US Supreme Court Rules 5-4 That Medicaid Funded Providers & Recipients Do Not Have Right To Sue In Court Under Medicaid Laws – Must Use CMS Administrative Process To Raise Concerns on Cuts & Reimbursement Rates.

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Legal Update:
US SUPREME COURT HANDS DOWN 5-4 DECISION THAT MEDICAID PROVIDERS AND RECIPIENTS DO NOT HAVE RIGHT TO SUE IN COURT UNDER FEDERAL MEDICAID LAWS
High Court Says Providers and Recipients Must Use Instead Administrative Process Under Centers for Medicare and Medicaid Services (CMS)To Resolve Concerns and Complaints Regarding Reductions and Provider Reimbursement Rates
SACRAMENTO, CA [CDCAN LAST UPDATED 04/01/2015 – 6:00 AM] – The US Supreme Court, in 5-4 decision yesterday, significantly narrowed the ability of Medicaid providers and recipients to stop reductions in federal court, handing down a ruling that those providers cannot sue a state under federal Medicaid laws for reductions or for low reimbursement rates.  The high court said that instead, those providers would need to use an administrative process under the US Department of Health and Human Services to address any complaints or concerns with reimbursements or services.  Oral arguments before the US Supreme Court was held on January 20, 2015.
    The ruling in the Idaho case, titled “Armstrong et al v. Exceptional Child Center, et al”, was an important victory for states and the federal government and a major setback for advocates for Medicaid – called “Medi-Cal” in California – providers and recipients and their families.  California was one of several states, in addition to the Obama Administration, that filed legal briefs in support of the State of Idaho, contending providers and recipients had no right to sue under Medicaid laws.
    While the US Supreme Court ruling does not stop those Medicaid providers and recipients from filing a federal lawsuit under different federal laws, doing so – and prevailing –  would be much more difficult, according to advocates.
    Lynn Carman, the 83 year old disability and senior rights advocate and attorney with the Medicaid Defense Fund , said that the “…decision will have very real consequences…if citizens can now no longer sue to prevent being injured from state violation of federal law, then there is no one, really, to see to it that federal laws are carried out by states as intended, and written, by Congress”.
    Carman filed several major successful lawsuits over the years to stop major cuts to Medi-Cal funded services, including the Southern California Independent Living Center v. Douglas case that was heard before the US Supreme Court in October 2011, with a decision handed down in February 2012 returning the case back to the US Court of Appeals for the 9th Circuit.
    Carman said that the only avenue remaining in federal court would be if a specific law authorizing the right to sue was enacted by Congress “…to prevent being injured by a state’s violation of federal law”, something Carman says Congress rarely does.
    The actual issues raised in the lawsuit filed by providers that claimed the State of Idaho was violating federal Medicaid laws by not fully funding Medicaid provider rates was not addressed before the high court because of the over-arching issue of whether those providers had even the right to sue the State under Medicaid laws.
    Justice Antonin Scalia, who delivered the opinion for the Court, concluded that the federal Medicaid laws specifically pointed to resolving those issues through the administrative process under the federal Centers on Medicare and Medicaid Services (CMS), the federal agency that oversees both programs, rather than the courts.  That part of the opinion was joined by Chief Justice John Roberts, and Justice Samuel Alito, Justice Stephen Breyer and Justice Clarence Thomas.
    Justice Sonia Sotomayor filed a 12 page dissent, joined by Justice Anthony Kennedy, Justice Ruth Bader Ginsburg and Justice Elena Kagan.
IMPACT TO CALIFORNIA AND OTHER STATES
    In the original case, filed in December 2009, by Medicaid funded providers of habilitation services in Idaho sued that the state was in violation of federal law for low Medicaid provider reimbursement rates.
    The case cited federal Medicaid law’s “equal access” provision that requires state Medicaid program payments to providers “are consistent with efficiency, economy, and quality of care and are sufficient 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 lawsuit also contended that providers had a right – or standing – to sue the State of Idaho, under Medicaid laws, and under a section of the US Constitution, known as the “Supremacy Clause” that essentially says federal law trumps any state law.
    The only issue before the US Supreme Court was the issue of whether or not Medicaid providers (and others) had standing or the right to sue under Medicaid laws.  The State of Idaho – supported by many other states including California and the federal government – contended that providers and recipients did not have that right but instead must use the administrative process under the Centers for Medicare and Medicaid Services (CMS) to address those concerns and problems.
    The Court’s ruling for Idaho means that Medicaid providers and recipients – including those in California – cannot sue in federal court under Medicaid laws to stop reductions or to fight low reimbursement provider rates, but instead must use that administrative process under the Centers for Medicare and Medicaid Services.  That process does not allow for an injunction – meaning temporarily stopping – a reduction that a state is implementing while the federal agency considers a complaint by providers or recipients.
    The Court’s ruling however did not mean that Medicaid providers and recipients and others cannot sue in federal court under different federal laws, though many advocates say while that is possible, it would very challenging and difficult to do.
    The US Supreme Court’s ruling yesterday could have impacted adversely the lower court ruling in favor of providers and recipients in California, known as “Arc California, UCP of San Diego v. Toby Douglas” regarding implementation of certain reductions for many regional center funded site based programs dealing with mandatory unpaid holidays and a restriction in billing as a violation of federal Medicaid law because a certain approval process was not done by California.
    However in that case California did not appeal the lower federal court ruling issued on February 13, 2015, and decided earlier this month to implement the court order that eliminated the mandatory unpaid holiday schedule and the restriction in billing, known as the “half-day billing rule”.  As a result, the US Supreme Court ruling yesterday doesn’t impact that implementation because the ruling by the lower federal district court was issued – and not appealed  – before the action by the high court.
    If the US Supreme Court ruling was in effect in 2009, it would have meant that Medi-Cal providers and recipients – including IHSS recipients, would not have been able to file, much less stop and delay, massive cuts from being immediately implemented, including major cuts to IHSS worker pay, IHSS recipient service hours, and other Medi-Cal provider rates and services.
RULING HAS NO IMPACT ON DEPARTMENT OF LABOR OVERTIME LAWSUIT
   The US Supreme Court ruling also did not impact a federal lawsuit filed last year by home care associations against the US Department of Labor to stop regulations that among other things required overtime for previously exempted home care workers – including In-Home Supportive Services (IHSS) and Supported Living Services (SLS) workers in California – because that lawsuit was filed under different federal law – not Medicaid.  That lawsuit contended that the US Department of Labor exceeded its authority in issuing those regulations that required first a change in federal laws passed by Congress and approved by the president.
    A federal district court in Washington, DC ruled against the federal government in late December and mid-January, stopping implementation of the major portions of the federal regulations impacting overtime.  That ruling has been appealed by the Obama Administration to the US Court of Appeals for the District of Columbia Circuit.  A hearing on the case is scheduled for May 7th.
    Meanwhile overtime implementation in California for IHSS, Waiver Personal Care Services workers, and home care type services funded through the regional centers (including Supported Living Services), remain on hold – though there are efforts in the Legislature to re-start implementation in the 2015-2016 State budget year regardless of what happens at the federal law.  The Assembly Budget Subcommittee #1 on Health and Human Services, chaired by Assemblymember Tony Thurmond (Democrat – Richmond) approved on March 11th a subcommittee proposal by the chair for California to implement overtime for those home care workers – including those under the Department of Developmental Services – as part of the 2015-2016 State Budget.  The State Senate has not yet taken up any similar action – and the issue will likely be one of several involving negotiations in late May and early June with Governor Brown and the two Democratic legislative leaders, Senate President Pro Tem Kevin De Leon and Assembly Speaker Toni Atkins.
OFFICIAL SUMMARY OR SYLLAUS OF US SUPREME COURT OPINION
    A PDF Document copy (30 pages total ) of the 2 page summary of the opinion (called a “syllabus”), followed by the 11 page main opinion and order by Justice Scalia, followed by a 5 page separate concurring opinion by Justice Breyer, and a 12 page dissenting opinion by Justice Sotomayor, can be viewed or downloaded from the US Supreme website at:
    The following is the official summary – called a “syllabus” of the US Supreme Court opinion:
Syllabus
ARMSTRONG ET AL. v. EXCEPTIONAL CHILD CENTER, INC., ET AL.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT
 
No. 14–15. Argued January 20, 2015—Decided March 31, 2015
 
Providers of “habilitation services” under Idaho’s Medicaid plan are reimbursed by the State’s Department of Health and Welfare. Section
30(A) of the Medicaid Act requires Idaho’s plan to “assure that payments are consistent with efficiency, economy, and quality of
care” while “safeguard[ing] against unnecessary utilization of . . .care and services.” 42 U. S. C. §1396a(a)(30)(A). Respondents, providers of habilitation services, sued petitioners, Idaho Health and Welfare Department officials, claiming that Idaho reimbursed them at rates lower than §30(A) permits, and seeking to enjoin petitioners to increase these rates.
The District Court entered summary judgment for the providers. The Ninth Circuit affirmed, concluding that the Supremacy Clause 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).
Held: The judgment is reversed.
567 Fed. Appx. 496, reversed.
 
JUSTICE SCALIA delivered the opinion of the Court, except as to Part IV, concluding that the Supremacy Clause does not confer a private
right of action, and that Medicaid providers cannot sue for an injunction requiring compliance with §30(a). Pp. 3–10.
    (a) The Supremacy Clause instructs courts to give federal law priority when state and federal law clash. Gibbons v. Ogden, 9 Wheat.
1, 210. But it is not the “ ‘source of any federal rights,’ ” Golden State Transit Corp. v. Los Angeles, 493 U. S. 103, 107, and certainly does
not create a cause of action. Nothing in the Clause’s text suggests otherwise, and nothing suggests it was ever understood as conferring a private right of action. Article I vests Congress with broad discretion over the manner of implementing its enumerated powers. Art I., Section 8; McCulloch v. Maryland, 4 Wheat. 316, 421. It is unlikely that the Constitution gave Congress broad discretion with regard to the enactment of laws, while simultaneously limiting Congress’s power over the manner of their implementation, making it impossible to leave
the enforcement of federal law to federal actors. Pp. 3–5.
    (b) Reading the Supremacy Clause not to confer a private right of action is consistent with this Court’s preemption jurisprudence. The
ability to sue to enjoin unconstitutional actions by state and federal officers is the creation of courts of equity, and reflects a long history
of judicial review of illegal executive action, tracing back to England. This Court has never held nor suggested that this judge-made remedy, in its application to state officers, rests upon an implied right of action contained in the Supremacy Clause. Pp. 5–6.
    (c) Respondents’ suit cannot proceed in equity. The power of federal courts of equity to enjoin unlawful executive action is subject to
express and implied statutory limitations. See, e.g., Seminole Tribe of Fla. v. Florida, 517 U. S. 44, 74. Here, 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, 42 U. S. C. Section 1396c—and the sheer complexity associated with enforcing Section 30(A) combine to establish Congress’s “intent to foreclose” equitable relief, Verizon Md. Inc. v. Public Serv. Comm’n of Md., 535 U. S. 635, 647. Pp. 6–10.
    SCALIA, J., delivered the opinion of the Court with respect to Parts I,vII, and III, in which ROBERTS, C. J., and THOMAS, BREYER, and ALITO,vJJ., joined, and an opinion with respect to Part IV, in which ROBERTS, C. J., and THOMAS and ALITO, JJ., joined. BREYER, J., filed an opinion concurring in part and concurring in the judgment. SOTOMAYOR, J., filed a dissenting opinion, in which KENNEDY, GINSBURG, and KAGAN, JJ., joined
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