The Courthouse Door Stays Open, But It’s Not Over Yet

February 23, 2012
Guest Post

By Rochelle Bobroff, Directing Attorney, Herbert Semmel Federal Rights Project, National Senior Citizens Law Center

The Supreme Court’s 5-4 decision in Douglas v. Independent Living Center, a case challenging California’s cuts in Medicaid reimbursement rates, can be summed up by the movie title: The Good, The Bad, and the Ugly.  The Good is the majority’s holding that refuses to deny court access to low-income Medicaid beneficiaries who had difficulty obtaining medications and other services when California slashed rates in violation of federal law.  The Bad is the narrowness of the court’s decision, which is limited to simple instructions to the lower court on remand.  And the Ugly is the dissent seeking to slam the courthouse doors on the poor.

The plot (or facts) in this case bears no resemblance to the movie.  When California slashed Medicaid provider rates to save money, ignoring the impact on beneficiary access to care, providers and beneficiaries sued the state.  Federal Medicaid law requires states to ensure adequate access to care.  So, the state laws cutting reimbursement rates conflicted with federal law.  The suit alleged that the state rate cut statute was “preempted” under the Supremacy Clause of the Constitution by the contrary federal law.  Businesses routinely bring preemption challenges to state laws that allegedly conflict with federal law. 

The state tried to get the case thrown out of court, arguing that beneficiaries could not bring a preemption suit to enforce the Medicaid statute.  But the Ninth Circuit, relying on over a century of Supreme Court cases permitting preemption cases to go forward, held that poor people have the same right to bring preemption challenges as businesses, and let the case proceed.  All other Circuits to consider whether preemption is available in these circumstances were in agreement. 

When the case reached the Supreme Court, numerous states and the Justice Department (over objections from Health and Human Services) joined California in arguing that beneficiaries should not be granted access to the courts to invalidate state laws that conflict with federal law.

The Good: Even with all the forces of government power aligned against the disadvantaged, a majority of the Justices refused to dismiss the suit. Justice Stephen Breyer wrote the opinion, joined by Justices Anthony Kennedy, Ruth Bader Ginsburg, Sonia Sotomayor, and Elena Kagan. The Court noted that about a month after oral argument, the federal agency had approved some of the rate cuts and the state had withdrawn its request to implement the remaining cuts. This changed the factual posture of the suit, permitting the beneficiaries to make a claim under the Administrative Procedure Act that they could not have brought previously. The majority remanded the case to the Ninth Circuit for consideration of this new development, instructing the Court of Appeals to apply usual deference to the agency's determination.

The Bad: The decision is focused on instructions to the Ninth Circuit, and therefore understandably narrow. But the Court missed an important opportunity to underscore that the extensive body of case law permitting preemption claims is as applicable to suits alleging violations of safety-net statutes as it is to suits by businesses challenging state regulatory law.

The Ugly: The dissent ignored a century of cases and advocated carving out the claims of the poor from the Court's preemption jurisprudence. Chief Justice John Roberts Jr. wrote the dissent, joined by Justices Antonin Scalia, Clarence Thomas, and Samuel Alito. The dissent made no attempt to distinguish the multitude of cases permitting preemption challenges, including cases in the past decade allowing Medicaid preemption claims to proceed. The dissent noted that other legal tools of enforcing Medicaid had been closed off by recent Supreme Court cases, and concluded that, as a result, all doors should be shut to the poor. The dissent suggested that preemption claims be limited to "defensive" actions, even though the claims in this case are no different than other preemption claims by big business which these justices have embraced.  The dissent’s approach is fundamentally unjust, permitting court access only for the powerful.

Luckily, the majority of the Court has preserved court access for the poor, at least for now, although final resolution of the court access question has been left for another day.