Douglas v. Indep. Living Center Of S. Ca; Douglas v. Santa Rosa Memorial Hospital

Whether Medicaid recipients and providers maintain a cause of action under the Supremacy Clause to enforce certain provisions of the Medicaid Act.

Petitioners, a group of pharmacies, heath care providers, senior citizens’ groups, and beneficiaries of California’s Medicaid program (“Medi-Cal”) sought to enjoin the California Department of Health Care Services Director from implementing a state statute that reduces payments to certain medical service providers under Medi-Cal by 10 percent. Specifically, Petitioners argued that the 10 percent rate reduction violated §1396(a)(30)(A) of Title XIX of the federal Social Security Act (“§30(A)”), which requires that a state plan “provide such methods and procedures, relating to…payment…as may be necessary…to assure that payments are consistent with efficiency, economy, and quality of care” and is therefore not valid under the Supremacy Clause. The District Court denied Petitioner’s motion, finding that §30(A) did not create any individual cause of action to sue. Petitioners appealed the denial of their motion and the Ninth Circuit concluded that under §30(A), Petitioners “could bring suit directly under the Supremacy Clause to enjoin a state law allegedly preempted by federal law,” and remanded the motion to the District Court. On remand, the District Court granted Petitioner’s motion and held that Petitioner’s had demonstrated a likelihood of success on the merits and that Petitioner had demonstrated a risk of irreparable injury as to some of the challenged Medi-Cal services. The Ninth Circuit affirmed.

On appeal, Petitioners renew their arguments from the Court of Appeals, specifically, that Congress did not intend to create a private cause of action to enforce §30(A), and that the relevant legislative history shows that it was Congress’ intent that the statute be administratively enforced by the Department of Heath of Human Services and not through private suits.