01 April 2015

Law in Plain English: Armstrong v. Exceptional Child Center, Inc.

This is one in a series of posts designed to describe court decisions in plain English. For more detail and background on the legal issues, see the link to the case below. For similar posts, click here.

SCOTUSblogArmstrong v. Exceptional Child Center, Inc.

Argument: Jan 20 2015 (Aud.)

Background: Section 30(A) of the Medicaid Act requires that state Medicaid plans contain procedures to ensure that reimbursement rates for healthcare providers “are consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers” to meet the need for care and services in the geographic area. The Ninth Circuit has interpreted Section 30(A) to require that reimbursement rates bear a reasonable relationship to provider costs. Where rates fail to “substantially reimburse providers their costs,” there must be some justification other than “purely budgetary reasons.”  Richard Armstrong, the Director of Idaho's Department of Health and Welfare, conducted yearly cost studies between 2006 and 2009, developed a new rate setting methodology, and recommended substantial increases in reimbursement rates for supported living services based on the cost study results; but did not implement the proposed rate changes because the Idaho legislature did not appropriate the necessary funds. The district court ruled in favor of the Medicaid providers, and the Ninth Circuit affirmed.

Issue: The question before the Court is whether the Supremacy Clause gives Medicaid providers a private right of action to enforce 42 U.S.C. § 1396a(a)(30)(A) against a state where Congress chose not to create enforceable rights under that statute.

Holding: In a 5-4 decision, the Supreme Court ruled that the Supremacy Clause does not confer a private right of action, and that Medicaid providers cannot sue for an injunction requiring compliance with § 30(A). The Court reasoned that the Supremacy Clause instructs courts to give federal law priority when state and federal law clash, but that it is not the source of any federal rights.
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