Douglas v. Independent Living Center

The first case this term might be better described as its Sherlock Holmes counterpart, The Case of the Strange Bedfellows. On one side, the petitioners include several states (California and 30 states in support) taking sides with the U.S. government. This is a strange enough occurrence when one considers that state rights vs. federal powers is the longest running feud in our country. On the other side, the respondents include the liberal American Civil Liberties Union (ACLU), the conservative Chamber of Commerce, and several members of Congress - just in case they risked having the government act unilaterally.

Why? The answer is simple, my dear Watson, for it all comes down to the money.

When California decided that it was too broke to continue paying the high costs of Medicaid (or 'MediCal'), the legislature voted to cut reimbursements to medical providers by 1-10%. The medical providers (hospitals, daycare centers, nursing homes) protested the idea of having to watch their bottom-lines crumble. They decided to sue in federal court, arguing that reforms were illegal under the Medicaid statute (and the Supremacy Clause of the Constitution - the clause that says that all federal laws trump state laws). The ACLU for the poor and disabled who benefited from Medicaid funding, and the Chamber of Commerce for the providers.

Problem is, the Medicaid statute doesn't mention that a private person (such as patients, doctors, or hospitals) can challenge its enforcement. Medicaid is a cooperative program; states voluntarily participate in order to receive large federal checks. Technically, if they don't comply with the parameters of the program - such as not providing enough reimbursements - the government can withdraw their funding until states acquiesce. As Justice Ginsburg pointed out in oral argument this morning, this is a "drastic measure that would hurt the people Medicaid was meant to benefit,"  and the lawyer for the petitioner was forced to concede that this was a rare occurrence.

The government withdrawing its funding is not a rare occurrence because state violations are rare, but because the administrative remedy in place usually works. The law gives the Department of Health and Human Services (HHS) the ability to review all state Medicaid programs, and sets a 90-day period to consensually resolve complications that arise under any state changes. This administrative remedy usually solves any HHS conflicts with the states - no federal suits required.

The question before the Court comes down to this - is it better to let private practitioners (i.e. hospitals) sue states to stop Medicaid reforms they don't like, or for the judiciary to stay out of the fray and let the administrative body Congress created do its thing?*

Oral arguments today suggest the the Justices seem to think some middle ground is necessary. Breyer balked at the idea of letting any private entity sue the state,

There are only 50,000 kinds of reimbursements. Maybe there are a million. I don't know how many. And they only take place in like, say, 400,000 counties. And we will have Federal judges reaching different views about what is sufficient in each of those different places...Well, hm, a problem."

Justice Kennedy swung to the other side,

"You introduce the fact, or the consideration, of what's administratively workable...There are almost $400 billion of HHS expenditures that are supervised by 50 people. That works out to $800 million each; and they say, we don't have time for this...it's much more consistent with the application of Federal law to allow this action to be brought in the courts."

Bringing the Court together, Justices Ginsburg and Sotomayor proposed what may end up being the most practical compromise between the two extremes - allowing private practitioners to sue states in federal court only so far as to stop state remedies from going into effect during the 90-day administrative review process,

 "...you would be satisfied with a limitation that the Court can issue an injunction pending the administrative procedure without going on to then the substance of the question...?"

"...what's wrong with just saying that the court's power is limited to...a preventive injunction that just stops the State from acting until the administrative process concludes?"

My best sleuthing from the comments this morning is that the Supreme Court is going to follow Justices Ginsburg and Sotomayor's lead and compromise.

But this situation isn't just limited to California or Medicaid, which is why 30 additional states signed on to support California. If states decide to follow California's method of reducing the budget by cutting Medicaid financial support, this case could have drastic impacts. This case might be the difference between the disabled elderly receiving medical attention or not, simply because hospitals don't want to assume the extra costs associated with increased care, absent state reimbursements. Mr. Phillips, the respondent's counsel, summed it up perfectly when Justice Breyer argued that allowing court injunctions was a slippery slope towards a mess of suits:

Justice Breyer: "No, no. Your people have your problem. But some other people have another problem."

Mr. Phillips: "But my people have a life and death problem, Justice Breyer. So if there was ever a situation where you would say, let's look to see whether or not there is relief available, this would be the situation."

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*(Of course, the Supreme Court phrased that question as whether or not private practitioners have standing under the Supremacy Clause to challenge a state statute that does not provide a cause of action for private challenges. But where's the fun in that?)