Armstrong v. Exceptional Child Center, Inc.

PETITIONER: Richard Armstrong, et al.
RESPONDENT: Exceptional Child Center, Inc., et al.
LOCATION: United States District Court, District of Idaho

DOCKET NO.: 14-15
DECIDED BY: Roberts Court (2010-2016)
LOWER COURT: United States Court of Appeals for the Ninth Circuit

CITATION: 575 US (2015)
GRANTED: Oct 02, 2014
ARGUED: Jan 20, 2015
DECIDED: Mar 31, 2015

ADVOCATES:
Edwin S. Kneedler - Deputy Solicitor General, Department of Justice, for the United States as amicus curiae, for the petitioners
Carl J Withroe - on behalf of the petitioners
James M Piotrowski - on behalf of the respondents

Facts of the case

The federal Medicaid Act requires that state Medicaid plans contain procedures to ensure that reimbursement rates for healthcare providers "are consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers" to meet the need for care and services in the geographic area. Ninth Circuit precedent also requires that reimbursement rates bear a reasonable relationship to Medicaid provider costs, and where rates do not "substantially reimburse providers their costs," a state cannot justify its rates with "purely budgetary reasons." Richard Armstrong, the Director of Idaho's Department of Health and Welfare, and others (the Directors) conducted provider cost studies and recommended increasing reimbursement rates but ultimately did not increase rates for budgetary reasons.

A group of Idaho Medicaid providers (the Providers) sued the Directors and claimed that, based on the new cost information, the Department's failure to raise rates was not consistent with the Ninth Circuit's requirements. The Directors argued that the Supremacy Clause of the federal Constitution does not give providers a private right of action and that the existing rates were consistent with the Medicaid Act's requirements of efficiency, economy, and quality of care. The district court granted the Providers' motion for summary judgment and held that the failure to increase rates led to a failure to substantially reimburse providers. The U.S. Court of Appeals for the Ninth Circuit affirmed.

Question

Does the Supremacy Clause give Medicaid providers a private right of action against a state when Congress chose not to create enforceable rights under the Medicaid Act?

Media for Armstrong v. Exceptional Child Center, Inc.

Audio Transcription for Oral Argument - January 20, 2015 in Armstrong v. Exceptional Child Center, Inc.

Audio Transcription for Opinion Announcement - March 31, 2015 in Armstrong v. Exceptional Child Center, Inc.

John G. Roberts, Jr.:

Justice Scalia has our opinion this morning in case 14-15 Armstrong v. the Exceptional Child Center.

Antonin Scalia:

This case is here on writ of certiorari to the United States Court of Appeals for the Ninth Circuit.

Medicaid is a federal program that subsidizes the state's provision of medical services to needy individuals like other legislation supported only by congress’ authority to tax and spend for the general welfare it offers the state to bargain.

Congress provides federal funds in exchange for the state’s agreement to spend them in accordance with congressionally imposed conditions.

Among these conditions is a funding requirement contained in Section 30(A) of the Act which requires State Medicaid plans to “provide such methods and procedures relating to the utilization of and the payment for care and services available under the plan as may be necessary to safeguard against unnecessary utilization of such care and services and to insure that payments are consistent with efficiency, economy and quality of care and are sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population in the geographic area.

Respondents here are providers of habilitation services to persons covered by Idaho's Medicaid plan.

Rehabilitation services are or habilitation services are essentially in home care to those who would otherwise be eligible for care at an institution like a hospital or a nursing home.

These respondents sued petitioners, two officials in Idaho's Department of Health and Welfare, claiming that Ohio violates Section 30(A) by reimbursing providers of habilitation services at rates lower than that Section permits.

They sought injunction requiring petitioners to increase the rates so as to bring Idaho into compliance with Section 30(A).

The District Court entered summary judgment for the providers, the Ninth Circuit affirmed holding that the supremacy clause confers a private clause of action under which Medicaid providers can sue to enforce Section 30(A).

We granted certiorari and now reverse the judgment of the Ninth Circuit.

The first question presented by the case is whether the supremacy clause gives a private right of action.

We hold that it does not and on this issue all nine justices are in agreement.

The supremacy clause provides that “the laws of the United States” enacted in pursuance of the constitution shall be the supreme law of the land.

This language creates a rule of decision.

Courts must not give effective state laws that conflict with federal laws.

It does not, however, confer any rights and it certainly does not create a cause of action. It instructs courts what to do when state and federal law clash, but is silent regarding who may enforce federal laws in court and in what circumstances they may do so.

In interpreting legal text our task is to give the text the meaning it had when enacted, and it is clear that at the time of the supremacy's clause ratification it was not understood as conferring a private right of action.

The supremacy clause was among the most debated provisions of the proposed constitution. Had it been understood to provide such significant private rights against the states, one would expect to find that mentioned in the pre-ratification historical record.

We are aware of no such mention.

Alexander Hamilton wrote that the supremacy clause “only declares a truth which flows immediately unnecessarily from the institution of a Federal Government” and Justice Story described the clause as “a positive affirmance of that, which is necessarily implied.”

These descriptions would have been grossly inapt if the clause were understood to give affected parties a constitutional and hence congressionally unalterable right to enforce federal laws against the states.

Additionally, it is important to read the supremacy clause in the context of the Constitution as a whole.

The necessary and proper clause of Article 1 vests Congress with broad discretion over the manner of implementing its enumerated powers, giving it authority to “make all laws which shall be necessary and proper for carrying them into execution.”

It is unlikely that the Constitution gave Congress such broad discretion with regard to the enactment of laws while simultaneously limiting Congress' power over the manner on their implementation, making it impossible to leave the enforcement of federal laws to federal actors.

That, however, is exactly what reading a private right of action into the supremacy clause would entail.

We have long held that federal courts may in some circumstances grant injunctive relief against state officers who are violating or planning to violate federal law, but we have never held that the right to seek such relief is guaranteed by the supremacy clause.

The right to enjoin state officers from violating federal law is the creation of courts of equity not the supremacy clause, and it reflects a long history of judicial review of illegal executive action tracing back to England.

The Ninth Circuit erred in holding otherwise.

The second question the case presents is whether quite apart from any cause of action conferred by the supremacy clause this suit can proceed against Idaho inequity.