In the 1979 case of O'Bannon, Secretary of Public Welfare of Pennsylvania v. Town Court Nursing Center et al., the U.S. Supreme Court ruled that nursing home residents do not have a constitutional right to remain in a particular facility if it is decertified by Medicaid due to noncompliance with federal standards. The court held that while patients had an interest in staying at their chosen facilities, this did not equate to a legal entitlement protected under the Due Process Clause of the Fourteenth Amendment. The decision was based on two main reasons: firstly, Medicaid benefits were provided for qualified individuals and not for specific institutions; secondly, regulations requiring notice and hearing before termination were designed primarily to protect public health rather than individual claims against wrongful transfer or discharge.

In the dissenting opinion for O'Bannon v. Town Court Nursing Center, Justice Thurgood Marshall argued that the majority's decision failed to recognize and protect the rights of nursing home residents. He contended that these individuals had a legitimate claim of entitlement to continued residence in their homes unless they were transferred for medical reasons or their own welfare, or if the facility ceased operations due to financial issues or regulatory non-compliance. He believed this right was rooted not only in state law but also in federal regulations designed to safeguard nursing home residents from arbitrary transfers and discharges. Furthermore, he disagreed with the majority's view that patients did not have a constitutional right to hearing before being relocated following decertification of a facility by Medicare/Medicaid programs; instead asserting such hearings could provide an important check on erroneous decisions affecting vulnerable citizens' lives significantly.