In Armstrong v. Exceptional Child Center, Inc., Case No. 14-15, issued March 31, 2015, the United States Supreme Court ruled that a group of private health care providers could not sue officials in Idaho’s Department of Health and Welfare for an injunction requiring that Idaho increase its Medicaid reimbursement rates to comply with section 30(A) of the Medicaid Act.  The 5-4 ruling overturned a Ninth Circuit decision, which would have permitted the providers to sue under an implied right of action.

Section 30(A) of the Medicaid Act, 42 U.S.C. § 1396a(a)(30)(A), requires Idaho’s Medicaid plan (and other state Medicaid plans) to “assure that payments 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.”  A group of providers of habilitation services—in-home care for individuals who would otherwise require the level of care provided in a hospital or nursing facility—sued Idaho’s Department of Health and Welfare for reimbursing such services at rates lower than are permitted under section 30(A).

The Court concluded that the providers had no cause of action to enforce section 30(A) because the Supremacy Clause, Article VI, clause 2 of the Constitution of the United States, does not create a private cause of action.  The Supremacy Clause instructs courts what to do when state and federal laws clash, but it does not specify who may enforce federal laws or in what circumstances they may do so, said the Court.  The Court found that the Supremacy Clause does not confer a right of action for its violation.  Moreover, the Court did not allow the suit to proceed in equity because express and implied statutory limitations establish Congress’s intent to foreclose equitable relief.  In the majority’s view, “the Medicaid Act implicitly precludes private enforcement” of section 30(A).

The Court noted that the providers were not without an avenue for relief —if the Secretary of Health and Human Services concludes that Idaho is not adhering to section 30(A), the Secretary can inform the State that its compensation scheme is inadequate and can withhold federal funds.  A concurring opinion by Justice Breyer added that if the withholding of funds is not effective, “the federal agency may be able to sue a State to compel compliance” with section 30(A).  In her dissenting opinion, Justice Sotomayor asserted that the proposed alternative sanction is too drastic to be a realistic source of relief. 

The full text of the Armstrong opinion is available here.

Reporter, Kristin Roshelli, Houston, +1 713 751 3263, kroshelli@kslaw.com.