SCOTUS Holds Providers Cannot Sue Over Medicaid Rates

In a 5-4 decision, the U.S. Supreme Court has ruled that developmental disability service providers cannot sue to force state Medicaid programs to raise their reimbursement rates. The high court ruled against a group of Idaho agencies serving people with developmental disabilities who sued the state for failure to raise Medicaid payments as outlined in a federally-approved formula for years. However, the Supreme Court ruled that private companies currently lack any right to enforce Medicaid requirements. 

The providers argued that Section 30(A) of the federal Medicaid Act requires states to “assure that payments are consistent with efficiency, economy, and quality of care” while “safeguard[ing] against unnecessary utilization of . . .care and services.” The District Court entered summary judgment for the providers, and the Ninth Circuit affirmed, concluding that the Supremacy Clause of the US Constitution, which says federal laws reign supreme over state ones, gave the providers an implied right of action, and that they could sue under this implied right of action to seek an injunction requiring Idaho to comply with §30(a).

Justice Antonin Scalia wrote in the majority opinion that the supremacy clause does not allow providers to sue state Medicaid agencies over rates, stating that “it is not the source of any federal rights…and certainly does not create a cause of action.” Scalia also wrote that the Medicaid Act implicitly does not allow private parties to enforce Section 30(A), because it includes the “express provision of a single remedy for a State’s failure to comply with Medicaid’s requirements—the withholding of Medicaid funds by the Secretary of Health and Human Services.” Congress, he concluded, did not mean for the court to be able to get around that part of the law. Joining Scalia in the majority were Chief Justice John Roberts and Justices Clarence Thomas, Stephen Breyer and Samuel Alito. Justice Sonia Sotomayor said in her dissent that the decision “has very real consequences,” arguing that “previously, a State that set reimbursement rates so low that providers were unwilling to furnish a covered service for those who need it could be compelled by those affected to respect the obligation imposed by §30(A). Now, it must suffice that a federal agency, with many programs to oversee, has authority to address such violations through the drastic and often counterproductive measure of withholding the funds that pay for such services.” Sotomayor was joined in dissent by Justices Anthony Kennedy, Ruth Bader Ginsburg and Elena Kagan.

FMI: The Court’s decision is available at http://www.supremecourt.gov/opinions/14pdf/14-15_d1oe.pdf.