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Oregon hospitals' new suit over poor mental health care could complicate legislative session

State lawmakers say behavioral health remains a major priority, and now hospitals' revived lawsuit could raise the stakes
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Oregon State Hospital in Salem. | JAKE THOMAS/THE LUND REPORT
October 3, 2024

Oregon hospitals are again suing the state over its failure to provide mental health services — just as lawmakers prepare to write a new budget.

Legacy Health System, PeaceHealth and Providence Health & Services brought a similar lawsuit in September 2022. St. Charles Health System later joined it. A federal judge struck it down,  only to have it revived on appeal.

Now, four months after that appeals decision, hospitals have filed beefed-up arguments intended to sidestep the state’s earlier objections. The suit seeks to compel the Oregon Health Authority to provide better treatment for civilly committed patients whom a judge has determined are a danger to themselves or others because they are experiencing mental illness.

The revived litigation could add a new layer of complexity to a 2025 legislative session that already is expected to tackle staffing shortages and a lack of treatment beds.

The filing faults the Oregon Health Authority for the fact that there's no room at the Oregon State Hospital, saying that forces hospitals to warehouse civilly committed patients without appropriate care. The filing cites state and federal laws that require the state to provide appropriate care, and also block hospitals from discharging patients unless needed care is available. 

“OHA is abandoning civilly committed patients in community hospitals not because OHA is looking out for patients’ best interests; rather, it is because OHA lacks sufficient facilities to provide the long-term treatment that OHA is charged by law to provide, and OHA deliberately makes a choice not to devote sufficient funding and resources necessary to providing such treatment,” the draft filing claimed. 

“In essence, OHA has outsourced its responsibilities to civilly committed patients to community hospitals so that OHA does not have to devote more funding and resources to such patients.”

The new allegations were filed as a draft lawsuit because hospitals needed U.S. District Judge Adrienne Nelson’s agreement before filing a final version. She provided it Thursday, Oct. 3, meaning hospitals have until next week to file it formally.

Hospitals say they lose money when they warehouse, or “board” mentally ill patients because patients who don’t need hospital care typically don’t generate insurance reimbursements.

Lawmakers have been working on solutions to address the hospital boarding problem, but in the meantime the situation is having ripple effects across the Oregon health care system.

Huge needs remain

Lawmakers have approved more than $1.5 billion since 2021 to plug gaps in the state’s behavioral health care system, but massive needs remain. 

A court-appointed expert who's monitoring the state's behavioral health system recently told Judge Nelson more information is needed on how that money was spent.

A state-hired consultant found earlier this year that Oregon still faced a shortage of treatment bedsAnother report found the state needs to spend about $170 million annually over the next five years to meet the expected behavioral health bed needs. 

So in addition to the normal pressures of their job, lawmakers will have Judge Nelson and a slew of high-powered attorneys watching them, too. 

“We don’t know exactly what the Legislature will do,” Nelson said in a court hearing in July in which the bed shortages were discussed. “And that’s a huge component, because if they make this a priority and fully funded it, maybe no one would be here.”

The appeals court ruling in June stopped short of saying the hospitals have a legal case to sue, instead saying only that reasoning of the lower-court ruling against them was wrong. 

That said, the appeals judges wrote that a hospital victory seemingly “would benefit civilly committed patients by ensuring they receive appropriate long-term treatment from OHA.”

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