a crime against a resident must report it to the state survey agency and local law enforcement within two hours if serious bodily injury is involved, or within 24 hours otherwise.¹⁴

Penalties are steep. An individual who fails to report faces a civil penalty of up to $200,000, rising to $300,000 if the failure contributes to further harm. Facilities that retaliate against a reporter face penalties of up to $200,000 and possible exclusion from federal funding.¹⁴

Paying for Nursing Home Care Through Medicaid

Medicaid is the primary payer for nursing home care in the United States, and its eligibility and recovery rules shape almost everything about how families handle long-term care.

Asset Limits and Spousal Protections

Federal law caps the assets a resident may hold while qualifying for Medicaid. Spousal impoverishment protections, in place since 1989, keep the spouse still living at home from being wiped out. Indiana’s rules illustrate the structure: the nursing home spouse may keep $2,000 in non-exempt assets, while the community spouse may keep half of the couple’s non-exempt assets up to $162,660 as of January 2026. The community spouse keeps their own income, and if it falls below a state minimum ($2,644 a month in Indiana as of mid-2025), they may take some of the institutionalized spouse’s income to reach that floor.¹⁵

The Look-Back Period

States review asset transfers made in a defined window before the Medicaid application. Texas, for example, uses a 60-month look-back for nursing facility, ICF/IID, and waiver services.¹⁶ Transfers during that period for less than fair market value can trigger a penalty period of ineligibility.

Estate Recovery

Every state must operate a Medicaid Estate Recovery Program, seeking reimbursement for nursing facility and related services from the estates of deceased enrollees who were 55 or older. States cannot pursue recovery if the deceased is survived by a spouse, a child under 21, or a child of any age who is blind or disabled, and states must offer hardship waivers.¹⁷ Details vary: Illinois exempts the first $25,000 of an estate’s value from recovery,¹⁸ and Texas exempts estates valued at $10,000 or less along with additional protections for unmarried adult children who lived in the decedent’s home.¹⁶ In every state, funeral costs, legal costs, and mortgages are paid ahead of the estate-recovery claim.

Recent Changes Under the One Big Beautiful Bill Act

The One Big Beautiful Bill Act, signed on July 4, 2025, tightened several Medicaid rules that matter for nursing home residents. It reduced retroactive Medicaid coverage from three months to one month for expansion enrollees and two months for traditional enrollees. Starting in 2028, it caps home equity for Medicaid eligibility at $1 million. It also delays a dual-eligible enrollment and renewal rule until October 2034; the Congressional Budget Office estimated that delay would reduce the number of dual-eligible beneficiaries by 1.3 million through that year.¹⁹

Arbitration Clauses in Admission Paperwork

Many facilities include pre-dispute arbitration agreements in their admission packets, requiring any future dispute to be resolved in private arbitration instead of court. Under a 2019 CMS final rule, facilities may use these agreements but cannot make signing one a condition of admission or continued care. The agreement has to be explained in language the resident understands, and the resident has 30 days after signing to rescind. The rule also requires a neutral arbitrator and a convenient venue, and it prohibits any language that discourages residents from talking to government officials, surveyors, or the Long-Term Care Ombudsman.²⁰ In practice, families often sign these forms during a stressful admission and don’t realize they are giving up access to the courts.

Suing a Nursing Home for Abuse or Neglect

Beyond the regulatory system, residents and families may sue in civil court. Claims usually fall into two categories: abuse, meaning intentional harm (physical, emotional, sexual, or financial), and neglect, meaning the failure to provide necessary care such as food, medication, hygiene, or adequate supervision.²¹

To win a negligence claim, the plaintiff has to prove four things: the facility owed a duty of care (established at admission), it breached the standard of care, that breach caused the injury, and the resident suffered actual damages. Damages can cover medical expenses, financial losses, pain and suffering, and, in cases of extreme or malicious misconduct, punitive damages. Under vicarious liability, a facility is generally responsible for the negligent acts of its employees on the job.²¹

Every state sets its own statute of limitations, and the deadlines are strict. The clock may be paused when the victim lacks the mental capacity to recognize the injury, when the facility concealed the abuse, or under a discovery rule that delays the start date until the injury was or should have been discovered.²²

Where State Law Changes the Picture

Federal law sets the baseline; state law fills in a lot of the detail. State-contracted agencies do the actual inspections, and state statutes define abuse, neglect, and exploitation, set criminal penalties, and decide who counts as a protected adult.²¹²³²⁴ Check your own state’s law for the specifics that apply to your situation.

Where To File a Complaint

Residents, families, and others with concerns have several places to turn. The Long-Term Care Ombudsman program, required under the Older Americans Act, has paid staff and certified volunteers in every state. Ombudsmen investigate complaints, help resolve problems, and keep the process confidential unless the resident says otherwise. The program investigated over 205,000 complaints nationwide in 2024.²⁵

Complaints can also go directly to the state survey agency, which is the primary contact point for official complaints about facility care. Suspected abuse or fraud should be reported to Adult Protective Services. Other options include CMS Regional Offices, the state Medicaid agency, the state Attorney General’s office, and the Medicaid Fraud Control Unit.²⁶ In an emergency or where a crime is in progress, call law enforcement.

1
eCFR. Title 42, Chapter IV, Subchapter G, Part 483
2
CMS. Your Resident Rights and Protections
3
National Long-Term Care Ombudsman Resource Center. Residents’ Rights
4
Kaiser Family Foundation. Nursing Home Reform Act Overview
5
National Long-Term Care Ombudsman Resource Center. Nursing Home Discharges
6
U.S. Government Accountability Office. Nursing Home Quality
7
ProPublica. Nursing Home Inspect
8
CMS. Nursing Home Enforcement
9
HHS Office of Inspector General. CMS’s Special Focus Facility Program for Nursing Homes Has Not Yielded Lasting Improvements
10
CMS. Five-Star Quality Rating System
11
CMS. Five-Star Quality Rating System Technical Users’ Guide
12
Center for Medicare Advocacy. Don’t Be Fooled by the Federal Nursing Home Five-Star Quality Rating System
13
Administration for Community Living. Elder Justice Act
14
FindLaw. Elder Justice Act Reporting Requirements
15
Indiana LTCP. Spousal Impoverishment Protection Law
16
Texas Health and Human Services. Your Guide to the Medicaid Estate Recovery Program
17
Medicaid.gov. Estate Recovery
18
Illinois Department of Healthcare and Family Services. Guide to the Medicaid Estate Recovery Program
19
AARP. One Big Beautiful Bill Act and Nursing Homes
20
American Bar Association. CMS Final Rule on Nursing Home Arbitration Clause
21
Justia. Nursing Home Abuse and Negligence
22
Justia. Statutes of Limitations and the Discovery Rule
23
U.S. Department of Justice. Elder Justice Statutes
24
California Office of the Attorney General. Elder Abuse
25
National Long-Term Care Ombudsman Resource Center. About Ombudsman
26
National Consumer Voice for Quality Long-Term Care. Get Help