The inter-branch turmoil continues

After the Supreme Court heard oral arguments in Douglas v. ILC, the Secretary of HHS approved some of California’s deep cuts in Medicaid reimbursement.   The Court requested additional briefing regarding the impact of the rate reduction approval, and the United States responded that the case was not moot because the grant of certiorari was based upon the Supremacy Clause question, not a determination as to the actual sufficiency of the state’s Medicaid payment rates.  As soon as the rate reductions were approved by HHS, the California Hospital Association, the California Medical Association, and other Medi-Cal providers filed additional claims for injunctive relief.  

Yesterday, U.S. District Court Judge Christina Snyder issued an injunction against California preventing the implementation of the HHS-approved rate reductions because they would cause irreparable harm to hospitals’ skilled nursing units (among other problems).  The new injunction keeps the issues in Douglas alive, whether as a matter of payment rate adequacy or as a matter of private enforcement of state violations of the Supremacy Clause.  Thus, even though HHS approved Medi-Cal rate reductions, the conflicts in Douglas have not been resolved. 

There is also a fascinating real-time separation of powers quandry in this case, which is highlighted by the injunction that was just issued.  Federal courts perceive states’ failure to abide by the mandate of the Equal Access provision, but HHS, whose job it is to ensure state compliance, turns a blind eye to state decisions that will limit access to medical care.  In the meantime, Congress does not modify the Equal Access provision to contain stronger language or a clearer private right of action, it merely relies on implied private enforcement actions (see the amicus brief of Members of Congress).  And HHS has issued paltry draft regulations to facilitate enforcement of the Equal Access provision, but the draft regulations do not guide CMS’s enforcement efforts so much as they provide some standards for states to self-report with little federal oversight.  It seems that federal courts are acting because the legislative branch either can’t or won’t, and because the executive branch either can’t or won’t ensure that this federal law is followed.  This makes the Obama Adminstration’s deference to state decisions all the stranger in Douglas, and courts’ patience with Equal Access litigation a bit more understandable.  It also helps to explain the sort of underlying tone of confusion at oral arguments.  The Court is left with the unenviable task of cutting this Gordian knot of inter-branch disfunction.

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2 Responses

  1. BDG says:

    Nicole, any idea why the administration is so hostile to a private right of action? Presumably, if the case went forward, CMS would get deference to its judgment that the rates are adequate, and so plaintiffs lose anyway. And that doesn’t make law for potential civil-rights plaintiffs. What gives?

  2. Nicole Huberfeld says:

    Hi Brian, It’s a great question. The scuttlebutt is that Neal Katyal/Ed Kneedler filed the merits brief over the protests of Sebelius – in fact, DOJ and HHS had been aligned at the writ stage. To add to the rift, former administrators of HHS have vehemently opposed the SG’s position in their amicus brief. It seemed during oral arguments that at least Justice Breyer, if not others, thought what you do – that primary jurisdiction could take care of the question. But the U.S. has gone so far as to oppose private rights of action in all conditional spending programs because of their ‘contractual nature’ – essentially extending Gonzaga. Very bizarre for this administration, especially in light of the Medicaid expansion. Some would probably say that the U.S. generally tends to approach the states supportively rather than antagonistically in Medicaid cases – but that still does not explain the bigger cooperative federalism argument being made. I’d love to hear others’ thoughts…