The Supreme Court reaches a decision in Armstrong v. Exceptional Child Center

On March 31, the United States Supreme Court concluded, in a long-awaited decision, that the alleged failure of a state Medicaid plan to comply with the provisions of the federal Medicaid Act is not enforceable in the federal courts by alleging that the state plan has been adopted in violation of the Constitution’s Supremacy Clause. Armstrong v. Exceptional Child Center. The decision, while relatively narrow, (more on that in a bit) does seem to largely foreclose federal judicial enforcement of the requirements of the Medicaid statute against the states. Thus, providers and patients are left to seek enforcement of state violations of the federal Medicaid requirements through the Centers for Medicare & Medicaid Services (CMS), likely an unsatisfying result for those participants in the program.


 

Read our summary of the oral argument in Armstrong HERE.


 

The Medicaid program is a federal-state cooperative program under which the federal government agrees to provide partial funding in support of “state plans for medical assistance” – Medicaid. Section 1902(a) of the Medicaid statute imposes some 80 requirements on state Medicaid plans as a condition of that funding. At issue in Armstrong is a relatively straightforward question: what happens if a state fails to comply with one of those 80 requirements? Can a party injured by that failure bring an action for redress in the federal courts?

Section 1902(a)(30)(A) of the federal Medicaid Act requires that a state plan for medical assistance “provide … payment for care and services available under the plan … as may be necessary … to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population in the geographic area.” In other words, state Medicaid plans must provide payment at levels that are sufficient to attract enough health care providers to treat low-income Medicaid patients. Given that the Constitution “and the Laws of the United States … made in Pursuance thereof …[are] the Supreme Law of the Land,” U.S. Const. Art. VI, doesn’t the federal Medicaid statute trump a state law that is inconsistent with that statute? That, in essence, was the question before the Supreme Court in the Armstrong case.

Interestingly, although this is a seemingly obvious question, it has taken the federal courts over two decades to answer it definitively. And indeed, as discussed in greater detail below, the Supreme Court has not completely answered the question. But for now, relying on the history of the ratification of the Constitution, a majority of the Supreme Court has ruled that § (a)(30)(A) does not trump an arguably inconsistent state Medicaid plan.

The Supreme Court essentially relied on two arguments to reach its conclusion. First, the Court distinguished between the language of the Supremacy Clause that creates a rule of decision for the federal courts when assessing a state law that is arguably inconsistent with federal law and the question of who may bring the challenge in the federal courts in the first place. The Supreme Court concluded that affected private parties lack the right to enforce federal laws against the states. Justice Scalia, who wrote the majority opinion, relied on the extensive history surrounding the debates over ratification of the Constitution to conclude that no such private right exists.

Second, the Court concluded that the language and the structure of the Medicaid Act itself precludes private enforcement – for two reasons. First, Justice Scalia noted that an alternative remedy exists – that is, CMS can withhold the federal share of Medicaid funding from a recalcitrant state that has failed to comply with § (a)(30)(A). Second, Justice Scalia refers to § (a)(30)(A) as “judicially unadministrable.” By conferring the right of enforcement on CMS alone, he concludes, Congress intentionally avoided inconsistent applications of the statute among and by the federal courts.

Justice Scalia concludes by rejecting the notion that the providers and beneficiaries in Idaho challenging the state plan are without recourse. After all, those parties can complain to CMS, and CMS has the authority to withhold federal Medicaid funds from Idaho. In the majority’s view, therefore, the parties have an adequate recourse.

Interestingly, Justice Breyer – often viewed as justice on the “left” side of the political spectrum – joined most of Justice Scalia’s opinion. Justice Breyer agreed that the Supremacy Clause of the Constitution did not provide a cause of action for the aggrieved providers and patients in Idaho. However – and this is why the Armstrong decision can be considered a narrow holding – Justice Breyer refused to join Justice Scalia’s holding (joined by three other Justices of the Court) that private parties lack rights as third party beneficiaries of the contract between the states and the federal government in implementing the Medicaid program to sue to enforce that contract.

While not terribly surprising, the Armstrong decision is notable for several reasons. First, the Supreme Court has now decidedly answered the question of the enforceability of the Medicaid statute using the Supremacy Clause. Second, the inability of Justice Scalia to attract a fifth justice to his views on third party enforcement of the Medicaid contract means that it is still possible that given the right facts, a state violation of federal Medicaid law could proceed in federal court. Finally, Justice Breyer has again advanced a view he expressed in an earlier case (Douglas v. Independent Living Centers of Southern California, 132 S. Ct. 1204 (2012)) that a cause of action may exist, under the Administrative Procedure Act, against CMS for approving a non-compliant state plan. It may be this aspect of Justice Breyer’s concurring opinion that provides the most hope to aggrieved providers and patients.

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