Armstrong v. Exceptional Child Center, Inc.

The parties in this case disagree over whether Medicaid providers can enforce § 30(A) to uphold a private cause of action for an injunction under the Supremacy Clause against Idaho’s Medicaid officials.

Armstrong asserts that Congress has not permitted private parties, such as Medicaid providers, to enforce § 30(A) against state officials, and therefore under the Supremacy Clause, Medicaid providers have no right to bring this injunction against Idaho officials. Further, Armstrong contends that only Congress has the power to designate private remedies, such as injunctions, to prevent Idaho’s Medicaid from providing low reimbursement rates to Medicaid providers.

ECC counters that due to the new cost analysis that IDHW conducted on their residential habilitation services reimbursement rates, IDHW’s reimbursement rates are preempted by § 30(A) because § 30(A) requires states to establish reimbursement rates in proportion to provider costs and to depend on that cost analysis before lowering rates. ECC argues that IDHW’s rates did not reimburse Medicaid providers enough to cover their expenses, and IDHW did not raise the rates in accordance to the new cost analysis that indicated that the current rates were too low. Further, ECC states that courts have allowed private parties to receive injunctive relief against state laws, such as § 30(A), that are preempted under the Supremacy Clause.

DO MEDICAID PROVIDERS HAVE A PRIVATE RIGHT AND REMEDY UNDER THE SUPREMACY CLAUSE TO ENFORCE § 30(A) AGAINST STATE OFFICIALS?

Armstrong maintains that to create a private right of action Congress must have intended to produce a right and a remedy, and Congress did not stipulate any terms in § 30(A) for private entities to have a right and remedy to enforce § 30(A) under the Supremacy Clause against state officials. As further evidence, Armstrong claims that the language within § 30(A) is broad and is aimed at administering state services as a whole rather than individually. Accordingly, Armstrong maintains that Medicaid providers arguing for their specific reimbursement rates to be higher falls under individual needs. Additionally, Armstrong argues that ECC’s claim that anticipatory enforcement applies to § 30(A), which would allow Medicaid providers suing Idaho officials to argue preemption as a preventative protection against Idaho’s low reimbursement rates, is wrong because Medicaid providers have no federal right of immunity that Idaho law interfered with. Armstrong asserts that § 30(A) governs the relationship between CMS and the state, and thus, CMS rather than the Medicaid providers are the intended beneficiaries of Idaho’s § 30(A) duties. Additionally, Armstrong claims that because a state will only be reimbursed under § 30(A) if it adheres to the required conditions, and the state does not violate federal law if it does not adhere to these required conditions, § 30(A) cannot preempt Idaho’s Medicaid reimbursement rates. Moreover, Armstrong argues that the Supremacy Clause does not provide a federal right of action to plaintiffs, but rather only ensures that federal law has precedence over state law when the laws diverge.

In opposition, ECC argues that because a Medicaid provider’s claim under the Supremacy Clause is for injunctive relief and rooted in equity rather than damages, Medicaid providers do not have to prove that Congress had the intent to create a private right and remedy in § 30(A). ECC claims that injunctive relief suits rarely occur in scenarios where the statute provides the plaintiffs a right and remedy. Instead, ECC argues that often the plaintiffs have no other means for seeking a right and remedy and thus, the proper measure is harm prevention. ECC contends that Idaho officials are harming the Medicaid providers through Idaho’s low Medicaid reimbursement rate, and these providers have no recourse to challenge this law other than under the Supremacy Clause. Additionally, ECC counters that the Supremacy Clause does provide a federal right to the Medicaid providers because through upholding the Supremacy Clause, the United States Constitution is being upheld. ECC also argues anticipatory enforcement applies in this case because Idaho can enforce fines and postpone or end providers’ membership in Medicaid, and thus, the providers are protecting themselves in advance against this potential enforcement action. ECC asserts that many statutes that preempt state law do not have “rights-creating language” and therefore it is not necessary for § 30(A) to have “rights-creating language” for Medicaid providers to have rights under the Medicaid Act. Lastly, ECC counters that § 30(A)’s discretionary nature is irrelevant as to whether § 30(A) can preempt Idaho’s Medicaid reimbursement rates, and that the judiciary can still enjoin Idaho officials from applying reimbursement rates that violate § 30(A) as long as Idaho maintains a Medicaid program.

IF SO, DOES ENFORCING THIS PRIVATE RIGHT AND REMEDY VIOLATE SEPARATION OF POWERS?

Armstrong asserts that Congress decides who can enforce federal statutes such as § 30(A), not private parties such as Medicaid providers. Armstrong claims that by producing privately enforceable rights and allocating power to the judiciary, separation of powers would be violated because the judiciary does not have the authority to create private remedies. Armstrong also argues that § 30(A)’s broad language—and language that would make it difficult for courts to interpret § 30(A) in their individualized decision-making—indicates agency authority rather than judiciary authority. Moreover, Armstrong argues that agencies rather than the judiciary are meant to implement § 30(A) because Congress often authorizes an agency to use it’s expertise in overseeing the specifics in Spending Clause statutes such as § 30(A) and here, Medicaid maintains the expertise to implement § 30(A). Further, Armstrong claims that by Congress delegating to Medicaid, § 30(A) will be administered uniformly throughout the states, rather than in fragments by the judiciary. Armstrong also claims that allowing private enforcement of § 30(A) would not notify states regarding standards they need to meet, and judicial remedies not required in § 30(A) or enforced by CMS would be implemented. Armstrong argues that private enforcement would only stifle the aims of § 30(A), which includes promoting dialogue between the states and CMS, not the states and the judiciary.

In contrast, ECC argues that as held in Rosado v. Wyman, courts have the power to enforce injunctions against actions violating statutes that allegedly preempt state law, such as § 30(A). Additionally, ECC argues that the legislative history shows that Congress has not made CMS the only authority on Supremacy Clause preemption, and Congress has not stated that it wants to bar the judiciary from deciding these cases. ECC further claims that Congress had the opportunity to amend § 30(A) to prevent state laws from being preempted by § 30(A) and constrain the role of the judiciary, but Congress did not. Additionally, ECC maintains that the judiciary will not obstruct agency authority in administering § 30(A) because there is still agency deference to CMS in determining whether preemption exists, and if CMS has expressed authority on the preempted issue then CMS’s interpretation is superior. ECC argues that preemption actions are crucial because CMS does not have enough resources to oversee all of the Medicaid programs’ adherence with federal law funding provisions, and to prevent harming Medicaid beneficiaries during lengthy administrative proceedings, the courts must help in overseeing the Medicaid programs. Additionally, ECC argues that § 30(A)’s broad language is irrelevant as to whether the Supremacy Clause provides a private cause of action because the language only speaks to whether § 30(A) preempts Idaho’s reimbursement rate system. ECC maintains that sufficient notice is provided to states because there have been many Spending Clause cases in the courts that implicate statutes such as § 30(A), and thus states should be aware that the judiciary is playing a role.