Family Health Centers of Southwest Florida, Inc. v. Secretary, Florida Agency for Health Care Administration

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF FLORIDA

FORT MYERS DIVISION

FAMILY HEALTH CENTERS OF

SOUTHWEST FLORIDA, INC., a

Florida nonprofit corporation

Plaintiff,

v. Case No: 2:21-cv-278-SPC-NPM

SIMONE MARSTILLER and

XAVIER BECERRA,

Defendants.

/

OPINION AND ORDER1

Before the Court is Defendant Secretary Xavier Becerra’s (“Federal

Secretary”) Motion to Dismiss the Amended Complaint (Doc. 39), along with

Plaintiff Family Health Centers of Southwest Florida, Inc.’s response (Doc. 43)

and the Federal Secretary’s reply (Doc. 47). Also before the Court is Defendant

Simone Marstiller’s (“State Secretary”) Motion to Dismiss Amended Complaint

(Doc. 40), along with Plaintiff’s response (Doc. 44). For the reasons below, the

Court grants the Federal Secretary’s motion but denies the State Secretary’s

motion.

1 Disclaimer: Documents hyperlinked to CM/ECF are subject to PACER fees. By using

hyperlinks, the Court does not endorse, recommend, approve, or guarantee any third parties

or the services or products they provide, nor does it have any agreements with them. The

Court is also not responsible for a hyperlink’s availability and functionality, and a failed

hyperlink does not affect this Order.

BACKGROUND2

This case is about a Medicaid reimbursement rate. Plaintiff is a health

center that treats Medicaid beneficiaries. It is reimbursed at a set rate for the

services it provides. Plaintiff recently asked the State of Florida to increase its

reimbursement rate to account for its growing workforce and services. The

State mostly denied the request, and this suit followed. Before getting to the

merits, background on Medicaid offers context to Plaintiff’s claims and

Defendants’ motions.

Title XIX of the Social Security Act created Medicaid to enable states to

provide medical care to certain low-income, elderly, and disabled persons.

Participating states have flexibility to design and administer their programs.

But their autonomy is limited in some respects. Pertinent here, each state

must submit a “state plan” for the Federal Secretary to approve. And if a state

later seeks to modify the plan, it must submit a “state plan amendment” for

approval.3 All state plans and any amendments must track federal laws and

regulations.

2 Because the Court writes for the parties, it assumes familiarity with the facts and writes

only those necessary for resolving Defendants’ motions.

3 Technically, a state submits a state plan amendment to the Center for Medicare and

Medicaid Services (“CMS”) to whom the Federal Secretary has delegated its approval

authority. See 42 C.F.R. §§430.14-430.15. To avoid further complicating this order with the

technicalities of the Medicaid authority structure, none of which is being challenged, the

Court will reference all agency action as being taken by either the Federal Secretary or the

State Secretary.

Under Medicaid, states must reimburse federally qualified health

centers (“FQHC”)—like Plaintiff—for their covered Medicaid services. See 42

U.S.C. § 1396a(bb). Florida and other states use the prospective payment

system (“PPS”) to reimburse FQHCs at a predetermined, fixed rate. The rate

is specific to each FQHC and is calculated based on historical costs of providing

care to patients. A FQHC is not stuck with its fixed rate forever. The rate can

be adjusted for “any increase or decrease in the scope of services furnished by

the center or clinic during that fiscal year.” Id. §1396a(bb)(3)(B).

What is meant by “any increase or decrease in the scope of services” is

the crux of this suit. Because Plaintiff argues that Florida wrongly defines the

phrase narrower than federal guidance, the Court reviews both definitions.

In 2010, CMS issued a general guidance (in a question-and-answer

format) on what is meant by “any increase or decrease in scope of such

services”:

A change in scope of FQHC and RHC4 services should

normally occur only if: (1) center/clinic has added or

has dropped any service that meets the definition of

FQHC and RHC services (i.e., that the FQHC or RHC

is qualified to provide in the State); and, (2) the service

is included as a covered CHIP5 service under the CHIP

State plan. Additionally, a change in the scope of

services could also occur when a service is added or

dropped as a covered CHIP service. A change in the

4 RHC refers to rural health centers, which are not at issue.

5 CHIP refers to Children’s Health Insurance Program, which extends Medicaid to cover

children.

“scope of services” is defined as a change in the

type, intensity, duration and/or amount of

services. A change in the cost of a service is not

considered in and of itself a change in the scope of

services. The State must develop a process for

determining a change in the scope of services.

Prospective Payment System for FQHCs and RHCs, Center for Medicaid and

State Operations, (Feb. 4, 2010), https://downloads.cms.gov/cmsgov/archived-

downloads/SMDL/downloads/SHO10004.pdf (bolded emphasis added).

In 2014, Florida submitted a state plan amendment (“SPA”) that

included the relevant change-in-scope definition. The definition materially

mirrors language used in earlier versions of amendments (“Pre-Existing

Language”). It says that a PPS rate may be adjusted for any increase or

decrease in an FQHC’s services. (Doc. 31 at 12). It then defines a change in

scope of services to include adding a new service the FQHC did not previously

provide or removing an existing service. (Id. at 12-13). But the definition stops

there. Unlike its federal counterpart, the SPA does not account for the “type,

intensity, duration and/or amount of services.” The missing language fuels

Plaintiff’s claims.

Plaintiff sues the Federal and State Secretaries in their official

capacities. Its three claims all center on the general logic that had the SPA

included the “type, intensity, duration and/or amount of services” language in

the federal guidance, Plaintiff would have received the higher PPS rate it

wanted. More specifics on each claim follows.

Count I is against the Federal Secretary for violating the Administrative

Procedure Act (“APA”). It alleges the Federal Secretary acted arbitrarily and

capriciously, abused his discretion, and acted against federal guidance in

approving the SPA with its change-in-scope definition. Count II focuses on the

State Secretary. It alleges he violated the PPS statute, § 1396a(bb)(3), because

the SPA’s change-in-scope definition is narrower than federal guidance. To

round out the Amended Complaint, Count III seeks declaratory relief against

both the Federal and State Secretaries under 28 U.S.C. § 2201. Boiled down,

the relief Plaintiff wants is for the Court to:

• require the State Secretary to submit a new state plan amendment to

the Federal Secretary that defines a change in scope of services to

include “the type, intensity, duration and/or amount of services”

• require the Federal Secretary to review that new SPA

• require the Federal Secretary to disapprove the Pre-Existing

Language from earlier state plan amendments

• require the State Secretary to grant Plaintiff the higher

reimbursement rate

(Doc. 31 at 28-29).

Both Defendants have moved to dismiss the claims against them. Their

arguments come next.

DISCUSSION

A. Federal Secretary’s Motion to Dismiss

The Federal Secretary moves to dismiss the APA claim (Count I) and the

declaratory relief claim (Count III) for lack of standing and pleading

deficiencies.

1. Count I: APA Violation

Plaintiff alleges the Federal Secretary’s approval of the SPA, and the

change-in-scope definition in it, is invalid because it is arbitrary, capricious, an

abuse of discretion, and inconsistent with governing law. It also attacks the

Federal Secretary for not retroactively reviewing the Pre-Existing Language

to find it no longer meets the PPS requirements in § 1396a(bb)(3).

The Federal Secretary moves to dismiss Count I, arguing that Plaintiff

lacks standing and states no plausible claim. Because standing is a

jurisdictional prerequisite to sue, the Court starts there. See Lewis v. Governor

of Ala., 944 F.3d 1287, 1296 (11th Cir. 2019) (“Because standing to sue

implicates jurisdiction, a court must satisfy itself that the plaintiff

has standing before proceeding to consider the merits of her claim, no matter

how weighty or interesting.”).

The Constitution limits federal courts to deciding only “Cases” and

“Controversies.” U.S. Const. art. III § 2. To satisfy the case or controversy

requirement, a plaintiff must have standing to sue. See Spokeo, Inc. v. Robins,

578 U.S. 330, 338 (2016) (citations omitted). Standing requires that the

claimant “(1) suffered an injury in fact, (2) that is fairly traceable to the

challenged conduct of the defendant, and (3) that is likely to be redressed by a

favorable judicial decision.” Id. In plain language, the standing elements are

injury-in-fact, causation, and redressability.

The party invoking federal jurisdiction must prove standing. Lujan v.

Defs. of Wildlife, 504 U.S. 555, 561 (1992). When at the pleading stage, as here,

the plaintiff “must clearly . . . allege facts demonstrating each element.”

Spokeo, 578 U.S. at 339 (citation and footnote omitted); Tsao v. Captiva MVP

Rest. Partners, LLC, 986 F.3d 1332, 1337 (11th Cir. 2021). In reviewing a

jurisdictional challenge to standing, courts must consider the pleadings and

examine the whole record. See Elend v. Basham, 471 F.3d 1199, 1208 (11th

Cir. 2006) (citation omitted).

The Federal Secretary challenges only causation and redressability.

Because the Court can make quick work of redressability, it starts there. In

assessing this element, a court “ask[s] whether a decision in a plaintiff’s favor

would significantly increase . . . the likelihood that [it] would obtain relief that

directly redresses the injury that [it] claims to have suffered.” Harrell v. Fla.

Bar, 608 F.3d 1241, 1260 n.7 (11th Cir. 2010) (citation omitted).

To fix Plaintiff’s injury of not getting an increased reimbursement rate,

Plaintiff needs the Court to require the State Secretary to write a new

amendment with “the type, intensity, duration and/or amount of services”

language and to require the Federal Secretary to review it. Should the Federal

Secretary approve the amendment, then the State Secretary also needs to find

Plaintiff’s growth qualifies under the new change-in-scope definition. Only

then can Plaintiff get the increased PPS rate. But Plaintiff is asking too much

from the Court in Count I and puts the cart before the horse.

There is no new state plan amendment before the Federal Secretary to

review. That’s because the State Secretary has yet to submit one, either by

court order or voluntarily. So the Court cannot compel the Federal Secretary

to review a non-existent amendment. What’s more, Count I is not the vehicle

to get the State Secretary to rewrite a new amendment as Plaintiff wants. But

Count II could be. Count II is against the State Secretary and claims the SPA

violates the Medicaid statute. Should Plaintiff succeed on it, then the State

Secretary may submit a new amendment for the Federal Secretary to consider.

Until that point, no decision by this Court in Plaintiff’s favor will—or can—

spike the likelihood that its injury will be redressed. Without redressability,

Plaintiff lacks standing to sue the Federal Secretary.6

This decision shouldn’t surprise Plaintiff. In fact, Plaintiff probably

expects it and has tried to get ahead of it with certain allegations in the

6 And without redressability, the Court need not address the causation arguments.

Amended Complaint. But Plaintiff’s efforts fall short. The Federal Secretary

argues it has neither caused Plaintiff’s injury nor can its injury be redressed

because invalidating the SPA puts prior amendments in control, and those

versions define change in scope of services nearly the same as the SPA.

Plaintiff has a regulatory ace up its sleeve—or so it thinks. Under 42 C.F.R.

§ 430.15(c)(1), Plaintiff says at any time the Federal Secretary may reject

“previously approved material [that] no longer meets the requirements for

approval.” Applied here, Plaintiff argues the Court can invalidate the SPA and

do the same with the earlier versions for the same reasons—i.e., none jive with

federal guidance on PPS. The Federal Secretary unsurprisingly reads the

regulation differently.

The Court need not weed through the parties’ competing statutory

interpretations. That’s because the result is the same. Even accepting

Plaintiff’s reading, the Court still cannot compel the Federal Secretary to

review a non-existent state plan amendment. And Plaintiff has presented no

binding authority or persuasive argument to suggest otherwise. So

§ 430.15(c)(1) does not save Plaintiff’s standing against the Federal Secretary.

To sum up, the Court grants the Federal Secretary’s motion to dismiss

as to Count I because Plaintiff lacks standing to bring it. With Count I

resolved, the Court turns to the declaratory judgment claim as against the

Federal Secretary.

2. Count III: Declaratory Judgment

The Federal Secretary argues that Count III fails to state a plausible

claim because a declaratory judgment is a form of relief—not a standalone

claim. (Doc. 39 at 23). Count III reads much like the other counts except it is

couched in a declaratory judgment language. For instance, Count III asks the

Court to declare the SPA to be invalid, the Federal Secretary’s approval of the

SPA’s change-in-scope definition to be arbitrary and capricious, and the Pre-

Existing Language to conflict with § 1396a(bb)(3). (Doc. 31 at 28). Before the

Court reviews the Federal Secretary’s dismissal argument, however, it must

first decide whether Plaintiff has standing to bring Count III. See 28 U.S.C.

§ 2201 (“In a case of actual controversy [a court] may declare the rights and

other legal relations of any interested party seeking such declaration, whether

or not further relief is or could be sought.”); Methelus v. Sch. Bd. of Collier

Cnty., Fla., No. 2:16-cv-379-SPC-MRM, 2017 WL 3421470, at *2 (M.D. Fla.

Aug. 9, 2017) (“This ‘actual controversy’ is the same as a justiciable ‘case or

controversy’ under Article III.” (citation omitted)). Plaintiff stumbles at this

initial step; Count III suffers the same standing shortcomings as Count I.

There is no case or actual controversy because (again) the Federal

Secretary has no state plan amendment to review. Plaintiff wants this Court

to require the Federal Secretary to review a non-existent amendment even

though he may do so on its own once the State Secretary submits one. This is

untenable. Doing what Plaintiff wants would amount to the Court issuing an

advisory decision and subverting the core of Article III’s justiciability

requirements. See Coffman v. Breeze Corps. Inc., 323 U.S. 316, 324 (1945)

(explaining that a declaratory judgment action “may not be made the medium

for securing an advisory opinion in a controversy which has not arisen”);

Bochese v. Town of Ponce Inlet, 405 F.3d 964, 974 (11th Cir. 2005) (“In the

absence of standing, a court is not free to opine in an advisory capacity about

the merits of a plaintiff’s claims.” (citations omitted)). So the Court also

dismisses Count III for lack of standing.

In conclusion, the Court grants the Federal Secretary’s motion to dismiss

Plaintiff’s claims against him for lack of standing. Because Plaintiff does not

satisfy this jurisdictional threshold, the Court need not address whether its

claims separately fail under Rule 12(b)(6). The Court now turns to the State

Secretary’s motion.

B. The State Secretary’s Motion to Dismiss

In Count II, Plaintiff alleges the State Secretary violated the PPS

payment provisions in § 1396a(bb)(3) because the SPA’s change-in-scope

definition leaves out “the type, intensity, duration and/or amount of services”

language from federal guidance. Plaintiff continues that it has an enforceable

right under 42 U.S.C. § 1983 to be paid per the formula set in § 1396a(bb)(3).

The State Secretary disagrees, arguing Plaintiff has no private cause of action

under § 1983 to bring Count II.

Section 1983 allows a plaintiff to obtain relief against any person who,

under color of state law, has deprived the plaintiff “of any rights, privileges, or

immunities secured by the Constitution and laws.” 42 U.S.C. § 1983. But not

every federal law is actionable under § 1983. For a plaintiff to seek relief under

§ 1983, it “must assert the violation of a federal right, not merely a violation of

federal law.” Blessing v. Freestone, 520 U.S. 329, 340 (1997) (emphasis in

original). The framework for discerning whether a federal statute creates a

federal right is provided in Blessing. There, the Supreme Court set a three-

factor test to analyze this question.

The first factor is whether Congress intended the statute to benefit the

plaintiff. The Supreme Court has clarified this prong by holding that only “an

unambiguously conferred right” can support a cause of action under § 1983.

Gonzaga U. v. Doe, 536 U.S. 273, 283 (2002). To unambiguously confer a

federal right, a statute’s text “must be ‘phrased in terms of the persons

benefitted,’” with “rights-creating terms.” Id. at 284 (citation omitted).

The second Blessing factor is whether the plaintiff can “demonstrate that

the right assertedly protected by the statute is not so vague and amorphous

that the judiciary is strained to enforce it.” Blessing, 520 U.S. at 341.

And the final factor requires that the statute unambiguously obligate the

States, meaning “the provision giving rise to the asserted right must be

couched in mandatory, rather than precatory terms.” Id.

Whether § 1396a(bb)(3) meets the Blessing factors is a question of first

impression in the Eleventh Circuit. At least six other circuits, however, have

found other subsections of § 1396a(bb) to be enforceable under § 1983.7

Although these cases are not binding, they inform the Court’s analysis. Before

the Court goes there, however, a full recap of § 1396a(bb)(3) helps. Again, it

governs the PPS payment for services provided by FQHCs and reads:

for services furnished during fiscal year 2002 or a

succeeding fiscal year, the State plan shall provide for

payment for such services in an amount (calculated on

a per visit basis) that is equal to the amount calculated

for such services under this subsection for the

preceding fiscal year—

(A) Increased by the percentage increase in MEI

. . . a applicable to primary care services . . . for that

fiscal year; and

(B) Adjusted to take into account any increase or

decrease in the scope of such services furnished by the

center or clinic during that fiscal year.

7 See, e.g., Legacy Cmty. Health Servs., Inc. v. Smith, 881 F.3d 358, 371 (5th Cir. 2018), as

revised (Feb. 1, 2018); Cal. Ass’n of Rural Health Clinics v. Douglas, 738 F.3d 1007, 1013 (9th

Cir. 2013); N.J. Primary Care Ass’n v. N.J. Dep’t of Hum. Servs., 722 F.3d 527, 539 (3d Cir.

2013); Concilio de Salud Integral de Loiza, Inc. v. Pérez-Perdomo, 551 F.3d 10, 17-18 (1st Cir.

2008); Pee Dee Health Care, P.A. v. Sanford, 509 F.3d 204, 212 (4th Cir. 2007); Rio Grande

Cmty. Health Ctr., Inc. v. Rullan, 397 F.3d 56, 74 (1st Cir. 2005).

§ 1396a(bb)(3) (emphasis added). Against this statutory language, it’s clear

that all three Blessing factors favor a right to sue under § 1983.

First, § 1396a(bb)(3) uses mandatory and clear language that requires

States to repay FQHCs for its services. And it goes the extra step of providing

the formula for calculating the payment. The clear focus is on benefitting

FQHCs and ensuring they are repaid. This focus remains the same even if the

reimbursement rate decreases because FQHCs are still guaranteed some

repayment. By requiring states to ensure that FQHCs are paid, the subsection

suggests that FQHCs are its intended beneficiaries. Second, § 1396a(bb)(3)

provides the formula for calculating the repayments. In other words, it

provides judicially administrable standards. Specific requirements that a

state reimburse FQHCs for certain services, at definite amounts, are far from

overly vague or amorphous. See Pee Dee Health Care, 509 F.3d at 212. And

finally, § 1396a(bb)(3) binds the States with mandatory language––“the State

plan shall provide.” Thus, the Blessings factors establish that § 1396a(bb)(3)

confers a private right enforceable through § 1983.

With that resolved, the Court must next decide whether the federal

guidance by CMS is based on a permissible construction of § 1396a(bb)(3)(B) to

get deference under Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467

U.S. 837, 844-45 (1984). See Sanchez Fajardo v. U.S. Att’y Gen., 659 F.3d 1303,

1307 (11th Cir. 2011). The State Secretary argues it does not, and thus the

Court owes no deference to the CMS guidance. The Court disagrees.

The CMS guidance reasonably interprets § 1396a(bb)(3)(B) consistent

with Congress’ intent. Remember that § 1396a(bb)(3) says a state must pay

an FQHC at a rate that is “adjusted to take into account any increase or

decrease in the scope of such services furnished by the center or clinic during

that fiscal year.” The CMS guidance, in turn, says that “A change in the ‘scope

of services’ is defined as a change in the type, intensity, duration and/or

amount of services.” The State Secretary makes much ado about how the word

“scope” appears with “amount” and “duration” in all but two times throughout

§ 1396a. (See Doc. 40 at 13-20). As best the Court can tell, the State Secretary

seems to argue that because the words usually appear together that suggests

“scope” cannot mean “amount” and “duration.” It also says the only times the

words do not appear together is in§ 1396a(bb)(3)(B), the relevant subsection

here. And the absence means that “Congress did not intend for payments to

FQHCs to be adjusted based on increases or decreases in the amount or

duration of service.” (Doc. 40 at 15). The State Secretary thus maintains the

CMS guidance’s definition saying otherwise is wrong. Not so. The State

Secretary’s longwinded interpretations are dense and overcomplicates the

issue. And Plaintiff falls into a similar trap of obscurity.

The Court reads the statutory language must simpler—as it must. See

Alfaro-Garcia v. U.S. Atty. Gen., 981 F.3d 978, 981-82 (11th Cir. 2020) (“The

fundamental principle governing any exercise in statutory interpretation is

that [courts] begin[ ] where all such inquiries must begin: with the language of

the statute itself, and . . . give effect to the plain terms of the statute.” (cleaned

up)). Congress wants a state to reimburse an FHQC at a predetermined, fixed

rate adjusted for “any increase or decrease” in the scope of services it provides.

Using “any” instructs this Court that Congress intended the scope of services

to be broad and encompass many circumstances. And using the term “scope”

also suggests room for FQHCs to receive adjustments for a wide range of

reasons. So CMS defining that term to include “a change in the type, intensity,

duration and/or amount of services” keeps in spirit of Congressional intent to

make sure the medical providers caring for Medicaid eligible patients are being

reimbursed for the services they provide. Both sides’ quibbling arguments lose

the forest for the trees and miss Congress’ straightforward intent. The Court

thus denies the State Secretary’s arguments against Chevron deference and its

motion to dismiss. Count II survives.8

Accordingly, it is

ORDERED:

8 Because the State Secretary made no arguments as to Count III, it too survives as alleged

against him.

□□□ Defendant Secretary Xavier Becerra’s Motion to Dismiss the

Amended Complaint (Doc. 39) is GRANTED.

(2)Defendant Simone Marstiller’s Motion to Dismiss Amended

Complaint (Doc. 40) is DENIED. Defendant must answer the

Amended Complaint on or before December 24, 2021.

DONE and ORDERED in Fort Myers, Florida on December 10, 2021.

, Lh platrathe 7

UNITED STATES DISTRICT JUDGE

Copies: Counsel of record