This story has been updated with additional reporting.
A federal appeals court has revived Oregon hospitals’ lawsuit claiming the state’s failure to provide mental health services is forcing them to warehouse psychiatric patients without proper care.
A three-judge panel of the 9th U.S. Circuit Court on Wednesday reversed an Oregon federal judge’s earlier ruling that four hospital systems couldn’t sue the state because they had willingly accepted the patients.
In addition, the appeals panel questioned whether the group that has been driving much of the litigation around the Oregon State Hospital, Disability Rights Oregon, is able to fairly represent two different groups of psychiatric patients that have conflicting needs.
The ruling stems from decades-old litigation over limited beds at the Oregon State Hospital and the constitutional rights of people with mental illness charged in criminal court.
Legacy Health System, PeaceHealth and Providence Health & Services first brought their lawsuit in September 2022. St. Charles Health System later joined it.
The suit seeks to compel the Oregon Health Authority to provide better treatment for civilly committed patients, people whom a judge has determined are a danger to themselves or others because they are experiencing mental illness.
Previously, the judge assigned to the case, Michael Mosman, agreed with health authority lawyers’ arguments that the hospitals couldn’t sue on behalf of the civilly committed because their interests weren’t aligned. Mosman pointed to briefs from the hospitals complaining about the cost and difficulty of caring for the patients.
He also concluded that Disability Rights Oregon, a federally designated organization that advocates for people with mental illness, was better suited to advance the legal interests of civilly committed patients.
That conclusion, however, was “clearly erroneous,” the judges wrote in their ruling.
The judges went further, writing that Disability Rights Oregon’s litigation on behalf of another group of patients amounted to a conflict of interest that “calls into serious question DRO’s (ability to fairly) represent the civilly committed patients.”
Disability Rights Oregon is pursuing a long-running lawsuit against the state hospital over the admission of so-called “aid and assist” patients, people who’ve been accused of crimes but need restoration treatment to be able to participate in their defense. As a result of the lawsuit, the population at the state hospital’s Salem campus is now primarily aid-and-assist patients, largely eliminating the facility as a treatment option for civilly committed patients.
Disability Rights Oregon responded with an emailed statement from Jake Cornett, the group's executive director, pushing back on the judges' assertion. He wrote that for 38 years Disability Rights Oregon "has investigated abuse and neglect of people with mental illness in psychiatric facilities—frequently against the very hospitals who brought this case."
"It seems clear to us that we are better situated to represent the interests of patients in comparison to hospitals who are in the business of protecting their bottom line," he continued.
Cornett wrote that hospitals are "the only open door for too many people in crisis" after decades of underinvestment in community-based mental health care. He added, "Until there is enough investment and wise stewardship of those resources, we're going to continue to struggle to meet the needs of people with mental illness in Oregon."
The appeals court judges wrote in their ruling that the state hospital is “under competing pressure” between the two patient groups.
“Whether (the hospitals’) interests are sufficiently aligned with the interests of its civilly committed patients may depend on what outcome (the hospitals) in fact (are) likely to achieve in this litigation and whether that outcome would benefit the patients whom (the hospitals) seeks to represent,” reads the ruling.
The judges wrote that these questions were “not clearly answered” in previous legal proceedings, and that the hospitals were seeking an outcome that “would benefit civilly committed patients by ensuring they receive appropriate long-term treatment from OHA.”
“We’re pleased with the court’s decision, and we’re optimistic that this lawsuit will result in a much-needed course correction from the OHA,” Melissa Eckstein, president of Unity Center for Behavioral Health, a Portland-based mental health services center operated by Legacy said in a statement. “We originally took this action because the State of Oregon consistently violates the civil rights of vulnerable Oregonians by refusing to provide care intended to restore their freedom.”
Robin Henderson, chief executive of Providence Behavioral Health, said in a statement that the lawsuit is intended to "ensure that there is a functional mental health system in Oregon." She added that must include "secure residential treatment facilities, as well as effective community-based services to meet the various needs of this vulnerable patient population. Oregonians won’t be able to fully realize this system until the state begins living up to its legally mandated role.”
As a result of the ruling, the lawsuit has been sent back to U.S. District Court in Portland for further proceedings.
