This story was originally published by The Lund Report, an independent nonprofit health news organization based in Oregon. It is republished with permission. You can reach Joanne Zuhl at [email protected].

Treatment providers and hospitals went to court Wednesday to challenge a state rule that forces residential mental health facilities to accept criminal defendants over other people, regardless of their level of need.

The rule adopted by state officials in 2025 was intended to satisfy a court order to move patients in and out of the Oregon State Hospital more quickly — nearly all of whom are criminal defendants assigned to its care by the courts. The goal: slow the growth of penalties against the state for contempt of court that already exceed $4 million.

With a shortage of behavioral health care beds across Oregon, the so-called “priority rule” puts criminal defendants at the front of the line to get treatment in community-based facilities that serve the general population.

In April 2025, the Oregon Council on Behavioral Health and six residential treatment facility operators petitioned the Oregon Court of Appeals to block the rule. That was one month after Legacy Health and other Oregon hospitals did the same thing, since hospitals have long complained that the state’s failings have them housing mentally ill patients at great cost. The two cases were merged, and a three-judge panel heard oral arguments on Wednesday.

Representatives of the providers and hospitals say state officials are overstepping their authority, in effect “commandeering” non-state facilities to fulfill state obligations. They argue the rule discriminates against people who need clinical care solely because they aren’t criminal defendants, and undercuts the ability of providers to screen patients to ensure a good fit. They contend that hurts outcomes and jeopardizes the health and safety of their staff and patients.

“The priority rule takes one group of people, all Oregonians with serious mental illness, who all need and all qualify for the same residential care, and ranks them for a bed at a residential treatment facility,” Kevin Jacoby, attorney for the treatment facilities, told the judges at the hearing in Salem. “The forensic patient goes first. Civilly committed and voluntary patients are last. That ranking is mandatory. It’s categorical, and it applies regardless of any individual’s clinical need.”

OHA says it has the authority

​Jona Maukonen, an attorney with the Oregon Judicial Department representing the Oregon Health Authority, noted that state law says the health agency has the authority “to direct and coordinate all the activities, duties, and direct services for persons with mental health disorders.”

Added Maukonen, “That legislative directive is telling OHA that it is in control of how people are receiving these services.”

But one state law doesn’t give the state carte blanche to deviate from other statutes that prohibit discrimination and require that mental health services are widely available to all people who need them, argued the providers’ lawyer.

​The roots of the case lie in Oregon’s chronic shortage in treatment beds for people experiencing behavioral health issues, which has led to federal court oversight of the Oregon State Hospital, the state’s largest acute-care psychiatric institution.

In Oregon’s system, criminal defendants deemed by the courts to be too mentally ill to stand trial are ordered to the state hospital for “community restoration” until they are found competent to “aid and assist” in their defense. Nearly all of the 700-plus beds there are filled with criminal defendants who were ordered there after they were arrested, often for violations connected to their mental illness.

The state is under a court order to admit patients from jail to the hospital within a week of being assigned to state care. Last year, state officials were found in contempt of that order and fines began mounting. It has only recently come into compliance.

Maukonen, the state’s attorney, defended the need for the rule. “The reason is to make room at the Oregon State Hospital for those who are in jail and have been ordered to receive aid and assist treatment or have been found guilty but insane. Those people in jail are not receiving the same level of care as others in the system.”​

She argued that the priority rule does not deny care to those not prioritized. However, with the state lacking thousands of behavioral treatment beds to meet the need, most facilities operate with a waitlist of patients hoping to be admitted, and the waitlist is also subject to the state’s priority rules. Maukonen noted, however, that facilities could freeze their waitlist at five people, and those on the list could not be bumped.

The new rule is making it harder for treatment providers, according to Jacoby.​

“Everybody had to quickly retool and essentially change the services that they provide,” he said. “A lot of my clients didn’t have staff that was trained for that… They just weren’t set up for that.”

Earlier this month, a consultant hired by the state health authority echoed Jacoby’s concerns. A comprehensive analysis of the state health authority’s policies on behavioral health care services essentially concluded that the state should roll back the new rule, among other things.

The consultant’s report concluded that the state’s rules leave “little room for community or voluntary referrals to mental health residential services.”

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News Source : https://www.opb.org/article/2026/09/25/oregon-mental-health-hospitals-challenge-treat-criminal-defendants/