Douglas v. Independent Living Center of Southern Cal., Inc.
565 U.S. ___ (2012)

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Justia Opinion Summary
The Court granted certiorari in these cases to decide whether Medicaid providers and recipients could maintain a cause of action under the Supremacy Clause to enforce a federal Medicaid law. Since the Court granted certiorari, however, the relevant circumstances have changed. The federal agency in charge of administering Medicaid, CMS, approved the state statutes as consistent with the federal law. In light of the changed circumstances, the Court believed that the question before it was whether, once the agency approved the state statutes, groups of Medicaid providers and beneficiaries could still maintain a Supremacy Clause action asserting that the state statutes were inconsistent with the federal Medicaid law. Given the present posture of the cases, the Court did not address whether the Ninth Circuit properly recognized a Supremacy Clause action to enforce the federal law before the agency took final action. To decide whether these cases could proceed under the Supremacy Clause now that the agency has acted, it would be necessary on remand to consider at least the matters addressed by the Court. Accordingly, the Court vacated the judgment and remanded for further proceedings.

NOTE: Where it is feasible, a syllabus (headnote) will be released, as is being done in connection with this case, at the time the opinion is issued. The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader. See United States v. Detroit Timber & Lumber Co., 200 U. S. 321 .

SUPREME COURT OF THE UNITED STATES

Syllabus

DOUGLAS, DIRECTOR, CALIFORNIA DEPARTMENT OF HEALTH CARE SERVICES v. INDEPENDENT LIVING CENTER OF SOUTHERN CALIFORNIA, INC., et al.

certiorari to the united states court of appeals for the ninth circuit

No. 09–958. Argued October 3, 2011—Decided February 22, 2012 [ 1 ]

Medicaid is a cooperative federal-state program that provides medical care to needy individuals. To qualify for federal funds, a State must submit its Medicaid plan and any amendments to the federal agency that administers the program, the Centers for Medicare & Medicaid Services (CMS). Before approving a plan or amendments, CMS conducts a review to determine whether they comply with federal requirements. Federal law requires state plans or amendments to “assure that payments are consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers” to make Medicaid “care and services” available. 42 U. S. C. §1396a(a)(30)(A).

          After California enacted three statutes reducing the State’s payments to various Medicaid providers, the State submitted plan amendments to CMS. Before the agency finished its review, Medicaid providers and beneficiaries sought, in a series of cases, to enjoin the rate reductions on the ground that they were pre-empted by federal Medicaid law. In seven decisions, the Ninth Circuit ultimately affirmed or ordered preliminary injunctions preventing the State from implementing its statutes. The court (1) held that the providers and beneficiaries could bring a Supremacy Clause action; (2) essentially accepted their claim that the State did not show that its amended plan would provide sufficient services; (3) held that the amendments thus conflicted with §1396a(a)(30)(A); and (4) held that the federal statute pre-empted the new state laws. In the meantime, agency officials disapproved the amendments, and California sought further administrative review. The cases were in this posture when the Court granted certiorari to decide whether respondents could mount a Supremacy Clause challenge. After oral argument, CMS approved several of the State’s amendments, and the State withdrew its requests for approval of the remainder.

Held: The judgments are vacated and the cases are remanded, thereby permitting the parties to argue before the Ninth Circuit in the first instance the question whether respondents may maintain Supremacy Clause actions now that CMS has approved the state statutes. Pp. 5–8.

     (a) CMS’ approval does not make these cases moot, but it does put them in a different posture, since the federal agency charged with administering Medicaid has now found that the rate reductions comply with federal law. That decision does not change the substantive question whether California’s statutes are consistent with federal law, but it may change the answer. It may also require respondents to seek review of CMS’ determination under the Administrative Procedure Act (APA) rather than in a Supremacy Clause action against California. The APA would likely permit respondents to obtain an authoritative judicial determination of the merits of their legal claim. And their basic challenge now presents the kind of legal question ordinarily calling for APA review. The Medicaid Act commits to a federal agency the power to administer a federal program, and the agency has exercised that authority. As CMS is comparatively expert in the statute’s subject matter, its decision carries weight. And §1396a(a)(30)(A)’s broad and general language suggests that CMS’ expertise is relevant in determining the provision’s application. Finally, to allow a Supremacy Clause action to proceed once CMS has reached a decision threatens potential inconsistency or confusion. The Ninth Circuit declined to give weight to the Federal Government’s interpretation of the federal law, but courts are ordinarily required to apply deference standards to agency decisionmaking. The parties suggest no reasons why such standards should not be applied here or why, now that CMS has acted, a court should reach a different result in an APA action than in a Supremacy Clause action. That would make the Supremacy Clause challenge at best redundant. Permitting it to continue would seem inefficient, for the federal agency is not a participant in the action, which will decide whether agency-approved state rates violate federal law. Pp. 5–8.

     (b) Given the present posture of the cases, the Court does not address whether the Ninth Circuit properly recognized a Supremacy Clause action to enforce the federal law before the agency took final action. To decide whether these cases may proceed under the Supremacy Clause now that the agency has acted, it will be necessary on remand to consider at least the matters addressed by this Court. P. 8.

No. 09–958, 572 F. 3d 644 (first judgment), 342 Fed. Appx. 306 (second judgment), No. 09–1158, 596 F. 3d 1098, 563 F. 3d 847, 374 Fed. Appx. 690, 596 F. 3d 1087, and No. 10–283, 380 Fed. Appx. 656, vacated and remanded.

     Breyer, J., delivered the opinion of the Court, in which Kennedy, Ginsburg, Sotomayor, and Kagan, JJ., joined. Roberts, C. J., filed a dissenting opinion, in which Scalia, Thomas, and Alito, JJ., joined.

Notes

1  Together with No. 09–1158, Douglas, Director, California Department of Health Care Services v. California Pharmacists Association et al., Douglas, Director, California Department of Health Care Services v. California Hospital Association et al. (see this Court’s Rule 12.4), Douglas, Director, California Department of Health Care Services v. Independent Living Center of Southern California, Inc., et al. (see this Court’s Rule 12.4), Douglas, Director, California Department of Health Care Services v. Dominguez, By and Through her Mother and Next Friend Brown, et al. (see this Court’s Rule 12.4); and No. 10–283, Douglas, Director, California Department of Health Care Services v. Santa Rosa Memorial Hospital et al., also on certiorari to the same court.

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