Armstrong v. Exceptional Child Center, __U.S.__, S.Ct. No. 14-15 (March 31, 2015)
The fears of advocates across the country were realized with the publication of this widely anticipated decision on March 31st. The plaintiffs in this case are providers of habilitative services who sued Idaho’s Department of Health and Welfare to compel the agency, under the Supremacy Clause and the Medicaid Act, to raise Medicaid reimbursement rates to comply with the mandate in section 30(a) of the Act [42 U.S.C. § 1396a(a)(30)] to “assure that payments … are sufficient to enlist enough providers so that care and services are available under the plan [to the same extent as in the general population].”
The Idaho district court and the Ninth Circuit concluded that the Supremacy Clause and the Medicaid statutory scheme gave the providers an implied federal right of action to enforce section 30(a) of the Act, and ordered the state to raise reimbursement rates in compliance with the statutory standard. In a 5-4 decision authored by Justice Scalia, with Justice Breyer incongruously aligned with the four conservative justices, and Justice Kennedy joining Justice Sotomayor’s dissent for the liberals, the majority ruled that neither the Supremacy Clause nor section 30(a) provides an implied private right of action to enforce the reimbursement rate standards.
The majority first dismissed the plaintiffs’ invocation of the Supremacy Clause as neither creating a cause of action nor providing a source of any substantive law. Justice Scalia then blithely overruled several decades of lower federal court decisions by holding that the availability of an “administrative remedy” from the federal Secretary of Health and Human Services, for a state’s non-compliance with section 30(a), indicated congressional intent to preclude a private right of action to enforce the statute directly in federal court.
Justice Sotomayor’s dissent mocked the so-called administrative “remedy” — the potential for the federal agency to withhold Medicaid funds from the state for non-compliance with section 30(a) — not only as completely inadequate but as “self-defeating” and “counterproductive,” because “a state’s non-compliance creates a damned-if-you-do, damned-if-you-don’t scenario [for the federal agency], where the withholding of state funds will only lead to depriving the poor of essential medical assistance.”
Jane Perkins, Legal Director of the National Health Law Program, who authored an amicus brief on behalf of many public interest advocacy organizations, stated that the decision “ignores hundreds of Supreme Court decisions, dating back to the early 1800s, which have recognized the ability of private parties to bring Supremacy Clause suits in federal courts to stop state officials from implementing state laws that violate a federal law or the Constitution.” While this ruling applies to medical providers, advocates fear that the majority’s analysis will soon be used to knock Medicaid recipients out of federal court as well.