Chapel Hill, NC
From: National Health Law Program
To: Persons concerned about enforcement of federal rights
Website of The National Health Law Program - Click Here
Sovereign Immunity Claims in Medicaid CasesPrepared by Jane Perkins, Legal Director
December 31, 2001
Updated: March 22, 2002
Attorneys for the state are increasingly trying to avoid federal Medicaid obligations by raising sovereign immunity as a bar to suits seeking compliance. This issue brief provides an overview of the current precedents governing state sovereignty. It then focuses on three novel arguments being made to further expand this sovereignty: (1) The Medicaid Act is not enforceable by private individuals because it is not the supreme law of the land; (2) The Medicaid Act is not enforceable by private individuals because the Act includes an alternative remedial scheme; (3) The Medicaid Act is not enforceable by private individuals because state officials have discretion to implement the statute.
Background on sovereign immunity and the Ex parte Young exception
While it does not receive attention in the media, on the floor of Congress, or in advocacy "tool kits," the interpretation of the Eleventh Amendment is central to the fierce political battle between those who favor states’ rights and a minimal role for the federal government and those who favor individual citizens’ rights to enforce federally-enacted protections against offending states. As discussed below, the states’ rights position has gained solid ground through a series of recent 5-4 United States Supreme Court decisions.
The Eleventh Amendment provides: "The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State." By its terms, the Amendment applies only to suits filed by the citizens of one state against another state. However, in Hans v. Louisiana, the Supreme Court construed the Amendment to apply to suits filed by a state’s own citizens.
There are limits to sovereign immunity. Congress can abrogate the immunity pursuant to the enforcement provisions of Section 5 of the Fourteenth Amendment. However, the Supreme Court has recently formulated an abrogation standard that is difficult to meet, requiring findings that the abrogation be clearly and unequivocally stated and exhibit "congruence and proportionality" between the injury to be prevented and the means adopted to that end (e.g. damages, retroactive relief).
In addition, the state can waive its immunity to suit in federal court. The waiver must be knowing and authorized, however. The mere acceptance of federal funds does not constitute clear consent. Open questions remain as to whether a state attorney general can independently waive sovereign immunity absent state statutory authorization, or whether removal from state to federal court by the state defendant constitutes a waiver.
Finally, an exception to sovereign immunity applies when individuals sue state officials to enjoin ongoing violations of federal law. This exception was announced in Ex parte Young, "one of the three most important decisions the Supreme Court of the United States has ever handed down." This issue brief focuses upon this exception to sovereign immunity.
Ex parte Young held that Minnesota’s attorney general could be sued in federal court to enjoin him from enforcing an unconstitutional state statute. The Court reasoned that a state official who acts in violation of federal law acts without the state’s authority because the state cannot authorize him to so act. Accordingly, a suit to force a state official to comply with federal law is not a suit against the state itself, and "[t]he state has no power to impart to him any immunity from responsibility to the supreme authority of the United States." The Supreme Court has extended this holding to violations of federal statutes as well as of the United States Constitution.
The Supreme Court has repeatedly reaffirmed the Ex parte Young doctrine up to and including its decisions in recent years, which have otherwise expanded the concept of sovereign immunity. Current precedent is summarized as follows:
Finally, it is important to note that the Eleventh Amendment is a jurisdictional bar and may be raised at any time. A district or appellate court may raise the issue sua sponte.
The states’ rights movement and further expansion of sovereign immunity
As noted, over the last decade, the United States Supreme Court has chiseled away at private individuals’ access to the courts in a series of decisions decided by the slimmest of 5-4 margins. At this point, the decisions have curtailed private enforcement of numerous federal enactments, including the Age Discrimination in Employment Act, the Americans with Disabilities Act, and the Violence Against Women Act.
It now appears that state rights’ advocates and judges are turning their sights to the Spending Clause of the Constitution—which has been used by Congress since the New Deal to establish numerous public housing, food, education, welfare, transportation, and health care programs. With Spending Clause legislation, Congress conditions the receipt of federal funds on the state’s promise to adhere to stated federal requirements. The effort to limit Spending Clause enforcement is best illustrated by the recent case, Westside Mothers v. Haveman, which found sovereign immunity to bar Medicaid beneficiaries from bringing legal actions to stop state officials from engaging in systemic, ongoing violations of the federal Medicaid Act—or any other spending clause programs.
Westside Mothers was filed by a group of children and child health providers against Michigan state officials whom they claim are failing to implement mandatory provisions of the federal Medicaid Act. The case particularly concerns Medicaid-covered early and periodic screening, diagnosis and treatment (EPSDT) services to address children’s health problems before they become serious and costly. The Complaint asked the court to issue injunctive relief against state Medicaid officials and sought no damages from the state.
The case soon took a number of unexpected turns. Encouraged by a concurring opinion from Justice Scalia in Blessing v. Freestone, Judge Cleland himself raised a number of sovereign immunity questions for the parties to brief. When the state defendants did not, in his opinion, submit adequate briefing, Judge Cleland invited a "friend of the court" brief from the Michigan Municipal League Legal Defense Fund, and specifically their attorney, Jeffrey Sutton, a prominent federalist attorney who has argued many of the recent sovereign immunity cases to the Supreme Court, including Garrett.
On March 26, 2001, Judge Cleland held the court could not provide any relief. Since there have been hundreds—if not thousands—of cases that have provided similarly situated plaintiffs with a remedy, the court’s reasoning is unique. In a detailed analysis, Judge Cleland held that neither jurisdiction nor a cause of action exists. Among other things, the decision finds:
Not surprisingly, the decision is being cited by states across the country as they seek to escape accountability for compliance with federal law. For example, during the fall of 2001, the National Health Law Program provided assistance on these issues to advocates in a number of states, including Florida, Idaho, Illinois, Maine, Massachusetts, Michigan, Montana, New Hampshire, New York, North Carolina, Texas, and West Virginia. Issues raised by Westside Mothers are currently before three of the federal circuit courts of appeal. The Sixth Circuit heard argument on January 24, 2002; the Fourth, on February 26,2002; and the Fifth Circuit is scheduled for argument on April 2, 2002.
Three novel sovereign immunity arguments being raised by state attorneys are discussed below.
The Supreme Law of the Land Argument
In support of their immunity claims, state officials are arguing that Medicaid and other Spending Power enactments do not constitute the supreme law of the United States. They say the Supremacy Clause does not come into play because the Spending Clause of the Constitution grants the Federal Government no power to compel the states and, thus, the states and federal government are on equal footing. According to this argument, Ex parte Young does not apply because the plaintiffs are not seeking to bind the state official to mandatory federal requirements.
The Supremacy Clause provides, "This Constitution, and the Laws of the United States which shall be made in Pursuance thereof ... shall be the supreme Law of the Land." Thus the Constitution itself does not create different categories of federal law—those which are "supreme" and those which are not. Rather, the Constitution establishes that all federal law is supreme, as long as Congress has enacted it "pursuant" to the Constitution.
Indeed, the Supreme Court and every circuit court have held that the Medicaid Act is "supreme" federal law and on this basis invalidated conflicting state law. The federal courts have been equally clear on another point: That a state may be under no compulsion to participate in a Spending Clause program in the first instance does not mean that the state need not adhere to the federal requirements once the choice to participate has been made.
Only one case, Westside Mothers, has held that Medicaid and spending clause enactments are not supreme federal law that may be enforced pursuant to Ex parte Young. To date, all five courts that have considered this argument from Westside Mothers have rejected it. As stated by the court in Boudreau v. Ryan:
[W]e do not agree with the [Westside Mothers] appraisal of laws passed pursuant to the Spending Clause as having inferior dignity to other laws. Certainly the Supreme Court has not articulated any such distinction; to the contrary, it has struck down state laws or regulations which violated a federal welfare statute, Aid to Families with Dependent Children, on the basis that such laws violated the Supremacy Clause. See Blum v. Bacon, 457 U.S. 132, 138 (1982); Carleson v. Remillard, 406 U.S. 598, 600 (1972); Townsend v. Swank, 404 U.S. 282, 285-86 (1971). Like the Medicaid Act, the AFDC statute was a Spending Clause statute that did not require states to participate. Therefore, we decline to hold that Spending Clause statutes fall outside the ambit of the Supremacy Clause.
The errors in Westside Mothers are apparent. The opinion acknowledges that "the Supreme Court has in the past held that federal-state cooperative programs enacted under the Spending Power fall within the ambit of the Supremacy Clause." Rather than applying these unequivocal holdings to the case before it, however, the district court rejected them as containing insufficient analysis, thus breaching the cardinal rule that a precedent of the Supreme Court must be followed by lower federal courts "no matter how misguided the judges of those courts may think it be."
Apparently convinced that the Court could not have meant what it repeatedly has said, the district court proceeded to reevaluate the law. However, its own analysis is irretrievably flawed. Two of the cases cited by the court do not pertain to Spending Clause statutes. The three cases that did deal with the Spending Clause each dealt with a subject different from whether the statute at issue was the supreme law of the land. Each of these cases was based on the Supreme Court’s longstanding holding that a statute, which conditions a grant of federal funds upon certain terms, is supreme. Finally, Westside Mothers asserted that the Supreme Court has "adopted the view espoused by Chief Justice Burger that Spending Power enactments are not mandatory upon the states under the Supremacy Clause." However, this is simply not the case. The First Circuit Court of Appeals recently noted the fact that no court has ever adopted Justice Burger’s statement:
To be sure, individual Justices have from time to time suggested that the authority for adhering to federal law when Congress employs its spending power is not to be located in the Supremacy Clause. See, e.g., Townsend, 404 U.S. at 292 (Burger, C.J., concurring). But these moments have been few and far between and, more important, they have not debilitated the general conclusion that the laws of a jurisdiction that receives federal funds must, when a relevant conflict looms, give way to federal law.
The Remedial Scheme Argument
Citing Seminole Tribe of Florida v. Florida, state attorneys are also arguing that Ex parte Young cannot be used in place of the Medicaid Act’s congressionally-provided remedy. Seminole Tribe held that the presence of a detailed remedial scheme of limited federal court jurisdiction precluded resort to an Ex parte Young suit because Ex parte Young would allow a plaintiff to ignore the scheme and obtain relief beyond that envisioned by the statute. The remedial scheme at issue in Seminole Tribe, contained in the Indian Gaming Regulatory Act (IRGA), was truly detailed and comprehensive and the role of the federal court limited. The obligation at issue in Seminole Tribe was for the state to negotiate in good faith. IGRA authorized the federal court to order a state to conclude a compact within 60 days. If the state failed to comply, IGRA further delineated a detailed post-judgment remedial scheme, allowing the court only to appoint a mediator.
The Medicaid Act does not contain a detailed remedial scheme. One provision of the Act grants the Secretary of Health and Human Services generalized powers to withhold federal funds from a noncomplying state, 42 U.S.C. § 1396c. Another provision allows individual beneficiaries a generalized opportunity for an administrative fair hearing when claims are denied, 42 U.S.C. § 1396a(a)(3). On their face, these provisions do not address judicial relief and simply are not comparable to the remedial scheme at issue in Seminole Tribe. In situations such as this, Seminole Tribe preserves the normal rule that an individual may "bring suit against a state officer in order to ensure that the officer’s conduct is in compliance with federal law."
Notably, the Fourth Circuit Court of Appeals has assessed the impact of Seminole Tribe in the Medicaid context. Maryland Psychiatric Society, Inc. v. Wasserman, held the court had jurisdiction to hear claims against the state official because the Medicaid Act does not have a comprehensive and detailed remedial scheme under Seminole Tribe. In so ruling, the court noted that the Supreme Court had rejected a "virtually identical" argument in Wilder v. Virginia Hospital Association, which held that the federal government’s "generalized powers to audit and sanction noncompliant states ‘were insufficient to foreclose reliance on § 1983 to vindicate federal rights’ in the Medicaid Act."
The Discretionary Action Argument
A third sovereign immunity argument being raised by state attorneys is that the Eleventh Amendment applies because the state officials are exercising discretion in their implementation of the Medicaid program.
This argument, of course, ignores one of Ex parte Young’s core precepts that states cannot give their officials discretion to violate federal law. Under the Ex parte Young doctrine, a state official whose actions contravene federal law is deemed to act without authority and cannot invoke the state’s immunity from suit, regardless of whether he or she purports to exercise discretion. As noted by the Tenth Circuit Court of Appeals, even if "state officials claim to act under the authority of valid state law, if their conduct is not in accord with federal law the state cannot cloak their actions with state authority or state immunity."
Moreover, this argument ignores the fact that, in most cases, the Medicaid plaintiffs are alleging that the state official has a mandatory duty to comply with federal law, not the discretion to ignore it. A number of courts have found that "an injunction to prevent a state official from doing that which he has no legal right to do is not an interference with the discretion of an officer." Indeed, the Tenth Circuit Court of Appeals has refused to find an Eleventh Amendment bar to prospective injunctive relief in a case involving the reasonably prompt provision of Medicaid home and community-based waiver services, even though the state officials have discretion in how they will implement the reasonable promptness requirements.
Conclusion and practice tips
To date, the Supreme Court and circuit courts have repeatedly allowed private parties to enforce the Medicaid Act and other Spending Clause enactments pursuant to Ex parte Young. Lower federal courts do not have license to ignore these controlling precedents. This does not mean, however, that novel arguments will not be raised by state attorneys and judges in the lower courts. Rather, encouraged by recent Supreme Court expansions of sovereign immunity, these activists are poised to intensify the pace of their arguments, hoping that in the not too distant future the Supreme Court will accept one or more of them.
Needless to say, if these arguments ultimately prevail, much will be lost. People with disabilities, low income people, the elderly, and children who rely upon the range of public Spending Clause programs enacted since the New Deal will be left with many rights on paper, but without the ability to enforce them.
Meanwhile, clients continue to come forward with problems, and complaints will need to be filed against state officials. Advocates must accept that the jurisdictional allegations of their complaints will probably be tested. And while the landscape will continue to be unsettled, well-pled complaints will help. Given the unsettled state of the law, federal court filing should not occur until the following questions have been thoroughly assessed:
3. Examine favorable precedent in your jurisdiction closely. The more similar your facts are to existing precedent the more likely it is that you will survive a motion to dismiss. Tailor your complaint accordingly.