Douglas v. Independent Living Center of Southern California

consolidated with Douglas v. Santa Rosa Memorial Hospital and Douglas v. California Pharmacists Association

What’s at stake?
The ability of individuals to compel states to abide by federal law.

Issue:
Whether Medicaid beneficiaries and providers may bring a Supremacy Clause preemption challenge claiming that insufficient reimbursements to health care providers by states threaten access to health care in violation of the federal Medicaid Act.  

Outcome: 5-4 to vacate and remand. Justice Breyer delivered the opinion of the Court, joined by Justices Ginsburg, Kennedy, Sotomayor, and Kagan. Chief Justice Roberts wrote a dissenting opinion, joined by Justices Scalia, Alito, and Thomas.

Decision date:
February 22, 2012

What the Court held:
The Supreme Court vacated the Ninth Circuit’s decision and remanded the case for further consideration “in light of the changed circumstances.” However, the Court did not resolve the central issue of whether individuals may sue the state of California using the Supremacy Clause of the U.S. Constitution for adopting state Medicaid laws that allegedly deny care to certain individuals in violation of the federal Medicaid statute.

The consolidated Douglas cases arose from California’s decision to issue cuts of up to ten percent in Medicaid benefits. A group of medical providers and low-income elderly and disabled individuals challenged the cuts under the Supremacy Clause, saying that they violated federal law by causing a reduction in the number of providers willing to participate in the program. The district court found that the reduction has forced or will force non-emergency medical transportation services and home health services providers to reduce the geographic area they are able to serve, to decline to take new Medicaid patients, and to end services to some existing patients or close their businesses. The Ninth Circuit held that the claims could proceed and that a preliminary injunction preventing the cuts from going into effect should be granted. The Supreme Court was asked to decide the preliminary issue of whether the Supremacy Clause granted the plaintiffs a right to sue.

In an opinion penned by Justice Breyer, the Court held that the cases, although not moot, are now “in a different posture.” Between the Court’s grant of certiorari and the rendering of its decision, the federal agency charged with administering Medicaid (Centers for Medicare & Medicaid Services, or “CMS”) approved some of the challenged rate reductions while the state withdrew its request to implement the other reductions. As a result, a cause of action under the Administrative Procedure Act became newly available to the plaintiffs. Thus, the Supreme Court decided that the parties should reargue the Supremacy Clause claim in the Ninth Circuit in light of these changed circumstances. In dissent, Chief Justice Roberts, joined by Justices Scalia, Thomas, and Alito, would have held that there is no cause of action under the Supremacy Clause, regardless of the position that CMS takes.

According to California and the dissenters at the Supreme Court, no private individual has the right to sue a state for noncompliance with federal Medicaid laws. However, as Alliance for Justice has reported in its report on the Douglas cases, former Housing and Human Services (“HHS”) officials have said that private enforcement “has been the cornerstone of HHS policy throughout the history of the Medicaid act, and remains the prevailing view of those charged with administering the program.” If Americans were left unable to use the Supremacy Clause to challenge illegal state laws, states would feel free to gut a range of other important federal programs and policies. Furthermore, businesses regularly use the Supreme Clause to challenge state laws that affect them, so it is only fair that everyday Americans be allowed to do the same.

Although the Supreme Court did not conclusively close the courthouse door to these plaintiffs, it did send the case back to the Ninth Circuit with the central issue left unresolved. We also now know that the Supreme Court has at least four votes against allowing Americans to stand up for their rights under the Supremacy Clause.