Private Enforcement of the Medicaid Act Pursuant to 42 U.S.C. § 1983

Private Enforcement of the Medicaid Act Pursuant to 42 U.S.C. § 1983

Executive Summary

This Issue Brief provides a review on private enforcement of the Medicaid Act through § 1983. The issue brief discusses some of the demanding tests The Court has established  for private enforcement, and provides background and updates on the law.
The Supreme Court has restricted the ability of private citizens to enforce federal laws pursuant to 42 U.S.C. § 1983. The Court has established a demanding test for private enforcement, in particular in the Gonzaga University v. Doe and Blessing v. Freestone cases. The Blessing case reflects the majority?s particular interest in narrowing private enforcement of laws enacted by Congress pursuant to the Spending Clause of the U.S. Constitution. The Medicaid Act is a Spending Clause program.
Since 2002, when Gonzaga was decided, the federal courts of appeal have decided 41 Medicaid cases. The appellate courts have consistently applied the test for private enforcement, uniformly finding some Medicaid provisions enforceable and others not. To date, there are no splits among the circuit courts. Significantly, § 1983 remains the primary vehicle for enforcing a number of the Medicaid Act?s most important consumer protections. Moreover, the Supreme Court has not hastened to revisit the statute. During its 2012-2013 Term, for example, the Court denied petitions for certiorari filed by state attorneys seeking to overturn appellate courts? enforcement decisions in four Medicaid cases.
This Fact Sheet will provide background on § 1983 and the leading Supreme Court cases discussing it.   It will then provide a current point-in-time assessment of Medicaid Act enforcement in the circuit courts of appeal and conclude by offering recommendations for lawyers who are considering a § 1983 Medicaid claim.
Background on § 1983
At the time of our Nation?s founding, the constitutional framers worked against the backdrop of English laws and principles. Among these was the ?invariable principle … that every right, when withheld, must have a remedy, and every injury its proper redress.?  The Supreme Court?s landmark decision, Marbury v. Madison, reflects this notion, stating that ?the very essence of civil liberty? is the ?right of every individual to claim the protection of the law, whenever he receives an injury. One of the first duties of government is to afford that protection.?
Over the years, private individuals have gone to court to obtain prospective injunctive relief when they are being harmed by state actions that are inconsistent with federal law. Some of these federal laws were enacted by Congress pursuant to the Spending Clause of the Constitution. The Social Security Act, of which Medicaid is a part, is an example of a Spending Clause enactment. Like many other Spending Clause enactments, the Medicaid Act makes federal funding available to states that participate in Medicaid consistent with the requirements of federal law and authorizes the federal government to withhold or terminate federal funding to a state that is not operating according to the federal requirements.  When it added Medicaid to the Social Security Act in 1965, Congress did not include a provision authorizing private (as opposed to federal) enforcement by program beneficiaries and/or applicants. But in enacting Medicaid, Congress acted with the understanding that courts would ?provide such remedies as are necessary to make effective the congressional purpose.?
Even without an express cause of action in the original Social Security Act, program beneficiaries enforced various titles of the Act pursuant to a civil rights statute, 42 U.S.C. § 1983 (§ 1983). Section 1983 provides an express cause of action to individuals when a state actor is depriving them of their rights under the U.S. Constitution or a federal law.  For example, in King v. Smith, the Court allowed welfare recipients to enforce the ?reasonable promptness? provision of the Social Security Act?s welfare law pursuant to § 1983.  In Maine v. Thiboutot, the Court again addressed enforcement under § 1983 and held that ?the phrase ?and laws? means what it says? and, thus, § 1983 enforcement applies not only to constitutional rights but also to rights defined in federal statutes.
Subsequently, the Court cautioned that § 1983 actions require a plaintiff to assert a violation of a federal ?right,? not merely a violation of federal law.  The Supreme Court thereafter announced a three-prong test for lower courts to use to determine whether a federal law creates a right:  (1) Was the federal provision in question intended to benefit the plaintiff; (2) Does the provision contain sufficiently specific language so that a court knows what to enforce; and (3) Does the provision create a binding obligation on the state?  If these questions are answered affirmatively, there is a presumption that the plaintiff can enforce the provision. The defendant can overcome the presumption by showing that Congress has foreclosed enforcement through § 1983, expressly or by including a comprehensive remedial scheme in the substantive federal law.   The Supreme Court has explicitly held that the Medicaid Act does not include such a remedial scheme.
Subsequently, lower courts applied this three-prong test, finding some federal laws created federal rights and were therefore judicially enforceable while others did not. Despite this history, recent Supreme Court Justices have been reluctant to allow private individuals to enforce spending clause enactments.  One year after Maine v. Thiboutot, the Court began to cut back on the right to private enforcement in Pennhurst State School & Hospital v. Halderman.  Discussing the Developmentally Disabled Assistance and Bill of Rights Act, Justice Rehnquist?s majority opinion equated legislation enacted pursuant to the Spending Clause to a contract between the federal government and the states with the typical remedy for state noncompliance being an action by the federal government to terminate funding.  Notably, the Developmentally Disabled Assistance and Bill of Rights Act, unlike Medicaid, is not part of the Social Security Act.
In 2002, the Rehnquist Court issued Gonzaga Univ. v. Doe to clarify and tighten the enforcement test.  Writing for the majority, Chief Justice Rehnquist cited Pennhurst and noted that Gonzaga involved a Spending Clause enactment.  The Gonzaga Court then held that a federal law is not privately enforceable unless Congress has unambiguously manifested its intent to confer individual rights on the plaintiff.  Moreover, this initial inquiry into whether a statute creates a federal right under § 1983 ?is no different from the initial inquiry in an implied right of action case.?  The provision must contain ?rights- or duty-creating language? and have an individual rather than an aggregate focus.
Thus, Gonzaga turns on the need to discern congressional intent.  Notably, in 1994, Congress added 42 U.S.C. § 1320a-2 to the Social Security Act expressly to recognize that provisions of the Social Security Act are privately enforceable.  The amendment requires all courts, in Social Security Act cases, to apply the grounds for enforcement recognized by the Supreme Court prior to 1994 (grounds, which as discussed above, include both preemption and § 1983 claims). Interestingly, not all courts have deferred to § 1320a-2.  Of particular note is a pithy, but incorrect, analysis by Ninth Circuit Court Judge O?Scannlain in a Medicaid case, Sanchez v. Johnson.  The decision dismisses § 1320a-2, finding it is ?hardly a model of clarity? and concluding that it does not disturb the reasoning of Pennhurst.  However, Congress enacted § 1320a-2 specifically to preserve the long history of private enforcement of the Social Security Act, and Pennhurst is not a Social Security Act case.
Medicaid enforcement under § 1983
The Supreme Court has not decided a Medicaid/§ 1983 enforcement case since Gonzaga was decided on June 20, 2002. During the 2011-2012 Term, however, the Court did agree to consider the question of whether beneficiaries and providers may maintain a cause of action under the Supremacy Clause to enforce § 1396a(a)(30)(A), a provision of the Medicaid Act requiring states to establish adequate provider payment rates.  While the case was remanded without a decision on the Supremacy Clause question, it is nevertheless important because Chief Justice Roberts? strong, four-member dissent, stated without discussion that § (30)(A) cannot be enforced through § 1983 (indeed, every appellate court has said this as well) and would have decided the Supremacy Clause question against the plaintiffs.
A number of lower courts have applied the Gonzaga/Blessing enforcement test in the Medicaid context. Of particular note are the 41 cases decided by the federal courts of appeals. This activity is summarized in the tables, below.

Table 1 shows where the cases have occurred. As of October 2013, 11 of the 12 federal circuits had reviewed at least one § 1983 Medicaid case since Gonzaga was decided. The First, Sixth, and Ninth Circuits have been most active. The DC Circuit is the only appellate court yet to decide a Medicaid case.

Table 1
Medicaid § 1983 cases in the circuits, June 2002-September 2013
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Courts review enforcement on a provision-by-provision basis. Although such assessment requires careful pleading of the complaint and exacts more painstaking analysis from the parties and the court, it is consistent with the Supreme Court?s teachings.   Table 2 shows that, since the 2002 Gonzaga ruling, federal appellate courts have reviewed the enforceability of 23 Medicaid Act provisions. These courts have allowed just over half of the provisions to be privately enforced by the plaintiffs. The vast majority of the cases involve enforcement by Medicaid beneficiaries; however, the Ninth and Third Circuits have now joined the First and Fourth to recognize the right of federally qualified health centers to enforce 42 U.S.C. § 1396a(bb), a Medicaid provision that specifically addresses payment requirements for FQHCs.
A few Medicaid provisions have received particular attention post-Gonzaga. Federal courts of appeals have consistently allowed Medicaid beneficiaries to enforce two provisions that are of the utmost importance:  42 U.S.C. § 1396a(a)(8), which requires the state Medicaid agency to provide medical assistance to ?all individuals? with reasonable promptness, and § 1396a(a)(10)(A), requiring the state agency to provide medical assistance to ?all individuals? who are described in the section?s listing of covered populations (e.g. SSI, qualified pregnant women, low-income children). By contrast all six of the federal circuits to have reviewed the question (the First, Second, Fifth, Sixth, Ninth, and Tenth) have held a Medicaid provider payment provision, § 1396a(a)(30)(A), does not create a federal right enforceable by health care providers.  And, some of these courts have decided the (30)(A) question on multiple occasions (more recently, in cases where providers have joined some program beneficiaries).
The vast majority of appeals court cases (38 of the 41 cases) turn on the first prong of the enforcement test (whether the provision in question unambiguously manifests congressional intent to confer individual rights on the plaintiff). The courts have reached the same conclusion when assessing a Medicaid provision against the first prong, and there are no splits among the circuits.
The Tenth, Eighth and Third Circuits have, however, reached different conclusions when applying the third prong of the enforcement test (whether the provision creates a binding obligation on the state). Their assessments pertain to subsections of 42 U.S.C. § 1396d(p)(4), a Medicaid provision that addresses eligibility when an applicant has a trust. In 2009, the Tenth Circuit held § 1396d(p)(4)(A) does not impose an unambiguous, binding obligation on the state. See Hobbs v. Zenderman, 579 F.3d 1171, 1179 (10th Cir. 2009). That conclusion is based on an earlier case, Keith v. Rizzuto, 212 F.3d  1190 (10th Cir. 2000), that did not discuss private enforcement under § 1983 but held that § 1396p(d)(4)(A) left the states free to decide whether and under what conditions to count trusts for eligibility purposes. Id. at 1180 (citing Rizzuto, 212 F.3d at 1193)). While acknowledging that ?the statute might have been read in the first instance to require States to exempt special needs trusts,? Hobbs held that construction was foreclosed by Keith absent en banc reconsideration or a contrary decision from the Supreme Court. Id.
By contrast, the other two circuits have held the applicant can enforce other subsections of § 1396d(p)(4). In Center for Special Needs Trust Administration v. Olson, 676 F.3d 688 (8th Cir. 2012), the Eighth Circuit acknowledged Hobbs but pointed out that Hobbs concerned paragraph (A) while the case before it raised a claim under paragraph (C). The court declined to apply Hobbs, finding paragraph (C) contains the mandatory language ?shall not? when describing the obligation imposed on the state and, thus, creates a binding obligation on the state. Id. at 700 n.2. Most recently, the Third Circuit concluded that paragraph (C) imposes mandatory obligations on the state and can be enforced under § 1983. See Lewis v. Alexander, 685 F.3d 325, 333-34, 342 (3d Cir. 2012); id. at 344 (acknowledging Rizzuto and Hobbs but stating, ?Here, Congress has not only provided a comprehensive system of asset-counting rules, it has actually legislated on this precise class of asset? and required states to exempt any trust meeting the provision of § 1396p(d)(4)). The Supreme Court denied certiorari in Lewis. See 133 S. Ct. 933 (2013).
Table 2
Circuit Court Enforcement of Medicaid Provisions, June 2002-Sept. 2012
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As discussed above, individual federal statutory provisions are the focus of the § 1983 inquiry. Circuit courts are consistently finding that federal regulations may not independently create privately enforceable rights under § 1983.  However, a regulation can ?define or flesh out? the content of a federal statute that is itself privately enforceable.  Thus, in Shakhnes v. Berlin, the Second Circuit recently held the Medicaid fair hearing statute, 42 U.S.C. § 1396a(a)(3), as construed by the timeframe regulation, 42 C.F.R. § 431.244(f), creates a right, enforceable under § 1983, to receive a fair hearing and a fair hearing decision ?[o]rdinarily, within 90 days? of a fair hearing request. By contrast, two federal circuit courts have refused to allow plaintiffs to enforce Medicaid regulations that establish the protocols for states to submit their state Medicaid plans and state plan amendments. See New Jersey Primary Care Ass?n v. New Jersey Dep?t of Health Servs., 722 F.3d 527 (3d Cir. 2013) (regarding 42 C.F.R. § 430.12(c)); Developmental Servs. Network v. Douglas, 666 F.3d 540 (9th Cir. 2011) (same); see generally John B. v. Emkes, 710 F.3d 394 (6th Cir. 2013) (refusing to allow plaintiffs to enforce EPSDT regulation, 42 C.F.R. § 441.61(c), requiring state agency to work with other entities and agencies to achieve EPSDT).
Finally, since Gonzaga was decided the Supreme Court has not accepted review of a Medicaid case applying the Gonzaga/Blessing enforcement test.  During the 2012-2013 Term, for example, the Court denied certiorari in four cases where state attorneys were seeking to overturn an appellate decision allowing private enforcement of a Medicaid Act provision pursuant to § 1983.
Recommendations, trends, and conclusions
Consider § 1983 enforcement carefully.  Do not seek to enforce Medicaid provisions that have a poor track record, and do not ask a judge to apply a provision to facts in novel ways, unsupported by the direct words of the statute and discussion in the case law. Remember that adverse decisions will affect not just the named plaintiffs but all Medicaid beneficiaries in the federal district or appellate jurisdiction and will be applied to other Medicaid provisions in future cases. Make sure to consult and address Medicaid enforcement decisions outside your jurisdiction and both Medicaid and non-Medicaid cases that establish § 1983 enforcement precedent in your jurisdiction.
The following trends should be carefully monitored and considered:
  1. Just because the Supreme Court has not yet granted certiorari to review a § 1983 Medicaid case does not mean it will not change its mind. Advocates should remain vigilant. As mentioned above, the Court is clearly interested in deciding the extent to which private individuals can rely on the Supremacy Clause to enjoin state laws that are inconsistent with federal law. If a Supremacy Clause case is accepted for review, the Court?s opinion could affect § 1983 enforcement, depending on whether the Court mentions § 1983 enforcement.
  2. While courts had long viewed § 1983 enforcement as within the broad remedial scope of the civil rights statutes, the Supreme Court has questioned this assumption. Accordingly, many lower court judges begin their review with the presumption that the Medicaid Act provision at issue is not enforceable. It is critical, therefore, to establish the proper framework for the court?s review.
  3. Consistent with Blessing, Medicaid enforcement questions should be decided on a provision-by-provision basis and, thus, complaints must be pled in ?manageable analytic bites.? Blessing, 520 U.S. at 342. Given the difficulties that can arise, advocates should plead claims to the precise paragraph that is being enforced (for example, plead 42 U.S.C. § 1396a(a)(43)(A), not simply § 1396a(a)(43)).
  4. Privately enforceable Medicaid Act provisions typically speak in terms of the ?individual,? frequently use words like ?must? and ?shall,? and specifically describe the state?s responsibilities to those individuals with specificity.
  5. Gonzaga focuses on the intent to benefit the named plaintiff; however, courts continue to apply the three-prong test.  Thus, while some judges argue that Gonzaga replaced Blessing altogether,  attorneys should continue to assess each provision at issue against all three prongs of the enforcement test when developing and briefing the claims in the case.
  6. Courts are not allowing private enforcement of federal regulations, standing alone, through § 1983, but regulations can be cited in the complaint?s legal framework section. Regulations can also be cited in the complaint?s background section and in briefs to fill out the requirements of statutes that are themselves privately enforceable.


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