Supreme Court Rules that Providers Cannot Sue States Over Medicaid Payment

On Tuesday morning, March 31, the U.S. Supreme Court ruled in Armstrong et al v. Exceptional Child Center, Inc., et al, that private healthcare providers cannot sue states over low Medicaid reimbursement rates, in a 5-4 ruling, reversing a lower court’s ruling. Providers had argued that suing over low rates is sometimes the only way to enforce federal payment requirements.  But their opponents asserted that a ruling in favor of providers could lead to unending litigation that would slow the system.

The Supreme Court took up the case after Idaho residential providers for disabled patients sued state officials over that state’s failure to implement higher reimbursement rates, after the Idaho Legislature failed to sufficiently fund such reimbursement. A federal district court ruled that Idaho’s rates did not align with requirements in federal law requiring adequate reimbursement, and the distrct court was upheld by the 9^th U.S. Circuit Court of Appeals.

A report in the online news service NewsMax reported that  “State officials recommended increases in reimbursement rates in the late 2000s but they were never implemented because the Idaho legislature declined to appropriate funds, according to court papers.Writing on behalf of the majority,” the NewsMax report said, “Justice Antonin Scalia said that the providers have no right to sue the state under the so-called Supremacy Clause of the U.S. Constitution, which holds that federal law generally trumps state law. The clause ‘instructs courts what to do when state and federal law clash, but is silent regarding who may enforce federal laws in court,’ Scalia wrote.”

The report further said that “Scalia noted that the providers have another option: they can ask the federal government to intervene on their behalf. In a dissenting opinion, Justice Sonia Sotomayor said there was nothing in the Medicaid law to suggest that Congress intended to prevent private lawsuits.”