Supreme Court: Docs cannot sue over low Medicaid payments



Physicians cannot sue state governments over low Medicaid payments, the U.S. Supreme Court ruled.

In a 5-4 decision, the high court overturned a decision by the 9th Circuit Court of Appeals that said physicians and other providers could sue to hold states accountable to the equal access provisions of the Medicaid Act (states accepting federal Medicaid funding are required to set pay rates at levels sufficient to ensure access to care).


In the case, Armstrong v. Exceptional Child Centers Inc., justices were determining whether the Constitution’s Supremacy Clause – which establishes the Constitution and federal law as the law of the land – gives providers the right to sue. The case originates from a 2009 lawsuit by Exceptional Child Center Inc., of Twin Falls, Idaho, and four other residential habilitation centers against Richard Armstrong, director of the Idaho Department of Health and Welfare.

In the majority opinion, Justice Antonin Scalia noted that physicians who believe Medicaid rates are inadequate have an administrative remedy by petitioning the Centers for Medicare & Medicaid Services, a remedy that “shows that the Medicaid Act precludes private enforcement ... in the courts.” He added that the plaintiffs must first seek relief through CMS first before instigating legal action.

In the dissenting opinion, Justice Sonia Sotomayor noted that seeking administrative relief could lead to reduced federal funding to a state for violating the Medicaid Act’s rate requirements, adding that “HHS is often reluctant to initiate compliance actions because a ‘state’s noncompliance creates a damned-if-you-do, damned-if-you-don’t scenario where withholding of state funds will lead to depriving the poor of essential medical assistance.’ ”

Justice Scalia dismissed that logic. “The dissent’s complaint that the sanction available to the [HHS] Secretary (the cut-off of funding) is too massive to be a realistic source of relief seems to us mistaken. We doubt that the Secretary’s notice to a state that its compensation scheme is inadequate will be ignored.”

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