AL issues. Just wondering if they can legally do this and what are his options?

With wheelchairs, they need to maneuver around on their own. Being blind he won't be able to do this. Your brother has outgrown an AL. His needs are more than they are willing or can do. This probably has been coming and this last hospital stay means he needs a higher level of care than they can give him. And yes its legal. ALs are just that, they assist. They do not do, nor have the staff to do, skilled nursing.

You need to speak to the SW at the Rehab and tell her/him that the AL is refusing to take him back. She/he can help u make arrangements to place him in LTC. Whatever money he has left can be spent down and then Medicaid applied for.

Assisted Living is under the premise that the reside may only need "some" assistance. Where my MIL used to live, her AL could add "a la carte" services each with their own price (giving medicine, doing laundry, etc -- all extras). Once a person needed all of their "a la carte" services, AL got very expensive and and it was no longer an appropriate level of care. Your brother's AL may not have the staffing to orbit around just him all day. He may have more social interaction in LTC since the staff makes it a point to come to each resident and get them engaged. My MIL is now in LTC and this is true in her case -- way more people in and out of her room daily taking her to meals, events, activities, pet visits, music, etc.