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

Medicaid beneficiaries and applicants may be harmed when state Medicaid officials do not comply with the requirements of the Medicaid Act, 42 U.S.C. §§ 1396- 1396v. These individuals may file suit in court to obtain injunctive relief. Traditionally, individuals have enforced provisions of the Medicaid Act pursuant to a civil rights statute, 42 U.S.C. § 1983 (?§ 1983?).2 Over the last decade, however, courts have narrowed the ability to use § 1983 to enforce Medicaid provisions. Plaintiffs, therefore, have turned to long-standing constitutional precedents allowing them to rely on the Supremacy Clause of the Constitution to obtain relief under a preemption claim.3 Last year, the U.S. Supreme Court considered but did not decide the question of whether beneficiaries and providers may maintain a cause of action under the Supremacy Clause to enforce a provision of the Medicaid Act, § 1396a(a)(30)(A), which requires states to establish adequate payment rates for participating providers.4 While the case was remanded without a decision on the Supremacy Clause question, a strong four- member dissent authored by Chief Justice Roberts took it as established law that § (30)(A) cannot be enforced through § 1983 and would have decided the Supremacy Clause question against the plaintiffs.5

While attention has lately focused on the preemption arguments, carefully constructed cases remain viable under § 1983. This Fact Sheet will provide background and discuss trends affecting private enforcement of the Medicaid Act under § 1983.6

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.?7 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.?8

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.9 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.?10 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 § 1983.11 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.12

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.13 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?14 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.15   The Supreme Court has explicitly held that the Medicaid Act does not include such a remedial scheme.16

Over the years, 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.17 While the decision concerned the Developmentally Disabled Assistance and Bill of Rights Act, which is not part of the Social Security 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.18

In 2002, the Rehnquist Court issued Gonzaga Univ. v. Doe to clarify and tighten the enforcement test.19 Writing for the majority, Chief Justice Rehnquist cited Pennhurst and noted that Gonzaga involved a Spending Clause enactment.20 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.21 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.?22 The provision must contain ?rights- or duty-creating language? and have an individual rather than an aggregate focus.23

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.24 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-2.25 Of particular note is a pithy, but incorrect, analysis by Ninth Circuit Court Judge O?Scannlain in a Medicaid case, Sanchez v. Johnson.26 The decision dismisses § 1320a-2, finding it is ?hardly a model of clarity? and concluding that it does not disturb the reasoning of Pennhurst.27 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.28