March 31, 2015

Supreme Court Decides Armstrong v. Exceptional Child Center, Inc.

On March 30, 2015, the United States Supreme Court decided Armstrong v. Exceptional Child Center, Inc., No. 14-15, holding that the Supremacy Clause of the Constitution (Article VI, clause 2) does not confer a private right of action to enforce federal laws, and that Medicaid providers cannot sue to enforce § 30(A) of the Medicaid Act, 42 U.S.C. § 1396a(a)(30)(A).

Through Medicaid, the federal government subsidizes States’ provision of medical services to qualified people. To get the federal funding, a state must adopt, and the federal government must approve, a Medicaid plan that the state will administer. Idaho’s plan includes “habilitation services” — in-home care for people who would otherwise need the level of care provided in a hospital, nursing or intermediate-care facility whose costs would be reimbursed under the state’s plain. Section 30(A) of the Medicaid Act requires Idaho’s plan to reimburse providers in a manner that ensures services aren’t unnecessarily used, but also ensures that enough providers will participate and provide services to “at least [the same] extent that such care and services are available to the general population in the geographic area.”

Idaho providers of habilitation services sued two officials in Idaho’s Department of Health and Welfare, alleging that Idaho violates § 30(A) by reimbursing habilitation services at rates lower than § 30(A) allows. They asked the district court to enjoin the officials to increase rates.

The district court granted summary judgment to the providers, holding that Idaho’s rates were not consistent with § 30(A). The Ninth Circuit affirmed, holding that the Supremacy Clause gave the providers an implied right of action to seek injunctive relief against the enforcement of state legislation that violated federal law.

The Supreme Court reversed. The Court noted that the Supremacy Clause simply creates a rule of decision for cases where state and federal law clash by requiring that courts must regard federal law as “the supreme Law of the Land.” But the clause does not create any substantive federal rights or create a cause of action to enforce federal laws against the states. The Court further reasoned that if the Supremacy Clause included an implied private right of action, it would limit Congress’ power to implement federal law as Article I provides because some of that power would belong to private parties.

The Court then explained that although the Supremacy Clause does not create a private right of action, courts sitting in equity may still enjoin violations of federal law by state and federal officials in proper cases. But the Court held that this was not such a proper case. The Court concluded that the Medicaid Act implicitly precludes private enforcement of § 30(A) because the sole remedy provided for a state’s failure to comply with Medicaid requirements is withholding of federal funds, and because it creates a “judgment-laden standard” that only the Secretary of Health and Human Services may enforce. The Court held that federal courts cannot use their equitable powers to circumvent that preclusion of private enforcement. In other words, § 30(A) displays Congress’ intent to foreclose the availability of equitable relief to enforce its requirements.

Justice Scalia delivered the opinion of the Court, in which Chief Justice Roberts and Justices Thomas, Breyer, and Alito joined as to parts I through III. Justice Breyer did not join Part IV of the opinion, and filed an opinion concurring in part and concurring in the judgment. Justice Sotomayor filed a dissenting opinion, in which Justices Kennedy, Ginsburg, and Kagan joined.

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