March 2019 Volume LIV Number 2

 
 
 
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Litch's Law Log

Supreme Court Rules Providers Cannot Sue Medicaid

November 2015 Volume L Number 6

On March 31, 2015, the U.S. Supreme Court decided that the Supremacy Clause does not give Medicaid providers a private right of action to seek judicial enforcement of 42 U.S.C. §1396a(a)(30)(A)—which is the so-called equal access provision.1
 
The case involved Medicaid providers of habilitation services who sued Idaho to enjoin state policies (provider reimbursement rates) that they argued were inconsistent with the federal Medicaid statute. The Ninth Circuit affirmed a lower court ruling that the Supremacy Clause of the U.S. Constitution gave providers a private right of action to sue to enforce the federal Medicaid law. The Supreme Court reversed the Ninth Circuit in a 5-4 decision. Justice Breyer voted with the majority and Justice Kennedy voted with the dissent.
 
A number of health provider associations, including the ADA and AMA, filed an amicus brief arguing that the Supremacy Clause, which makes federal law the supreme law of the land, creates a private right of action that permitted the plaintiffs to seek the requested relief. The equal access clause of the Medicaid statute provides that state Medicaid plans must:
"provide such methods and procedures related to the utilization of, and the payment for, care and services available under the plan . . . as may be necessary to safeguard against unnecessary utilization of such care and services and to assure that payments are consistent with efficiency, economy, and quality of care and are sufficient enough to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population in the geographic area . . ."
 
The majority opinion written by Justice Scalia concludes that the Supremacy Clause does not require Congress to permit the enforcement of its laws by private actors, nor does the Medicaid statute confer a private right of action. He argues the sole remedy Congress provided for failure of a state to comply with Medicaid’s requirements is for the federal government to withhold Medicaid funds. He also refers to the equal access clause as follows:  "it is difficult to imagine a requirement broader and less specific." He disagrees with the dissent that a cutoff of funding is so severe as to be politically unrealistic, suggesting that an HHS Secretary who notifies a state that their compensation is inadequate will get the state’s attention. Breyer’s concurrence argues that the federal government might also be able to sue a state to enjoin it from paying less than the equal access clause requires.2 Scalia further argues that the Medicaid statute, specifically the equal access clause, lacks the rights creating language needed to create a private right of action.
 
Scalia goes on to question even the rights of program beneficiaries to sue, stating that:  ". . . modern jurisprudence permitting intended beneficiaries to sue does not generally apply to contracts between a private party and the government . . . much less to contracts between two governments." He suggests the equal access clause does not unambiguously confer such a right. However, his language is dicta—verbiage in addition to and not determinative of the holding in the case—and therefore not binding precedent. Unfortunately, his language could be cited to bolster future legal challenges to the right of beneficiaries to sue Medicaid.
 
Justice Sotomayor’s dissent argues the majority ignores precedent that there should be equity jurisdiction to enforce state action unless Congress "affirmatively manifests a contrary intent." That is, the Medicaid statute does not explicitly or by strong inference restrict equity jurisdiction. She also cites the absence of remedies in the Medicaid law as implying that private enforcement is necessary. She observes that cutting off federal funds (for a state being charged with low reimbursements) would be a "self-defeating" remedy, and that the mere breadth of the equal access clause "does not require the Court to give up all hope of judicial enforcement—or, more important, to infer that Congress must have done so." She also notes that similar language in another section of the Medicaid statute approved by Congress at the same time as the equal access clause (1989) was subsequently found by the courts to confer a private right of action.
 
This decisions means that Medicaid lawsuits must have plaintiffs who are program beneficiaries in order to proceed on jurisdictional grounds. Most successful lawsuits to date have included such individuals along with health care providers. See for example http://aapd-oldsite.ae-admin.com/federal_judge_rules_that_florida_medicaid_program_violates_federal_law/.
 
For further information, please contact AAPD Chief Operating Officer and General Counsel C. Scott Litch at slitch@aapd.org.
 
1 The case is Armstrong v. Exceptional Child Center Inc., et al.
2 Your columnist would rate the chances of this ever happening as slim to none.

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