A federal appeals court in Denver has ruled that the Health and Human Services Department has "abdicated its duty" to ensure that about 1 million federally supported nursing home residents receive "high-quality patient care." The court asserted that HHS "has a duty to promulgate regulations" enabling it to guarantee the quality of care in facilities it helps pay for.

In reversing a district court ruling, the three-judge appeals panel did not find fault with the standards the department sets for the 15,000 facilities that serve patients who receive Medicaid benefits. But the panel said HHS did not have a proper enforcement system and fails "to adequately inform itself as to whether the facilities receiving federal money are satisfying the requirements of the law , including providing high-quality patient care."

The plaintiff in the suit, a 21-year-old victim of muscular dystrophy who died shortly after the case was filed in 1975, contended that federal regulations only permit HHS to assess a facility's "potential" to deliver care, and are geared to determine the adequacy of facilities -- buildings, staff and the like -- but not the actual quality of the care residents receive.

Under the law establishing the Medicaid system, which provides health-care assistance for the poor, HHS and the states reimburse facilities that meet federal standards. Inspecting the facilities, however, is the responsibility of state health departments. The state inspectors report their findings to HHS.

Because of this two-tiered system, the district court ruled that HHS had only a passive role in the inspection process and could not be held responsible for ensuring the quality of care. The appeals panel disagreed strongly.

"The federal government has more than a passive role in handing out money to the states . . . . There is nothing in the law to indicate that the state function relieves the secretary of all responsibility to ensure that the purposes of the act are being accomplished," wrote Judge Monroe McKay.

Philip Nathanson, director of the Health Standards and Quality Bureau of HHS's Health Care Financing Administration, said last week that he would not comment on the decision until he had reviewed it.

The Oct. 29 decision by a 10th Circuit Court of Appeals panel was a victory for advocate groups such as the National Senior Citizens Law Center, which campaigned for stricter enforcement of federal standards in nursing homes.

"This is a fabulous victory for nursing home residents," said Patricia B. Nemore, a staff attorney for the center. "The practical effect will be to help Medicaid beneficiaries, but this will spill over to help Medicare recipients as well."

Most federally supported nursing home residents participate in Medicaid, rather than Medicare, the federal health program for the elderly, she said.

The decision comes as a congressionally mandated panel is in the midst of a comprehensive review of nursing home regulations. The National Academy of Sciences panel was constituted after Congress blocked the Reagan administration's attempt to rewrite existing enforcement regulations covering state inspection of nursing homes.