Thursday, February 23, 2012

Medicaid Providers' Supremacy Clause Case Goes Back to Ninth Circuit

A sharply divided Supreme Court yesterday remanded Douglas v. Independent Living Center of Southern California, Inc. to the Ninth Circuit to determine whether the plaintiffs' case on the Supremacy Clause can move forward in light of the federal government's post-oral argument approval of defendant-California's reductions in its Medicaid plan.  We previewed the oral argument here.

Douglas is a suit by California Medicaid providers and recipients against California for its changes to its Medicaid program.  The plaintiffs argued that the changes violated federal Medicaid requirements and were therefore unconstitutional under the Supremacy Clause.

But soon after the Court heard oral argument in the case, the federal government approved California's changes.  The parties agreed that this did not moot the case, however.  (The plaintiffs still maintained that the state changes violated federal Medicaid requirements, even if the federal government disagreed.)  So the question became: Can Medicaid providers and recipients sue the state under the Supremacy Clause, even after the federal government approved the state's Medicaid changes?

Justice Breyer, writing for a 5-justice majority, including Justices Kennedy, Ginsburg, Sotomayor, and Kagan, sent the case back to the Ninth Circuit for resolution of this question.  He wrote that the parties didn't brief the issue at the Court, and that the Court wouldn't call for reargument on this question.  Instead, the case goes back to the Ninth Circuit.

Cheif Justice Roberts wrote in dissent for himself and Justices Scalia, Thomas, and Alito.  He said that nature of the Supremacy Clause, along with the Medicaid Act itself, means that the plaintiffs don't have a Supremacy Clause case.  He pointed to the fact that the Medicaid Act itself doesn't provide a cause of action for its enforcement, and the Supremacy Clause can't step in to provide one.  "That is not a proper role for the Supremacy Clause, which simply ensures that the rule established by Congress controls [over conflicting state law]."

Plaintiffs in the case have a cause of action against the federal government under the Administrative Procedures Act for its final approval of the California Medicaid changes, even if they don't have a cause of action against California under the Medicaid Act.  If the Ninth Circuit rules that they have a cause of action against California under the Supremacy Clause, the plaintiffs may have an election between the APA claim against the federal government and the Supremacy Clause claim against the state.

In short, this case isn't over.  In fact, it looks like it's just beginning.


Cases and Case Materials, Federalism, News, Opinion Analysis, Supremacy Clause | Permalink

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