Supreme Court Hears Oral Arguments in Armstrong v. Exceptional Child Center, Inc.

The Supreme Court of the United States heard oral arguments this morning in Armstrong v. Exceptional Child Center, Inc., an appeal from a decision from the United States Court of Appeals for the Ninth Circuit that tees up a major question of federalism in the Medicaid program: can a Medicaid provider (or beneficiary) use the Supremacy Clause of the U.S. Constitution to enforce a provision of the Medicaid statute against a state where the Congress chose not to create enforceable rights under that statute. Of particular interest to observers is the fact that the Supreme Court expressly declined to address this exact question two years ago in Douglas v. Independent Living Centers of Southern California, 132 S. Ct. 1204 (2012). In Douglas, the Supreme Court had a way to avoid deciding the question. This Term, it is not clear that they do.

The Social Security Act requires that State plans for medical assistance “assure that payments [to providers under the Medicaid program] are … sufficient to enlist enough providers so that care and services are available under the [state Medicaid] plan at least to the extent that such care and services are available to the general population in the geographic area.” Congress, however, did not provide an enforcement mechanism for this statutory requirement. What recourse, then, does a health care provider have when a state fails to provide sufficient payments? Because the Supremacy Clause to the U.S. Constitution declares that the Constitution, “and the laws … made in pursuance thereof … shall be the Supreme law of the land,” can a state law that does not provide sufficient payments to Medicaid providers be invalidated on the authority of the Supremacy Clause? That is the question that the Supreme Court was asked to decide today.

The Court has been down this road before. In 1990, the Supreme Court held in Wilder v. Virginia Hospital Association, 496 U.S. 498 (1990) that the federal Civil Rights statute could be used to enforce a similar provision of the Medicaid statute. The Supreme Court’s holding in Wilder led to a series of lawsuits against states by health care providers seeking higher Medicaid rates. Shortly thereafter, Congress stepped in and revised the underlying statute at the same time that the Supreme Court started to curtail its holding in Wilder. After years of relative repose, the issue has returned.

The issue could have been resolved in 2012 in the Douglas case, but the Supreme Court punted on procedural grounds. Those procedural issues don’t seem to appear in Armstrong, possibly teeing up a major Medicaid case this Term. Interestingly, the Obama Administration has weighed in on the side of the states and against the providers, and the Solicitor General was permitted to participate in this morning’s oral arguments as a friend of the Court. Whether or not providers and beneficiaries have rights to challenge state under-funding of Medicaid programs could likely be decided before the Court adjourns in June.

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