California clinics just won a battle. Will they lose the war?

The following is a guest post by Nicholas Bagley, University of Michigan Assistant Professor of Law.

Say you’re a health clinic in a large state with a budget problem. In the face of a wicked recession, the state—let’s call it “California”—slashes your Medicaid reimbursement rates. You’re terrified that you might have to cut back on services or close altogether. You also think that what the state did is unlawful. You try to complain to federal Medicaid officials, but they just shrug and say that the rate-cut looks fine to them.

So what do you do? Well, you might be tempted to sue the state. That’s just what a group of health clinics did. They asked the federal courts to order California to undo a raft of cuts that, in the clinics’ view, violated federal law. The details of the clinics’ legal claim aren’t especially important. What is important, however, is that, this past Friday, the Ninth Circuit issued an opinion agreeing with them.

For the moment, this is a big win for the clinics. And this isn’t the first time that the Ninth Circuit has yanked California’s chain when it comes to Medicaid. The state’s been rebuked in a number of decisions over the years. But California is sick and tired of seeing the Ninth Circuit reverse its Medicaid cuts, especially where the feds have said they’re okay. So sick and tired, in fact, that the state may turn to the Supreme Court and ask it to hold that the clinics should never have been allowed to sue in the first place. If it does, there’s a decent chance that the Supreme Court will take the case and rule in California’s favor. The clinics will have won the battle but lost the war.

Here’s why. Federal law—specifically, 42 U.S.C. §1983—allows private parties to sue states that deprive them of certain federally protected rights. But which rights? Over the past two decades, the answer from the Supreme Court has been “fewer and fewer.” Only rights that are expressed in clear and unambiguous terms can be enforced through §1983—and, even then, only where Congress hasn’t established an alternative statutory scheme to protect those rights. Medicaid is vulnerable on both counts. The Medicaid statute rarely speaks all that precisely about anything. And there’s a plausible argument that Congress intended disputes about Medicaid coverage to get hashed out in negotiations between the states and the feds, not through the courts. Reading the tea leaves, then, it looks like the conservative wing of the Supreme Court may be quite ready to eliminate §1983 claims alleging violations of the Medicaid statute.

If it did, that’d be a big change in the law. Maybe it’d be a good one. When the courts compel additional Medicaid spending, that increases the pressure on the states to cut other essential services, particularly education. There’s nonetheless reason to worry. All too often, the federal government lacks the resources or the inclination to hold states accountable to the rules that Congress has established for Medicaid. Maybe it’s appropriate for the courts to step into the breach and tell states that they can’t balance their budgets on the backs of their poorest and most vulnerable citizens. At any rate, it looks like the Supreme Court might soon be weighing that very question.

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