Supreme Court Watch Court ponders individual right to sue over state Medicaid rule Plaintiffs contend state measure violates Supremacy Clause

By Kimberly Atkins

The Daily Record Newswire

The U.S. Supreme Court kicked off its October 2011 Term with oral arguments in a case that considers whether private plaintiffs can sue to enjoin a state from deviating from federal Medicaid program requirements.

The case before the court, Douglas v. Independent Living Center of Southern California, was consolidated with several other cases. It concerns a California law that reduced by 10 percent payments to physicians, hospitals and other providers under Medi-Cal, the state's fee-for-service Medicaid program.

A group of program recipients, health care providers and senior citizen groups sued to enjoin the state law, arguing that the rate cuts contradicted a provision of the Medicaid Act that requires states to study the effect of any reduction in healthcare service reimbursements before enactment. The state measure, the plaintiffs argued, therefore violated the Supremacy Clause and was preempted by federal law.

A U.S. District Court held that the plaintiffs could not assert a viable claim for injunctive relief because none of the petitioners or their members had a federal right to Medi-Cal payments or benefits.

But the 9th Circuit reversed, holding that the state rate cuts could be enjoined because the state "failed to 'rely on responsible cost studies, its own and others,' in determining the effect of the rate cuts ... on the statutory factors of efficiency, economy, quality, and access to care before implementing those cuts."

Given the circuit split on this issue, the Supreme Court granted certiorari.

At oral arguments Monday, California Supervising Deputy Attorney General Karin S. Schwartz argued that "Congress controls who can enforce federal law, and it has not provided for private enforcement" of the Medicaid Act provision.

"If Congress wants to provide for private party litigation, it must do so clearly and unambiguously, and it has not done so in this case," Schwartz said.

When Schwartz argued that enforcement is the responsibility of federal administrative agencies, Justice Anthony Kennedy wondered if such a scheme was workable.

"There are almost $400 billion of HHS expenditures that are supervised by 50 people," Kennedy noted, citing a brief by Health and Human Services officials.

Deputy Solicitor General Edwin S. Kneedler argued on the government's behalf as amicus curiae that Congress "has not created a cause of action under [the Medicaid reimbursement program] for private parties to enforce particular provisions of it."

Justice Elena Kagan noted that in other contexts the Court has allowed plaintiffs to bring actions when the "state has acted in some sense to change the behavior of the person, to regulate the person, even if that person doesn't have a proceeding in which to mount a defense."

But Kneedler argued that the Court's ruling in the instant case could be narrow.

"We are not challenging those [other] cases," he said. "The Court, we think, doesn't need to look more broadly to an all-encompassing theory."

In his argument on behalf of the plaintiffs, Carter Phillips, managing partner of the Washington office of Sidley Austin, compared the right of action sought to the one the Court sanctioned in Ex parte Young, in which the Court held that individuals have can sue government officials in their official capacity in certain situations.

Chief Justice John G. Roberts asked if that position essentially made "a complete end run around all of our implied right of action jurisprudence?"

"We have wasted a lot of time trying to figure out whether there is an implied right of action under a particular statute [if you are saying] there has always been one under the Supremacy Clause," Roberts said.

Phillips argued that the implied right of action cases dealt with broader rights of action, such as the ability to seek damages and broad injunctive relief. The injunction in the instant case, Phillips argued, is much more limited.

Scalia bristled at the comparison to Ex parte Young.

"The fiction that you're moving against the individual and not against the state simply cannot be maintained when you are taking money out of the state treasury," Scalia said.

"We are not asking for damages here, Justice Scalia," Phillips replied. "All we are asking for is injunctive relief."

A decision from the Court is expected later this term.

Published: Wed, Oct 5, 2011


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