Wilder v. Virginia Hospital Association

RESPONDENT: Virginia Hospital Association
LOCATION: Verdugo-Urquidez's Residence

DOCKET NO.: 88-2043
DECIDED BY: Rehnquist Court (1988-1990)
LOWER COURT: United States Court of Appeals for the Fourth Circuit

CITATION: 496 US 498 (1990)
ARGUED: Jan 09, 1990
DECIDED: Jun 14, 1990

John G. Roberts, Jr. - for U.S. as amicus curiae, supporting petitioners, by special leave of Court
R. Claire Guthrie - Argued the cause for petitioners
Walter E. Dellinger, III - Argued the cause for the Respondent

Facts of the case

To qualify for federal funding under the Medicaid Act, states must submit to the Secretary of Health and Human Services a plan that establishes a system by which healthcare providers will be reimbursed. Under the Boren Amendment, the reimbursement rates must be "reasonable and adequate" to meet the costs of efficiently operated facilities.

In 1986, a group of hospitals brought sought against the state of Virginia, arguing that its reimbursement rates (which had been approved in 1982 and again in 1986 by the Secretary) were not "reasonable and adequate." The suit was brought under 42 U.S.C. 1983, which allows individuals or organizations to bring suit for the "deprivation of any rights ... secured by [federal] laws." Virginia argued that the Boren Amendment had not been intended to create a an enforceable right, but simply to provide guidelines for the Secretary to follow, and that the hospitals therefore could not bring suit under 1983. The state also argued that Congress had intended to prevent private parties from bringing suit to enforce the provisions of the Amendment. The District Court disagreed, allowing the suit to proceed. The Fourth Circuit Court of Appeals affirmed.


Did the Boren Amendment create a "right" under the definition of 42 U.S.C. 1983, therefore allowing private parties to bring suit challenging the state's finding that its Medicaid reimbursement rates are "reasonable and adequate"? If such a right was created, did Congress intend to prevent private suits to enforce the it?

Media for Wilder v. Virginia Hospital Association

Audio Transcription for Oral Argument - January 09, 1990 in Wilder v. Virginia Hospital Association

William H. Rehnquist:

We'll hear argument next in 88-2043, Gerald Baliles v. Virginia Hospital Association.

Ms. Guthrie?

R. Claire Guthrie:

Mr. Chief Justice, and may it please the Court:

This case comes to you today by way of an interlocutory appeal from a case pending in the Eastern District of Virginia which concerns the administration of the Virginia Commonwealth's Medicaid Program.

The case concerns, fundamentally, the significance of action Congress took in 1981 when it amended the Social Security Act by way of what is now commonly called the Boren Amendment.

The Boren Amendment granted states new authority to set Medicaid payment rates for in-patient hospital services.

Exercising this new authority in 1982, Virginia adopted a prospective payment system as its method for reimbursing hospital rate... hospitals for expenditures for Medicaid patients.

In March of 1986, Respondent in this case, The Virginia Hospital Association, brought suit challenging our prospective payment system on the ground that it violated the terms of the Boren Amendment because it under-reimburses Virginia hospitals.

Accordingly, the hospital association argued that our system is inconsistent with Federal standards.

The Commonwealth moved for dismissal or summary judgment on several grounds, including, among other things, the Eleventh Amendment and the lack of enforceable right under Section 1983 and collateral estoppel, and the district court initially granted judgment on the collateral estoppel grounds, but that decision was ultimately reversed by the Fourth Circuit.

We're now before you on appeals from subsequent decisions by the district court and the Fourth Circuit that rejected the Commonwealth's grounds... remaining grounds for dismissal, and from a decision fundamentally that... in which the Fourth Circuit ruled that the Boren Amendment guarantees cost-efficient hospitals, a substantive Federal right to reasonable and adequate reimbursement, and that this right can be enforced under Section 1983.

The Commonwealth sought certiorari on four issues, but the Court decided to grant and to hear only this one.

I intend to focus my argument today on two key points relevant to our principal argument, which is that the Boren Amendment, as drafted, does not secure any substantive Federal rights that can be enforced under Section 1983.

Sandra Day O'Connor:

Ms. Guthrie, do you think that the legislation, as it was written before the Boren Amendment, provided a private cause of action?

R. Claire Guthrie:

I think, Justice O'Connor, there's a much better argument that could be made there, but we would not concede that point.

There is a distinct difference in the language between the Boren Amendment and its predecessor.

And that language... the change in the language is to incorporate the express findings and assurances requirement and also to expressly repeal the cost-based reimbursement standard reflected in the prior language.

The prior language said that a state plan for medical assistance must provide for the payment of the reasonable cost of in-patient hospital services.

That language is somewhat similar in nature to other standards incorporated in the Social Security Act that this Court has held enforceable.

But what's important about the Boren Amendment is that it doesn't say that anymore, that it makes a very significant change that must not be overlooked by this Court.

The Boren Amendment reflects congressional intention to interject the free enterprise system into the Medicaid program.

Under cost-based reimbursement, hospitals could argue that they were entitled, essentially, to present a bill to the Commonwealth and to have it paid, regardless of whether the charges made or the bill presented was in fact necessarily related to the services that the Medicaid recipients were entitled to.

It is that fundamental change that we would stress in this case.

And our second important point today is that the language of the Boren Amendment itself doesn't secure any substantive Federal rights within the meaning of Section 1983.

The only requirement, we would submit, that the Boren Amendment now imposes on the states is an administrative obligation to make findings and assurances to the Secretary of Health and Human Services, an administrative obligation that relates to how we administer our program, not to any entitlement to hospitals, and certainly not to anything that would remotely resemble an industry subsidy.

Alternatively, we would argue that even if the Boren Amendment could be said to impose an obligation to make payments to hospitals, the standards for determining the level of payment to be made under the Boren Amendment are too imprecise, too general, too open-ended to secure any specific and Federal... specific and definite Federal rights in any party.

Antonin Scalia:

But what about a Federal right to a good-faith determination by the state, and to a good-faith assurance?

At least that is categorical in the act, is it not?

R. Claire Guthrie:

Your Honor, we would argue that in fact the finding... the findings and assurances language requires that the Commonwealth be accountable in making assurances to the Secretary, and certainly the presumption of regularity of administrative and state action would obtain.

And we wouldn't, obviously, expect a state to make a finding or submit an assurance that was patently false or inaccurate.