North East Med. Svcs. v. Cal. DHCS

The Eleventh Amendment of the United States Constitution bars claims for retroactive monetary relief, but prospective relief may be granted if "the complaint alleges an ongoing violation of federal law and seeks relief properly characterized as prospective."

North East Medical Services, Inc. and La Clinica de la Raza (the "Centers") offer medical services for the poor and uninsured. The Centers receive a fixed, per-visit fee for services provided to Medicare patients from the California Department of Health Care Services ("California"). In 2006, California shifted the responsibility for payment of dual-eligibles' (beneficiaries of Medicare and Medicaid) prescription drugs to the federal Medical Part D Program. The Centers argued that California was overpaid after a change in the management of payments under the new legislation. The Centers sought reimbursement for payments made under the Medical Part D Program. However, "the Eleventh Amendment...bars 'declaratory judgments against the state governments that would have the practical effect of requiring the state treasury to pay money to claimants.'" There are three exceptions to this shield. First, Congress can repeal Eleventh Amendment state governmental immunity. Second, the claimant can seek recovery of property seized and held in the state's escheat fund. Third, the claimant can seek prospective relief. Despite the Centers' arguments, the panel was not persuaded that the Eleventh Amendment did not apply. The panel found that because the Centers did not seek “the return of their own property seized pursuant to a unique statutory scheme,” their claims for retroactive monetary relief did not fall under a recognized exception to the Eleventh Amendment and were therefore barred. The panel distinguished money held in the state treasury, which cannot be recovered pursuant to the Eleventh Amendment, from money held in the state escheat fund, which can be recovered. The Centers also sought relief for future payments California might request. The panel asked the district court to revisit this issue because the district court appeared to have “overlooked this aspect of their claims.” AFFIRMED in part, REVERSED and REMANDED in part.