(CN) - The Supreme Court on Wednesday ordered the 9th Circuit to reassess claims against changes to the California Medicaid plan, which only recently received approval by a federal agency.
Despite agency approval, the plans remain encumbered by federal-court injunctions.
The dispute revolves around rate reductions that California enacted in 2008 and 2009, slashing the payments it makes to Medicaid providers, such as physicians, pharmacies and clinics. Though California set the reduction at 10 percent in February 2008, it replaced that figure with a more modest set of cuts seven months later. In February 2009, it capped the contributions California can make to county-paid wages and benefits for providers of in-home care.
Groups of Medicaid providers and beneficiaries filed several lawsuits over the proposed amendments, producing seven decisions on the case by the 9th Circuit. In blocking the state from implementing its statutes, the court found that the opponents had a cause of action under the supremacy clause to enforce a federal Medicaid law.
But one month after the U.S. Supreme Court heard oral argument on this issue, the Centers for Medicare and Medicaid Services approved the state statutes as consistent with federal law.
This development has changed the landscape, and the parties have not fully argued the new questions that the case presents, a five-justice majority ruled Wednesday.
"While the cases are not moot, they are now in a different posture," Justice Stephen Breyer wrote for the court. "The federal agency charged with administering the Medicaid program has determined that the challenged rate reductions comply with federal law. That agency decision does not change the underlying substantive question, namely whether California's statutes are consistent with a specific federal statutory provision (requiring that reimbursement rates be 'sufficient to enlist enough providers'). But it may change the answer. And it may require respondents now to proceed by seeking review of the agency determination under the Administrative Procedure Act (APA), rather than in an action against California under the supremacy clause." (Parentheses in original.)
"Thus, it may be that not all of the considerations that may bear upon the proper resolution of the issue have been presented in the briefs to this court or in the arguments addressed to and considered by the court of appeals," Breyer concluded. "Given the complexity of these cases, rather than ordering reargument, we vacate the Ninth Circuit's judgments and remand the cases, thereby permitting the parties to argue the matter before that circuit in the first instance."
In a stinging dissent, Chief Justice John Roberts said the court should have rejected the attempt to sue under the supremacy clause.
"The CMS approvals have no impact on the question before this court," according to the nine-page dissent, joined by Justices Antonin Scalia, Clarence Thomas and Samuel Alito. "If, as I believe, there is no private right of action under the Supremacy Clause to enforce §30(A) [of the federal law on state plans for medical assistance], that is the end of the matter. If, on the other hand, the court believes that there is such a cause of action, but that CMS's recent rate approvals may have an effect on that action going forward, then the court should say just that and then remand to the Ninth Circuit for consideration of the effect of the agency approvals." (Emphasis in original.)
"I am not sure what a remand without answering the preliminary question is meant to accomplish," Roberts added. "The majority claims that the agency's recent action 'may change the[lower courts'] answer' to the question whether the particular state rates violate §30(A). But that fact-specific question is not the one before us; we chose not to grant certiorari on the question whether California's rates complied with §30(A), limiting our grant to the cause of action question."
Logically, there is only one way to rule, and that is to dispel an attempt to sue under the supremacy clause, the chief justice said.
"Saying that there is a private right of action under the supremacy clause would substantively change the federal rule established by Congress in the Medicaid Act," Roberts wrote. "That is not a proper role for the supremacy clause, which simply ensures that the rule established by Congress controls."
"Indeed, to say that there is a federal statutory right enforceable under the supremacy clause, when there is no such right under the pertinent statute itself, would effect a complete end-run around this court's implied right of action and 42 U. S. C. §1983 jurisprudence," he added.
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